Private Placement Life Insurance

Because Private Placement Life Insurance is a product for high net-worth individuals, it can only be issued to clients who satisfy the definitions of an Accredited Investor under rule 501(a)(1)-(8) of Regulation D of the Securities Act of 1933 and a Qualified Purchaser under section 2(a)(51) of the Investment Company Act of 1940.

As you can see from the definitions above, there are many ways to qualify, but to summarize, this product is frequently useful for Family Foundations, Family Offices, or High Net Worth Families. Many times, this involves trusts in excess of $5,000,000, or individuals with a net worth of $20,000,000 or more, or someone that controls a business that would place him/her in that category.

What would interest one in this product or what would they need to consider?

  • Looking to reduce taxes on investments with a desire for a long-term diversification strategy.
  • Limited need to access funds during lifetime, and a longer-term wealth transfer desire.
  • Possible source of supplemental retirement income.
  • Interested in Alternative Investments (Private Equity/Private Credit), and the tax advantages of owning these investments in a life insurance structure.