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Insurance For The Ultra-Wealthy ’ s Protection and Growth
Private placement life insurance offers benefits as an investment vehicle . By Jim Carroll and Andrew Mescon
MOST INVESTORS BUILD THEIR PORTFOLIOS to achieve two goals : growth and protection . Though life insurance falls on the protection side of the ledger , it can also be used as an effective growth tool . For instance , investors can use variable universal life insurance policies , which balance wealth protection with account holders ’ ability to access the vehicles ’ cash value via investments through subaccounts that operate like mutual funds .
If you ’ re an affluent investor considering life insurance , another option is private placement life insurance ( PPLI )— a form of variable universal life insurance that offers access to a broader range of investments while providing unique tax advantages .
Unlike traditional life insurance , private placement life policies allow for greater customization . Not only can your financial advisors directly manage your portfolio , but they can also select from a broader range of investments , including alternatives and separately managed accounts . Additionally , PPLI policies can offer higher death benefits than traditional life insurance policies available through the public markets , providing more protection to wealthy families .
Here are three benefits to choosing PPLI as an investment vehicle :
1 . It ’ s got tax advantages . Since PPLI is structured using a life insurance policy , it provides investors with significant tax advantages . All assets inside the policy grow tax-deferred , which is especially helpful for high-income-generating investments such as private credit and hedge funds . In addition to the policy ’ s tax-free death benefit , policy holders enjoy tax-free income during their lifetime by structuring withdrawals as policy loans , which allows them to access funds without triggering a taxable event .
2 . It ’ s an effective estate planning tool . Like all life insurance , continued on page 63
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