Sen. Wyden Continues Investigation Into Private Placement Life Insurance Schemes
Senate Finance Committee Chair
In his letters, Wyden wrote, "I am concerned that these insurance vehicles are being used, without a genuine insurance purpose, to invest in hedge funds and other investments while avoiding billions of dollars in federal taxes. According to public reports, the bare minimum required to invest in a PPLI policy is
Text of the letter to
I write seeking information regarding the growing use of
According to public reports, the bare minimum required to invest in a PPLI policy is
One of the market leaders in the PPLI industry described PPLI as a "core element of effective long-term wealth structuring strategies for many wealthy individuals and families." These policies are marketed by some in the industry as a means to invest in hedge funds, private equity funds and other financial products while avoiding income and estate taxes. According to marketing materials from the PPLI industry leader, a properly designed PPLI policy can be used to "minimize or eliminate estate taxes" and "defer or potentially eliminate income tax or any tax reporting associated with investment activities." Some experts have also indicated PPLI would increase in importance if
In addition to concerns that PPLI policies are promoted as a tax shelter, a recent investigation by the
Though the size of the PPLI market is difficult to determine, it appears that these policies and related investment accounts are now worth at least tens of billions of dollars and are proliferating rapidly among ultra-high net worth individuals. One major industry player's overall assets under administration grew from
As Chairman of the
1. Please provide the current dollar value of assets under administration by
2. Please provide the dollar value of new assets under administration with respect to PPLI products held by
3. Please provide a list of all pooled investment funds in which PPLI products of
4. Is investment in PPLI products marketed to new or existing clients as a means to minimize or eliminate ordinary income, capital gains or estate taxes? If so, please explain the legal basis for why these products help minimize or eliminate taxes.
5. What minimum criteria (net worth, income, etc.) is required of your PPLI product clients? What is the average net worth of your PPLI product clients? What is the average income of your PPLI product clients?
6. How are possible clients for PPLI products identified? Do you receive referral of potential clients from other companies? If so, what are the referral criteria that must be met?
7. Please describe the Know Your Customer (KYC), Customer Due Diligence (CDD) or other anti-money laundering processes you have in place with respect to PPLI product clients.
8. Has
9. Please describe the typical policy acquisition and annual maintenance costs that apply to PPLI products. What other costs or fees are paid (directly or indirectly) by your PPLI product clients? How is your sales team compensated with respect to PPLI product clients (please describe in detail)?
10. For a PPLI product issued by
11. What percentage of
12. Please provide copies of all sales and marketing materials (to include client and
* * *
Dear Mr. Terryn,
I write seeking information regarding the growing use of
According to public reports, the bare minimum required to invest in a PPLI policy is
One of the market leaders in the PPLI industry described PPLI as a "core element of effective long-term wealth structuring strategies for many wealthy individuals and families." These policies are marketed by some in the industry as a means to invest in hedge funds, private equity funds and other financial products while avoiding income and estate taxes. According to marketing materials from the PPLI industry leader, a properly designed PPLI policy can be used to "minimize or eliminate estate taxes" and "defer or potentially eliminate income tax or any tax reporting associated with investment activities." Some experts have also indicated PPLI would increase in importance if
In addition to concerns that PPLI policies are promoted as a tax shelter, a recent investigation by the
Though the size of the PPLI market is difficult to determine, it appears that these policies and related investment accounts are now worth at least tens of billions of dollars and are proliferating rapidly among ultra-high net worth individuals. One major industry player's overall assets under administration grew from
As Chairman of the
1. Please provide the current dollar value of assets under administration by
2. Please provide the dollar value of new assets under administration with respect to PPLI products held by
3. Please provide a list of all pooled investment funds in which PPLI products of
4. Is investment in PPLI products marketed to new or existing clients as a means to minimize or eliminate ordinary income, capital gains or estate taxes? If so, please explain the legal basis for why these products help minimize or eliminate taxes.
5. What minimum criteria (net worth, income, etc.) is required of your PPLI product clients? What is the average net worth of your PPLI product clients? What is the average income of your PPLI product clients?
6. How are possible clients for PPLI products identified? Do you receive referral of potential clients from other companies? If so, what are the referral criteria that must be met?
7. Please describe the Know Your Customer (KYC), Customer Due Diligence (CDD) or other anti-money laundering processes you have in place with respect to PPLI product clients.
8. Has
9. Please describe the typical policy acquisition and annual maintenance costs that apply to PPLI products. What other costs or fees are paid (directly or indirectly) by your PPLI product clients? How is your sales team compensated with respect to PPLI product clients (please describe in detail)?
10. For a PPLI product issued by
11. What percentage of Zurich Insurance Group PPLI product clients are non-
12. Please provide copies of all sales and marketing materials (to include client and
Text of the letter to ACLI follows:
I write seeking information regarding the growing use of
industry assets in the U.S.1 ACLI serves as an influential industry advocate and strategic planner. As such, I am seeking industry insight and statistics developed by ACLI to help my understanding of how these policies are used, as well as industry growth trends and the total scale of usage.
According to public reports, the bare minimum required to invest in a PPLI policy is
However, experts indicate that it is much more common for investors to devote at least
One of the market leaders in the PPLI industry described PPLI as a "core element of effective
long-term wealth structuring strategies for many wealthy individuals and families."4 These policies are marketed by some in the industry as a means to invest in hedge funds, private equity funds and other PPLI policy can effectively replicate a basis step-up on unrealized gains through a tax-free insurance death benefit paid to beneficiaries.
In addition to concerns that PPLI policies are promoted as a tax shelter, a recent investigation by the
Though the size of the PPLI market is difficult to determine, it appears that these policies and
related investment accounts are now worth at least tens of billions of dollars and are proliferating rapidly among ultra-high net worth individuals. One major industry player's overall assets under administration grew from
As Chairman of the
1. Please provide the approximate aggregate dollar value of assets under administration with respect to PPLI policies held by ACLI member company clients based upon the most recent available data.
2. Has ACLI conducted any surveys, studies or other research efforts to assess the size of the PPLI industry by assets under administration or other metrics indicating the dollar value of investments held by these policies? If so, please provide copies of the results of those efforts.
3. To the extent that statistics are available, please provide the total amount of new funds under administration in PPLI vehicles in years 2015 through 2021 and as of most recent 2022 statistics.
4. Based on your understanding of the industry, are PPLI policies typically marketed to new or existing clients as a means to minimize or eliminate ordinary income, capital gains or estate taxes? If so, please specify how these products help minimize or eliminate taxes.
5. What minimum criteria (net worth, income, etc.) does industry require, on average, for PPLI clients? What is the average dollar value of a PPLI policy?
6. From your perspective, what are industry best practices in terms of Know Your Customer (KYC) and Customer Due Diligence (CDD) processes with respect to a PPLI policy?
7. What are industry best practices to confirm legitimate source of funds accepted for investments made through PPLI products? Please describe industry standards for know your customer policies or anti-money laundering standards in place for companies offering PPLI products.
8. Please describe industry best practices for the following questions:
a) Should insurance companies allow insurance policy holders to direct the investments of an insurance policy?
b) Should insurance companies allow insurance policy holders to direct the investments of an insurance policy through the client's investment advisor?
c) Should insurance companies invest significant portions of an insurance policy in speculative, risky, or undiversified investments?
d) Should insurance companies allow insurance policy holders to direct the investments of an insurance policy into specific investment funds not available to the general public? With respect to investment of insurance policies into such investment funds, should insurance companies allow policy holders to select their own investment advisor to manage their policy's investment, and should insurance companies allow policy holders to guide their investment advisors on preferred funds and investment strategies?
9. Based on your analysis of the market, what percentage of PPLI clients are non-
10. Please describe, in detail, what ACLI believes are the legitimate insurance benefits PPLI products provide to clients.
* * *
Original text here: https://www.finance.senate.gov/chairmans-news/wyden-continues-investigation-into-private-placement-life-insurance-schemes
Leading Defendant Insurance Law Firm Plexus Law Announces Partnership with expert.ai to Improve Operational Capabilities and Enhance Client Experience with AI-based Natural Language Technology
Rep. Owens Co-Sponsors Huntington's Disease Disability Insurance Access Act
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News