
Introducing Private Placement Life Insurance (PPLI)
What is a peace of mind? Peace of mind is when asset protection, legacy planning, compliance and taxes are no longer a concern.
What is PPLI?
Simply put, PPLI is a multi-jurisdictional wealth planning tool available on a private placement basis to wealthy families and high net worth individuals. Tailored to each client, therefore, it is known as private placement. It is based on life insurance and annuity policies that allow for bespoke tailored and internationally diversified investment strategies.
The product is often also known as “private banking insurance” or “insurance wrappers”. In other words, PPLI presents a planning structure, just like trusts, companies, foundations and funds that allows your internationally diversified portfolio to be enveloped within the legal structure of a life insurance resulting in a series of desirable wealth planning benefits.
Who are the Parties Involved?
- Policyholder: The policyholder owns and controls the policy. He has the right to select the investment strategy, appoint the beneficiaries, surrender the policy and make changes to the policy. Policyholder can be a private individual, a company or legal structure like a trust or foundation.
- Insured Person: The term of the policy is linked to this person’s life. When the insured person dies, the contract normally comes to an end. The insured person must by definition be a private individual. It is possible to have two insured persons in a contract (joint-insured).
- Beneficiary/ies: He/they receive the payout at death of the insured person. The beneficiary/ies can be one or several private individuals, but also, a company or legal structure like a trust or foundation.

Advantages of PPLI?
- Privacy
Increased freedom with respect to investments. The investments are made in the name of the insurer, therefore, no restrictions due to citizenship. Increased confidentiality due to insurance secrecy laws and often lower or no reporting obligation due to tax privileged growth. - Asset Protection
If correctly structured, the policy may not be seized or included in bankruptcy proceedings. Due to its structure, assets in the PPLI investment portfolio can be allocated into investment opportunities and strategies otherwise not available to US investors directly. All investments are made in the name of the insurance carrier, a non-US person. Thus, the ordinary restrictions of international funds that may restrict investments by US persons will not apply. - A high degree of investment flexibility and choice also applies. The policyholder can choose the custodian bank, the asset manager and the investment strategy. Furthermore, these choices can be adjusted over time.
- Tax
Depending on the policyholder’s and the beneficiaries’ tax domicile, a policy can be tailored to be tax-efficient. The investment gains achieved within a PPLI policy accrue tax-free within the policy, thus accelerating the performance of the assets via tax-free compounding. Furthermore, tax-free loans; tax-free withdrawals and tax-free inheritance of the policy’s face value may be achieved depending upon the choice of policy employed. - Estate Planning
PPLI is separated from the ordinary estate. Free choice of beneficiaries; direct payout at death within 30 days; no certificate of distribution or will is needed. - Cash
PPLI provides liquidity, funds may be partially withdrawn or entirely liquidated at any time. The PPLI portfolio may be pledged in exchange of a loan and this allows a seamless succession of assets.
Combination with Existing and Other Structures
Jurisdictions
Depending on the investor’s domicile or nationality, a different jurisdiction and insurer should be chosen. After all, the investor is normally doing this for more protection, and therefore, he needs to make sure he is investing in a prime jurisdiction with the right tax agreements in place and with a first-class institution. The unique PPLI structure contains a system of multi-layer checks and balances, thus providing for secure global investment capacity.
How does it work and the role of RFO?
- Client / Policyholder signs the PPLI application with an insurer
- Client decides on investment strategy (with RFO) and appoints beneficiaries
- Client transfers assets or cash to the insurer
- Insurer opens a custodial account with custodian bank through RFO
- Policy-underlying assets are invested according to the agreed strategy
- Client receives the PPLI policy
- During his lifetime, the client can withdraw from the policy as he likes
- At death of insured person, the policy pays out to the beneficiaries
At RFO, we always look for solutions that give our valued clients solid wealth management benefits.
How do you become tax-effective? How do you ensure that your nest eggs grow and they are protected for your children and grandchildren? How can you achieve all these in compliance with international laws and regulations?
These questions need to be answered. These are the questions we deal with on a daily basis.
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