What Is Private Placement Life Insurance?
Life insurance policies offer high-net-worth individuals a way to more safely diversify their assets. Private placement life insurance (PPLI) is a life insurance policy that offers a lower-than-normal death benefit and maximizes the cash value component of a whole life policy.
In many cases, the death benefit for a PPLI is as low as possible. Although the death benefit is certainly still a consideration, it is not the driving factor behind the policy. Instead, a PPLI policy is typically used more as a way to optimize the tax strategy for a high net worth individual (HNWI) and offer a way for them to better invest in other assets.
Who Should Consider Private Placement Life Insurance?
Private placement life insurance is primarily for high net worth individuals. The reason for this is the premium costs are typically high with a whole-life private placement life insurance policy. Moreover, it is more for individuals who desire tax benefits and have the intention to invest in other assets. However, it is not ideal for individuals who want a higher death benefit and are less interested in the cash value aspect of a whole life policy.
Benefits Of Private Placement Life Insurance
The benefits of a private placement life insurance policy depend largely on the specifics of your policy. However, in general, a PPLI can offer unlimited policy flexibility, substantial tax advantages, and the ability to hedge against investments that perform poorly.
Unlimited Flexibility Over Your Policy
As discussed, a private placement life insurance policy maximizes the cash value and investment aspect of a life insurance policy and minimizes the death benefit. This gives you full control. There are numerous investment options. You can also choose to raise or potentially lower your death benefit as desired as well.
Tax-Deferred (Or Tax-Free) Cash Value Growth
You do not pay taxes for a whole life policy unless you end your policy early (i.e., default on premium payments). This means your withdrawals from your cash value asset are free from taxes. In addition, the death benefit is also not subject to taxes.
Hedge Against Poor Investments
Although there are still risks, a private placement life insurance policy is one of the safer assets a high net worth individual can have as the death benefit can help protect against bad investments that lose money.
Are You Considering A Private Placement Life Insurance Policy?
A private placement life insurance policy enables high net worth individuals to better invest their money with huge tax incentives now, along with offering a generous (yet minimal) death benefit. Vector Financial Group is your source for private placement life insurance information, brokerage services, and financial planning. Contact us by phone or message today to learn more about how a private placement life insurance policy can benefit you.