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Private Placement Life Insurance
A uncommon feature of private placement life insurance (PPLI) is it is a custom-built policy wherein the client can, within particular parameters, choose the money manager and the investment direction. Any policy premiums minus insurance costs and commission are placed in a separate account governed by the investment manager. Basically the value of the policy is the amount of the investments plus the extra value resulting from the death benefit.
Since an offshore private placement life insurance policy contains significant quantities of investment funds the level of asset protection given to the policy is very important. Life insurance at present receives a layer of asset protection in the US against the claims of creditors. This statutory protection can operate throughout the life of the insured and after their dying. It can take care of the insured's ownership in the policy, the beneficiaries share in theproceeds, interest's of other parties in the policy or a combination. in several states the protection may be limited to a set number and in each state there are exceptions allowing creditors to attack policy wealth.
Comparably, a properly established PPLI policy in a jurisdiction including strong asset protection laws provides a much greater level of protection for life insurance. There are numerous transfer tax planning options that may be taken advantage of using PPLI, including the reduction of transfer tax liability by an alternative premium paying arrangement.
The PPLI policies are only accessible to high net worth individuals. To purchase the policy requires the outlay of large upfront premiums typically all paid in the first 5 years of the policy. To secure such a policy in a very regulated jurisdiction like the US can necessitate significant minimum premium commitments of approximately $5 Million over 5 years. In comparison, offshore jurisdictions like Bermuda, one of the largest insurance industries in the world, have assembled a cost effective situation to purchase PPLI for as little as $1 Million paid over five years.
The insurance costs and commissions for PPLI are nearly insignificant particularly when the policy is purchased offshore. The cost of PPLI purchased offshore is in many cases under 1% per year. There are additionally upfront insurance commissions to bear in mind of approximately 1% of the premiums paid. Other costs include the cost of employing specialist to draft the documents who will be responsible for dealing with an extensive range of issues counting the life insurance planning and tax compliance. This expense is frequently charged on a time cost basis or can be performed as a fixed charge.
To conclude, PPLI can be taken advantage of to optimize returns on long term assets, ensure investments are protected and further the clients estate planning and wealth preservation goals. It is an option well worth looking into when helping a client with their estate planning and wealth preservationgoals. It is valuable to identify the correct private placement life insurance carriers.
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Private Placement Life Insurance
, Offshore Private Placement Life Insurance
, Private Placement Life Insurance Carriers
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Date: Sat, 4 Dec 2010 -
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