FAQ

Private placement variable universal life insurance (PPVUL) is a highly specialized type of life insurance designed to maximize the cash value (investment portion) for the beneficial owner(s) of the policy. PPVUL allows policy owners to invest the cash account of their life insurance policy in their choice of investments.

All of our strategies are approved by all relevant governmental agencies, including the U.S. Internal Revenue Service and insurance commissioners. Additionally, our strategies are backed by comprehensive legal opinions from multiple nationally recognized and internationally recognized law firms.

We have attempted to make the process of obtaining a policy as simple as possible. Our carrier will provide all documents required, including a draft trust. Obtaining a policy is largely a web-based transaction (although this can be completed in hard copy if so desired). We leverage technology and the internet to make the process easy to complete.

In many cases, our strategies can be implemented in as little as 2 to 4 weeks.

Any changes in the laws could only be prospective in nature. Therefore, any strategies implemented prior to the enactment of new tax laws would be grandfathered and would not be affected by any such changes in the tax laws. Additionally, we believe it is unlikely that any such changes in the tax laws will ever be enacted. Please call us and we would be happy to explain more in a telephone conversation.

Yes, an investor can choose their own group to be the insureds who receive the death benefits for the investor’s policy as long as the chosen group fits our government-approved profile for our insured groups. Please contact us for more information.

All PPVUL policies enjoy tax-free accumulation of investment income. The cash value of PPVUL policies may be placed in a wide variety of investments, including hedge funds and other alternative assets. These types of investments often employ investment strategies that would normally result in adverse income tax consequences to an investor. Investments within the policy will not be subject to such adverse tax consequences as long as they remain in the policy. There is also no income taxation upon the receipt of death benefits.

Life insurance products sold in the U.S. are subject to the requirements of state insurance regulations which may be generally restrictive with regard to the type of underlying investments (such as hedge funds) that may be available to policy owners.

These restrictions do not apply to offshore life insurance policies. Consequently, they will usually offer a greater diversity of underlying investments than a comparable onshore product.

Furthermore, offshore life insurance policies can be more cost-effective, as they are subject to lower fees and charges. For example, U.S. state premium taxes and federal excise taxes are not applicable to policies written offshore.

• Investment Flexibility: Being based in Bermuda allows great flexibility regarding underlying investment options. Bermuda has no liquidity requirements in contrast to very restrictive liquidity requirements in the United States.
• Stability: Bermuda is internationally recognized as a stable and well-developed insurance jurisdiction. Bermuda has a highly developed body of insurance law and proven segregated account legislation that protects policy owners’ segregated accounts from any claims which may be made against the insurance company. Each segregated account is totally protected from any potential creditor of the company.
• Account Segregation Laws: Moreover, at our carrier’s request, the Bermuda Monetary Authority enacted a special law which provides additional legal protection for policy owners in that all proceeds from our carrier’s insurance policies are paid by a highly rated reinsurer directly into a segregated account for the absolute benefit of policy owners.
• Cost Effective: Bermuda allows for a low cost policy structure which makes financial sense.

Our PPVUL provides policy owners with the following advantages:

Tax free investment growth throughout the life of the policy (this applies to all PPVUL policies);
Significant investment flexibility;
Capacity to access the cash value of the policy (this applies to all PPVUL policies);
A low policy cost structure;
Asset protection provided by the general legislation in Bermuda together with a special private law passed specifically for our policies in order to further protect the death benefit of the policy;
A user-friendly and efficient policy origination process (for example, we provide all documentation, including a draft trust).
In summary, our PPVUL policies combine the most efficient combination of the tax advantages available through life insurance with maximum flexibility of investments.

Our carrier’s PPVUL policies have been designed to be and are 100% compliant with the U.S. Internal Revenue Code. Our carrier made an IRC 953(d) election, which means that it is treated as if it were a U.S. insurance company for U.S. tax purposes. Therefore, our carrier is also fully entitled to the same preferential tax treatment enjoyed by domestic U.S. life insurance companies.

There are two options for paying premiums with our PPVUL policies. Beginning at the inception of the policy, premiums can be paid either in one lump sum (resulting in a Modified Endowment Contract – “MEC”) or in 5 equal annual payments (which will produce a Non-MEC). Note that any loan from a non-MEC is tax-free while a loan from a MEC may be subject to tax. Policy owners who may need access to the cash value which has accumulated in the policy will typically pay the premium in 5 equal annual payments in order to make their policy a non-MEC.

Our insurance carrier does not at any stage ever have access to your segregated accounts. Each segregated account is always held separately, is fully protected and is never comingled with the carrier’s General Account. This level of asset protection is achievable because of Bermuda’s sophisticated general segregated account legislation and the special private law passed specifically for our carrier by the Bermuda legislature.

In addition, the insurance operations and administrative functions are provided by Marsh Management Services, Bermuda, part of Marsh, the world’s leading insurance broker and risk advisor. Their Bermuda office will supervise and execute the actual setup, all ongoing administration and payout the death benefits of the policy.

Our carrier’s unique structure obviates the need for a rating. The reason for this is that 100% of the Net Amount At Risk (the insurance component) in our carrier’s policy is reinsured by leading, highly-rated reinsurance companies. The entire risk is retained by the reinsurers for the life of the policy. Consequently, the effective rating which is relevant for policy owners to consider in relation to evaluating our policies is the rating of the reinsurers.