PPLI

A Game-Changer for Ultra High-Net-Worth Clients with a net worth of $10 Million or More.

Private Placement Annuity and Life Insurance

PPLI: Unlocking Transformative Opportunities for Ultra-High-Net-Worth Individuals

Private Placement Life Insurance (PPLI) is an advanced and underutilized strategy in wealth management, offering exceptional tax benefits, investment flexibility, and asset protection. For ultra-high-net-worth clients, PPLI represents a sophisticated tool to optimize financial planning, mitigate risks, and preserve wealth across generations.

What Makes PPLI Unique?

Unlike traditional financial products such as annuities or structured notes, PPLI operates as a legal structure akin to a trust. It enables clients to transform their existing portfolios into tax-advantaged investments without changing custodians or sacrificing control.
Consider this real-world example:
A client with $11 million in investments was asked, “If you could make all your investments tax-free for life by paying an additional 45 basis points, would you do it?” The response? An unequivocal “Yes!”

PPLI’s appeal lies in its ability to maintain the client’s current investment framework—whether with Charles Schwab, Fidelity, or another trusted custodian—while wrapping it in a tax-efficient legal structure. Assets remain legally segregated from the insurer’s balance sheet, offering unmatched security and flexibility.

Why Ultra-High-Net-Worth Individuals Are Turning to PPLI

PPLI addresses common pain points for affluent clients, delivering benefits such as:

Tax Efficiency

It creates a tax-free “wrapper” around investments, significantly boosting after-tax returns.

Asset Protection

Assets remain separate from the insurer’s balance sheet, safeguarding them from creditor claims or bankruptcy risks.

Cost Effectiveness

With fees typically ranging from 0.4% to 0.6%, PPLI is more affordable than many alternatives, such as those offered by Morgan Stanley, UBS, or Zurich.

For clients skeptical of “life insurance” products, advisors often present PPLI as a strategic legal construct—similar to a trust or IRA—focused on tax optimization and wealth preservation.

Innovations

Key Innovations in PPLI

Asset Segregation:

Using U.S.-based insurers domiciled in favorable jurisdictions like Puerto Rico, PPLI ensures that assets are legally separated from the insurer’s financial obligations.

Global Reinsurers

Policies are often backed by reinsurers such as RGA and Munich Re, reducing reliance on a single insurer and enhancing security.

Cost Efficiency

The streamlined structure reduces fees significantly compared to traditional high-cost insurance products.

Breaking Through Client Resistance

For clients hesitant to dive into PPLI immediately, Private Placement Annuities (PPA) can serve as an introductory step. While PPAs offer tax deferral instead of full tax exemption, they familiarize clients with the framework, easing the transition to the more comprehensive benefits of PPLI.

Advisors often emphasize the tangible outcomes:

Enhanced

Enhanced investment returns due to tax-free compounding.

Superior

Superior creditor protection.

Flexible

Flexible investment strategies tailored to individual goals.

The Path to Implementation

Adopting PPLI involves careful planning and collaboration with skilled legal and financial professionals. Key steps include:

Establishing

Establishing structures such as LLCs to avoid state premium taxes.

Educating

Educating clients and their advisors—such as CPAs and estate attorneys—on the benefits.

Working

Working with reputable insurers and reinsurers to ensure compliance and cost efficiency.

While the process can take months, the long-term benefits for clients with $5 million or more in non-qualified assets are unmatched.

The Competitive Advantage for Advisors

For financial advisors, PPLI is more than a solution—it’s a game-changer. Offering PPLI helps advisors:

Differentiate

Differentiate their practice in a competitive market.

Deepen

Deepen relationships with affluent clients by addressing unmet needs.

Attract

Attract referrals from professionals like CPAs and estate attorneys.

Mastering PPLI: A Journey Worth Taking

PPLI requires specialized knowledge and collaboration with top-tier professionals. For one seasoned advisor, adopting PPLI was a process that began with managing $250 million in assets but feeling something was missing. After two years of due diligence, they placed their first PPLI case. Today, after four and a half years, their confidence in offering this solution has solidified. Collaboration with experienced attorneys, reinsurers, and other professionals has been critical in addressing questions from skeptical CPAs and estate attorneys.