PPLI Offers the Following Advantages
- Protects assets with segregated account legislation
- Protects assets from claims of creditors
- Protects assets using the benefits of life insurance
The assets inside a PPLI policy are protected from creditors of the insurance company because they are segregated into separate accounts. These separate accounts are not part of the general assets of the insurance company.1 The assets are protected from their own creditors, because of the asset protection laws in the jurisdictions where the PPLI companies are located.2 For example, the Bermuda Life Insurance Act of 1978, § 26(1), provides an unlimited exemption to the insured of both cash value and death benefit. Further protection can be offered with the policy being owned by a trust that has its own asset protection provisions.
A PPLI policy actually offers three layers of asset protection: the fact that they are held in segregated accounts; laws that exempt life insurance from the claims of creditors; and the asset protection laws in the jurisdictions where the PPLI insurance companies are located.
In addition, the PPLI policy inherently offers considerable tax benefits as well as asset protection. This would counter any argument that the transaction was a mere so-called fraudulent transfer to thwart creditors.3
- Lawson, “An Introduction to PPLI,” in The PPLI Solution, Delivering Wealth Accumulation, Tax Efficiency, and Asset Protection Through Private Placement Life Insurance (The PPLI Solution) at 5 (Bloomberg Press, 2005).
- Williams, “Jurisdiction—Home or Away?” in The PPLI Solution, supra note 1 at 285.
- Rothschild and Rubin, “Asset Protection: Riches Out of Reach,” in The PPLI Solution, supra note 1 at 50.
by Michael Malloy CLU TEP RFC, @ Advanced Financial Solutions, Inc