In a recent webinar, CEO Matt Swendiman was joined by Anthony Stanek, Managing Director at IPL (Investors Preferred). The webinar focused on the potential benefits of private placement life insurance (PPLI) and private placement variable annuities (PPVA) for registered investment advisors (RIAs) and their high net worth clients.

Understanding Private Placement Insurance and Annuities

Private placement life insurance and private placement variable annuities are specialized financial products aimed at serving ultra-high net worth individuals. These products offer unique advantages, including tax efficiency, flexibility in investment options, and lower costs compared to retail alternatives.

Benefits

  1. Tax Efficiency: Within a private placement life insurance contract, investments grow tax-free during the policy’s term. Additionally, the insured can access the cash value through tax-free loans. PPVAs offer tax-deferred growth, allowing systematic withdrawals or annuitization without tax implications at distribution.
  2. Investment Flexibility: Unlike retail alternatives, private placement products offer a broader range of investment options, including hedge funds, private equity, venture capital funds, and private debt.
  3. Lower Costs and No Surrender Charges: Private placement products typically have lower overall costs and do not include surrender charges or loads found in retail offerings.

Target Clients

Private placement insurance and annuities are best suited for clients with a significant net worth and those who have already begun engaging in estate planning. Clients with investments in high-returning, yet tax-inefficient assets like hedge funds, private equity, and venture capital, can benefit from the tax advantages offered by private placement products.

Choosing between PPLI and PPVA

Clients must weigh the advantages of both products to determine the most suitable option. PPLI provides the most tax-free growth and allows for tax-free loans, while PPVAs offer tax-deferred growth and flexibility in taking distributions.

Working with Investors Preferred

Investors Preferred focuses on providing a high level of client service and education. The company is domiciled in South Dakota, which allows for lower premium taxes, and it has relationships with six reinsurance carriers, providing flexibility in structuring the policies.

 

Implementation and Underwriting

Implementing private placement products can take two to four months, depending on the complexity of the case. Investors Preferred handles all aspects of the process, from illustrations and underwriting to setting up separate accounts for investments.

Conclusion

Private placement insurance and annuities offer attractive benefits for high-net-worth clients, especially when combined with customized investment strategies. RIAs can explore opportunities to integrate these products into their clients’ portfolios, creating tax-efficient legacy plans that extend beyond their lifetimes. For more information or to explore partnership opportunities with Investors Preferred, reach out to Anthony Stanek at A-S-T-A-N-E-K@IPLINS.com.