Life Insurance Planning

Life Insurance Planning

AN EFFICIENT FUNDING VEHICLE
Life insurance, as a funding instrument, has the ability to enhance your estate planning, business strategies and investment goals. In the right situations, dollar for dollar, its impact would be hard to duplicate. As a planning instrument, strategy or methodology, life insurance can offer better returns on investment and is often the most financially efficient funding method available.

FOR EXAMPLE
Life insurance portfolios can produce attractive, income-tax-free IRRs and provide immediate liquidity at the death of the insured(s). A well-constructed life insurance portfolio can help reduce the volatility of a family’s investment portfolio, while providing an important liquidity hedge for long-term wealth transfer strategies, and help to prevent the forced sale of assets that might otherwise be required to fund estate tax liabilities at the death of an insured.

PLANNING FOCUS
At Jones Lowry, we believe that obtaining life insurance for high net worth clients involves a customized planning process that is coordinated with your other advisors and incorporated into your overall plan.
LEARN MORE ABOUT OUR PLANNING-BASED PROCESS

AN EFFICIENT FUNDING VEHICLE
Life insurance, as a funding instrument, has the ability to enhance your estate planning, business strategies and investment goals. In the right situations, dollar for dollar, its impact would be hard to duplicate. As a planning instrument, strategy or methodology, life insurance can offer better returns on investment and is often the most financially efficient funding method available.

FOR EXAMPLE
Life insurance portfolios can produce attractive, income-tax-free IRRs and provide immediate liquidity at the death of the insured(s). A well-constructed life insurance portfolio can help reduce the volatility of a family’s investment portfolio, while providing an important liquidity hedge for long-term wealth transfer strategies, and help to prevent the forced sale of assets that might otherwise be required to fund estate tax liabilities at the death of an insured.

PLANNING FOCUS
At Jones Lowry, we believe that obtaining life insurance for high net worth clients involves a customized planning process that is coordinated with your other advisors and incorporated into your overall plan.
LEARN MORE ABOUT OUR PLANNING-BASED PROCESS

LIFE INSURANCE CAN PROVIDE GOAL-BASED-SOLUTIONS
Customized to Your Situation

REDUCING ESTATE, GIFT AND INCOME TAXES

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CREATE LIQUIDITY WHEN ESTATE TAXES ARE DUE TO AVOID THE FORCED SALE OF ASSET

FUND INHERITANCES TO HEIRS OR CHARITIES

REDUCING ESTATE, GIFT AND INCOME TAXES

Dollar-PNG-Image-28574

CREATE LIQUIDITY WHEN ESTATE TAXES ARE DUE TO AVOID THE FORCED SALE OF ASSET

FUND INHERITANCES TO HEIRS OR CHARITIES

ACCUMULATE ASSETS IN A TAX-EFFICIENT MANNER

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ESTABLISH A GUARANTEED, FIXED-INCOME INVESTMENT WITHIN A FAMILY’S INTERGENERATIONAL ASSET ALLOCATION

PROTECT AGAINST LITIGATION AND CREDITORS

ACCUMULATE ASSETS IN A TAX-EFFICIENT MANNER

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ESTABLISH A GUARANTEED, FIXED-INCOME INVESTMENT WITHIN A FAMILY’S INTERGENERATIONAL ASSET ALLOCATION

PROTECT AGAINST LITIGATION AND CREDITORS

WE SPECIALIZE IN INSURANCE SOLUTIONS FOR ULTRA HIGH NET WORTH CLIENTS

Why is Specialization Important?

The complex financial needs of ultra-high net worth clients require highly customized and sophisticated planning solutions. At the same time, the behavior patterns of the affluent enable insurance companies specializing in this market to offer products that are more favorably priced.

Because product pricing is influenced by three components—longevity, retention, and policy size, the favorable experience among the high net worth clients of M Financial Member Firms creates distinct pricing advantages. Click on the links below to find out how.

Longevity

M Financial’s affluent clients tend to live longer than the average American. As a result, mortality charges are lower which, in turn, lowers the cost of insurance. M Financial’s death claims are 10% less than the industry high net worth segment.

Retention

M Financial clients tend to keep their policies longer. This gives insurance companies a longer period to recoup their expenses which results in lower on-going policy charges. The lapse or surrender rate for M policies averaged 37% lower than the industry.

Policy Size

M Financial clients tend to buy policies that, on average, are 12 times larger than the industry. This creates economies of scale for insurance companies, which result in lower policy charges.

Private Placement

Private Placement

WHAT IS PRIVATE PLACEMENT LIFE INSURANCE?
Private Placement Life Insurance is institutionally-priced variable life insurance, available only to qualified purchasers and accredited investors*, that offers the ability to allocate account values to both mutual and alternative investment funds in a tax-efficient manner. Our strategic partner, M Financial, is widely recognized as one of the leading experts in the structuring and administration of Private Placement Life Insurance.

WHY IS IT GROWING IN POPULARITY?
With the passage of the 2017 Tax Act, the investment portfolios of many wealthy investors are now subject to a higher level of income tax, resulting in lower after-tax returns in their investment portfolios. This has prompted an increasing number of ultra-affluent families to utilize Private Placement Life Insurance (PPLI) to enhance their after-tax investment returns.

HOW DOES PRIVATE PLACEMENT LIFE INSURANCE WORK?
If structured correctly, the values inside a PPLI account grow tax- deferred and a large percentage (approximately 85%) of the account value can be accessed income tax-free during the insured person’s lifetime. At the death of the insured, the remaining values not accessed during the insured’s lifetime are generally paid to the beneficiary(ies) as an income tax-free life insurance benefit.
The overriding advantage is that in most situations, the incremental cost of PPLI is significantly lower than the cost of income taxes that would otherwise be payable on investment gains.

WHAT IS PRIVATE PLACEMENT LIFE INSURANCE?
Private Placement Life Insurance is institutionally-priced variable life insurance, available only to qualified purchasers and accredited investors*, that offers the ability to allocate account values to both mutual and alternative investment funds in a tax-efficient manner. Our strategic partner, M Financial, is widely recognized as one of the leading experts in the structuring and administration of Private Placement Life Insurance.

WHY IS IT GROWING IN POPULARITY?
With the passage of the 2017 Tax Act, the investment portfolios of many wealthy investors are now subject to a higher level of income tax, resulting in lower after-tax returns in their investment portfolios. This has prompted an increasing number of ultra-affluent families to utilize Private Placement Life Insurance (PPLI) to enhance their after-tax investment returns.

HOW DOES PRIVATE PLACEMENT LIFE INSURANCE WORK?
If structured correctly, the values inside a PPLI account grow tax- deferred and a large percentage (approximately 85%) of the account value can be accessed income tax-free during the insured person’s lifetime. At the death of the insured, the remaining values not accessed during the insured’s lifetime are generally paid to the beneficiary(ies) as an income tax-free life insurance benefit.
The overriding advantage is that in most situations, the incremental cost of PPLI is significantly lower than the cost of income taxes that would otherwise be payable on investment gains.

Private Placement Life Insurance is an unregistered securities product and is not subject to the same regulatory requirements as registered variable products.
As such, Private Placement Life Insurance (or Annuities) should only be presented to accredited investors or qualified purchasers as described by the Securities Act of 1933.

*Qualified Purchasers are individuals with a minimum of $5,000,000 of investable assets.
Accredited Investors are individuals having a net worth exceeding $1,000,000 or an annual income exceeding $200,000 for the last 2 years.

WHAT ARE SOME OF THE BENEFITS OF

PRIVATE PLACEMENT LIFE INSURANCE?

When structured properly, Private Placement Life Insurance (PPLI) can provide high-net-worth purchasers with:

Optimized After-Tax Investment Returns

Optimized After-Tax Investment Returns
Values inside a PPLI account grow tax-deferred. PPLI enables the owner to customize the investment strategy and allocate account values to a broad array of investment options.
Tax-Advantaged Cash Access

Tax-Advantaged Cash Access
A large percentage (approximately 85%) of the account value can be accessed income tax-free during the insured’s lifetime.
Optimized Wealth Transfer and Charitable Bequests

Optimized Wealth Transfer and Charitable Bequests
At the death of the insured, the remaining values not accessed during the insured’s lifetime are paid to the beneficiary(ies) as an income tax-free life insurance benefit.
Lower Cost

Lower Cost
In most situations, the incremental cost of PPLI is significantly lower than the cost of income taxes that would otherwise be payable on investment gains.
Enhanced Creditor Protection

Enhanced Creditor Protection
Life insurance policy values cannot be claimed by creditors in most states.
Simplified Tax Reporting

Simplified Tax Reporting
PPLI eliminates many of the annual reporting burdens associated with certain types of investments such as hedge funds, including K-1s. It also reduces the reporting requirements for foreign financial institutions and protects foreign wealth from U.S. income tax.
Enhanced Multi-Generational Trust Planning

Enhanced Multi-Generational Trust Planning
(1) Assets within a trust allocated through PPLI grow on an income tax-deferred basis; (2) The trustee can make income tax-free distributions to trust beneficiaries from PPLI without incurring income tax consequences of liquidating assets; (3) The trust will eventually receive an income tax-free insurance benefit; (4) By insuring younger generations, instead of senior generations, the duration of income tax-free compounding can be extended, which further improves the long-term economics of the trust investments.

WHAT ARE SOME OF THE BENEFITS OF

PRIVATE PLACEMENT LIFE INSURANCE?

When structured properly, Private Placement Life Insurance (PPLI) can provide high-net-worth purchasers with:

Optimized After-Tax Investment Returns

Optimized After-Tax Investment Returns
Values inside a PPLI account grow tax-deferred. PPLI enables the owner to customize the investment strategy and allocate account values to a broad array of investment options.
Tax-Advantaged Cash Access

Tax-Advantaged Cash Access
A large percentage (approximately 85%) of the account value can be accessed income tax-free during the insured’s lifetime.
Optimized Wealth Transfer and Charitable Bequests

Optimized Wealth Transfer and Charitable Bequests
At the death of the insured, the remaining values not accessed during the insured’s lifetime are paid to the beneficiary(ies) as an income tax-free life insurance benefit.
Lower Cost

Lower Cost
In most situations, the incremental cost of PPLI is significantly lower than the cost of income taxes that would otherwise be payable on investment gains.
Enhanced Creditor Protection

Enhanced Creditor Protection
Life insurance policy values cannot be claimed by creditors in most states.
Simplified Tax Reporting

Simplified Tax Reporting
PPLI eliminates many of the annual reporting burdens associated with certain types of investments such as hedge funds, including K-1s. It also reduces the reporting requirements for foreign financial institutions and protects foreign wealth from U.S. income tax.
Enhanced Multi-Generational Trust Planning

Enhanced Multi-Generational Trust Planning
(1) Assets within a trust allocated through PPLI grow on an income tax-deferred basis; (2) The trustee can make income tax-free distributions to trust beneficiaries from PPLI without incurring income tax consequences of liquidating assets; (3) The trust will eventually receive an income tax-free insurance benefit; (4) By insuring younger generations, instead of senior generations, the duration of income tax-free compounding can be extended, which further improves the long-term economics of the trust investments.

Alternative investments involve risks that may not be suitable for all investors. These risks include (but are not limited to), the possibility that the investment may not be liquid, principal return and/or interest rate risk. Higher fees associated with alternative investments may offset any potential gains. Investors should consider the tax consequences, costs and fees associated with these products before investing.

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