Q & A – PPLI and Understanding

Questions and Answers  from the book “The Wit and Wisdom of Professor PPLI”

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How do we achieve understanding?

 Section One, Part 1

Professor PPLI, please tell us more about how understanding Private Placement Life Insurance (PPLI) leads to a successful outcome for wealthy families?

 When most people think of life insurance, they think of a product. This understanding is much too restrictive for PPLI. Wealthy families are looking for new methods to structure their assets. FATCA and CRS have eliminated many structuring tools that gave these families legitimate privacy.

PPLI is a long-established, conservative tool that uses the six elements of Expanded Worldwide Planning (EWP) to not only produce a structure that gives legitimate privacy, but tax efficiency and asset protection as well. This is the correct understanding of PPLI.

Professor PPLI, why isn’t the understanding that you just explained more widely circulated among those who advise wealthy families?

 We live in an era of specialization, and this is true among those who advise wealthy families:  attorneys, asset managers, accountants, financial planners, and trust officers.  All these disciplines have their own unique focus. Proper PPLI asset structuring incorporates all these disciplines, and blends them into a conservative and tax compliant structure that produces a multi-generational asset structure.

The broad vision of PPLI is sometimes difficult for those who practice these disciplines. One must leave the narrow and safe confines of a certain way of thinking to embrace the broader and more expansive vision of PPLI.

Professor PPLI, please tells us about the history of PPLI. Is it true that it dates back to the 1980s in the United States?

 Yes, this is true. PPLI began in the United States in the 1980s. It was principally used to structure benefits for senior executives at major corporations. It allowed these executives to customize their investments and provide greater benefits than with the standard plans available.

In the early 1990s, it  was adopted by wealth individuals. Attorneys and other advisors saw that PPLI could be a valuable tool in planning for wealthy clients given all the advantages of life insurance, as well as the special properties that we mentioned before. PPLI allows planners to incorporate all of the key elements of EWP into one coherent structure.

In the mid-1990s, major companies entered the market. Insurance companies saw the marketing opportunities inherent in PPLI, and we see companies being formed in tax friendly jurisdictions like Bermuda and Barbados.

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by Michael Malloy, CLU TEP, @ Advanced Financial Solutions, Inc

Michael Malloy-CLU-TEP








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