LIFE INSURANCE DONE SMART™️
We were quoted by InsuranceNewsNet regarding private placement life insurance (PPLI) in a deep and informative article by Senior Editor John Hilton—”HNW clients take center stage under Trump“.
🔎The last several years, we’ve seen a strong and growing focus on private placement life insurance (PPLI) and private placement variable annuities (PPVA), both institutional products. PPLI and PPVA can be amazingly helpful structures for trust & estate planning, multigenerational wealth, and tax efficiency—they work well for tax inefficient investments like private credit, hedge funds, secondaries, and even high performing private equity—and are backed by reputable life insurance companies.
💡Our take on this is that PPLI is Life Insurance Done Smart ™️(LIDS).
QUOTED EXCERPTS
Go private
Private placement life insurance is an option that can make sense for high net worth clients in a scenario of swirling uncertainty, said Michael Ashley Schulman, partner at and chief investment officer for Running Point Capital Advisors, a multifamily office.
A PPLI policy is structured as a private contract between the insurer and the investor. This arrangement allows the investor to “wrap” a new bespoke investment portfolio within the life insurance policy, thereby delaying taxes on income and capital gain accumulation while potentially minimizing estate tax liability at the end, Schulman explained.
PPLI investments can include opportunities not available in traditional life insurance policies, such as private credit, real estate debt, hedge funds, private equity, insurance-directed funds and publicly traded securities.
PPLI is a strong tool for advisors in estate planning for wealthy clients, more so if stepped-up basis is eliminated at the federal level, Schulman said. It offers high net worth individuals “an efficient mechanism for wealth transfer in an evolving tax environment,” he said.
Stepped-up basis is a tax rule that adjusts the value of an inherited asset to its fair market value at the time of the original owner’s death.
“By combining the tax advantages of life insurance with customized investment flexibility, PPLI provides sophisticated investors a powerful tool for long-term tax optimization while maintaining access to investment growth through policy loans, removal of basis, and other permitted features,” Schulman said.
ADDITIONAL THOUGHTS
⚖️The PPLI structure combines the tax advantages of life insurance with the flexibility of customized investment options, making it a potentially attractive solution for sophisticated high-net-worth (HNW) and ultra-high-net-worth (UHNW) investors with substantial assets.
ALSO QUOTED in the article was:
🟠Michelle Magner, CLU®, ChFC®, CASL®, RICP® of Socium Advisors
🟠Van Carlson, founder and CEO of SRA 831(b) Admin
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Running Point, “we are your family office”™️
PPLI and PPVA managed separate accounts
Tailored financial planning, wealth management, estate planning, investing, taxes, business
Too many pieces of music finish too long after the end.
Igor Stravinsky, 20th century Russian conductor and composer with French and American citizenship
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-25-84
