Asset protection is essential for any individual with assets worth protecting. There are ways to make tax-free investments and to protect your assets. Life insurance is a useful investment tool. An individual or a couple can make an investment in an Irrevocable Life Insurance Trust in a foreign country. This provides the benefits of life insurance, tax-free growth of an asset portfolio, and asset protection. If the insured dies while the policy is in effect, tax-free distributions are made to the beneficiaries.
Private Placement Life Insurance (PPLI) is another form of tax-free investment that offers asset protection. It is a type of life insurance offered privately and requires a premium commitment of at least $1 million. Multiple contributors of an Irrevocable Life Insurance Trust can pool their assets in order to meet the minimum premium amount. The funds are held in separate accounts in PPLI so they are protected creditors of the insurance carrier.
Investments in the PPLI grow tax-free during the lifetime of the insured. When the insured dies the proceeds are paid to the trust without estate tax. PPLI is useful for holding both short-term investments and long-term high-yield investments.
Offshore PPLI is more accessible than domestic PPLI. Companies offering PPLI in the U.S. require a minimum of from $10 million to $50 million as premium commitment. Offshore insurance companies require a minimum premium commitment of $1 million. Therefore, the moderately wealthy can enjoy tax advantages and asset protection benefits. More than one grantor can provide assets to satisfy the premium commitment requirement for an offshore PPLI policy. Assets that are covered by PPLI grow free of income and capital gain taxes. Offshore PPLI’s offer investment flexibility. The policy’s funds can be invested in high growth assets like start-up companies and hedge funds and the policy assets are held in separate accounts that are owned and managed by the insurance company.