Unlocking Wealth: Using Bespoke PPLI to Transform Your Advisory Practice

The bespoke (customized) version of Private Placement Life Insurance (PPLI) is a powerful yet underutilized tool in wealth management. For wealth advisors engaged in exit planning and business succession planning, understanding and leveraging customized PPLI products and strategies early in the planning process can provide substantial benefits for their clients and their own practices. This article aims to demystify curated PPLI, highlighting why it's invaluable for advisors and how it can elevate their practice to new heights. 

The Unique Advantages of PPLI 

PPLI combines traditional life insurance's tax and non-tax benefits with unparalleled investment flexibility. Let’s delve into the five critical reasons why wealth advisors should incorporate PPLI into their strategies: 

1. Near Unlimited Investment Flexibility 

One of the most compelling features of PPLI is the vast universe of investments available. Unlike traditional insurance policies, which are limited to the issuing company’s portfolio, PPLI policies allow investments in private equity, cryptocurrencies, real estate, hedge funds, and more. This flexibility means advisors can tailor investment strategies to meet each client's specific needs without being constrained by an insurer’s pre-packaged funds. 

2. Tax Advantages and Wealth Accumulation 

The tax benefits of PPLI are identical to traditional non-MEC life insurance. The cash value within a PPLI policy grows tax-advantaged, and upon the policyholder’s death, the death benefit is also income tax-free. Moreover, policyholders can access the policy’s cash value tax-free through withdrawals up to the cost basis or loans against the policy. This structure can profoundly increase the client's wealth while enhancing the advisor’s assets under management (AUM) and profitability - all without any additional market risk. 

3. Cost Efficiency and Competitive Edge 

PPLI policies can be integrated with domestic life insurance, leveraging investment performance to offset premium costs. This can reduce the net out-of-pocket cost for death benefits by 35% to 50%. In competitive scenarios, this cost efficiency gives advisors a significant edge, making life insurance more affordable and attractive to clients. 

4. Early Planning and Relationship Building

Incorporating PPLI early in the planning process helps cement long-term client relationships. Advisors can add value and profitability without waiting for significant events like business sales. This proactive approach enhances client satisfaction and strengthens the advisor’s role as a trusted long-term partner.  

With proper planning, advisors can secure millions of dollars in death benefits to ensure the client's family is protected if the business builder or entrepreneur dies before the planning is completed. Through the thoughtful and strategic use of PPLI, this safety net can typically be arranged without additional cost to the client. By leveraging the inherent performance and cost savings that stem from advanced PPLI planning to cover the cost of insurance, advisors armed with this knowledge can set themselves apart, providing substantial protection and peace of mind to their clients. This further solidifies their role as indispensable partners in wealth management.  

5. Marketing and Growth Opportunities 

PPLI products are still relatively novel, offering advisors a unique marketing opportunity. By becoming early adopters, advisors can establish themselves as innovators within their professional communities. This differentiates them from competitors and attracts new clients seeking sophisticated and tailored wealth management solutions. 

Implementing PPLI in Your Practice 

To effectively integrate PPLI into your advisory practice, consider the following steps: 

1. Educate Yourself and Your Team

Understanding the intricacies of the bespoke version of PPLI is crucial. Attend workshops and webinars, and consult with experts to deepen your knowledge.

2. Expand Your Possibilities

Recognize that the added flexibility of investment options, including a wide range of private economic interests, affords unparalleled strategic advantages, both within and outside of the exit planning process. This expansion of possibilities enables advisors to craft highly tailored solutions that can address unique client needs and goals, setting their practice apart from the competition.

3. Identify Suitable Clients

Not every HNW client will be a perfect fit for PPLI. Focus on high-net-worth individuals and business owners who can benefit most from the investment flexibility, cost savings, and tax advantages inherent with life insurance. 

4. Collaborate with Trusted Partners

Work with reputable insurance companies and investment managers who specialize in PPLI. Their expertise can help you design and manage policies that align with your clients’ objectives.

5. Communicate the Benefits Clearly

Educate your clients about the advantages of PPLI, emphasizing the tax benefits, investment opportunities, and cost efficiencies. Use real-world examples to illustrate potential outcomes. 

6. Stay Compliant

Ensure that all PPLI policies meet the statutory requirements under sections §7702 and §817(h) of the Internal Revenue Code and the Investor Control Doctrine to maintain their favorable tax treatment. 

Maximize Your Advisory Potential

Private Placement Life Insurance is not just a financial product; it’s a strategic tool that can transform how wealth advisors serve their clients. By offering unmatched investment flexibility, significant tax advantages on cash value and death benefit from life insurance, and cost efficiencies, PPLI can enhance client relationships, increase AUM, and provide a competitive edge in the marketplace. Now is the time to explore and integrate PPLI into your practice, positioning yourself as a forward-thinking advisor in the wealth management industry. 

Curious about how customized Private Placement Life Insurance (PPLI) can revolutionize your practice and benefit your clients? Begin your journey today by exploring the wealth of information available at the Exit Planning Institute. Unlock unparalleled growth opportunities for your practice while offering enhanced benefits to your clients. 

Meet The Author

Brad Barros brings over 35 years of leadership in risk mitigation, adept at resolving complex issues and pioneering industry advancements. His extensive experience includes founding and steering various life and casualty insurance entities, launching a global joint venture with a "Big 8" NYSE-listed CPA firm, and establishing two national consulting firms that offer customized strategies for AI risk management and sophisticated tax solutions tailored to family offices, high-net-worth individuals, and professionals in entertainment and sports. 

An alumnus of the University of Delaware, Brad is passionately committed to philanthropy, actively supporting the B+ Foundation and Casey Cares Foundation.

For more information, he can be reached at BBarros@privateriskpartners.com or through JSellers@privateriskpartners.com.