PPLI and PPVA
PPLI and PPVA are US compliant insurance products, which are offered to “qualified purchasers” and “accredited investors” under SEC guidelines. It is not a retail insurance offering and is offered by specialist providers in various offshore jurisdictions such as Bermuda and the Bahamas. The cost of setting up and maintaining a Private Placement policy is lower than a retail offering, which allows the policy to potentially perform far better over time without the higher costs associated with its retail counterparts.
Vie International is a leader in the design and implementation of offshore Private Placement insurance products for use in solving a number of complex planning strategies. We work closely with the tax advisors and trustees of the ultra affluent to manage accumulation problems for foreign non-grantor trusts with US beneficiaries and to re-position investment portfolios for persons who plan to move or immigrate permanently to the US.
Collective investments such as Mutual Funds, Unit Trusts, OEICs, Investment Trusts and Hedge Funds, that do not provide US reporting, can be subject to adverse US tax consequences if they are held directly by US taxpayers. We have a wealth of experience working with clients and their investment managers to structure non US investment portfolios within Private Placement Insurance Contracts.
Under the Investor Control Doctrine, the policyholder cannot direct investment strategy or make investment decisions on the “segregated asset account”. In addition, there cannot be any prearranged plan or agreement between the policyholder and the discretionary investment manager either directly or indirectly. The investment mandate needs to be a pure discretionary agreement between the policyholder and investment manager. At Vie International, we can act as an intermediary between the policyholder and the investment manager to assist with compliance issues as they relate to the Investor Control Doctrine.
The diversification rules require that each “segregated asset account” supporting a Private Placement Policy must contain a certain amount of diversification under code section 817(H) of the Internal Revenue Code. Investment managers are required to certify on a quarterly basis with the life insurance company that they have complied with both the investor control doctrine and the diversification rules. As part of the on-going administration of our Private Placement Business, we work closely with Private Placement Insurance Companies and Investment Managers on the both of these issues.