Utilizing Private Placement Life Insurance in Estate Planning

2021 is about to end, and we are still impacted by challenges that have emerged from the COVID-19 pandemic. One of the critical aspects of daily living that people have learned from the pandemic is the significance of asset protection.

To help you in this regard, private placement life insurance allows individuals to allocate alternative investments tax-efficiently while creating effective strategies that do not form with other life insurance options.

How Private Placement Life Insurance Functions

Private placement life insurance trusts are a unique kind of life insurance that provides a high cash value compared to a low death benefit. In order to lower the costs involved, it is kept as affordable as possible. The intent behind private placement life insurance is to amass its cash value to drive death benefits.

Whom Does the Private Placement Life Insurance Benefit the Most?

Private placement life insurance help in the tax-free handling of income as well as gains from the investment in the policy. The wealthier class can create their own life insurance contracts. The standard life insurance policies, on the other hand, do not address various investor instruments.

Tax Implications of Private Placement Life Insurance

It is essential to understand the following tax issues that come with private placement life insurance.

  • An individual can pass on assets from one class to another within the private placement life insurance policy without getting into any substantial capital gains consequences.
  • An individual can access the cash value present in a private placement life insurance policy without being subject to taxes.
  • Assets located under private placement life insurance grow tax deferred
  • At the time of the policy owner’s demise, the policy value, as well as the coverage for the death, can pass on to the beneficiaries without being subject to taxation

For further details, contact Keystone Asset protection and Estate Planning.