The Smart Planner’s Primer on PPLI and PPVA

Private Placement Life Insurance (PPLI) and Private Placement Variable Annuities (PPVA) are no longer niche tools reserved for the ultra-wealthy with offshore trusts and European bank accounts. These structures have quietly become some of the most efficient, flexible, and forward-thinking solutions available to families, advisors, and institutions that want to reduce tax drag, enhance legacy planning, and take greater control over how wealth is grown and ultimately passed on.

At Life Insurance Strategies Group, we help advisors and their clients navigate the complexity of these products and decide if they’re the right fit. This guide is a primer for anyone ready to understand how PPLI and PPVA work, why they’ve gained traction, and what makes them so effective when used correctly.

What Is PPLI, Really?

PPLI is life insurance—but not the kind you buy off the shelf. Instead of being built around a fixed premium and standard investment lineup, PPLI is a customizable insurance contract that allows qualified investors to allocate cash value into institutional investments, including hedge funds, private credit, private equity, and other alternatives.

When properly structured, PPLI offers:

Income tax-free death benefits
Tax-deferred investment growth (or potentially tax-free if held until death)
Access to high-quality, illiquid, or alternative investments
A compliant framework for wealth transfer and asset protection

You can get a fresh look at how PPLI works here, or read more about whether PPLI is a fit for your clients based on their goals and jurisdiction.

The PPVA Alternative

While PPLI includes a death benefit, Private Placement Variable Annuities (PPVA) strip that away, leaving just the investment component. That makes PPVA a simpler, lower-cost wrapper that still allows for tax-deferred growth inside a flexible annuity contract.

PPVA is a popular choice among:

Individuals who don’t need life insurance
Tax-exempt institutions like foundations and endowments
Donors and philanthropists who want tax efficiency before gifting assets

We’ve explored how PPVA is being used by institutions and tax-exempt investors to create scalable, long-term investment efficiency, and how investors are increasingly “going pro” with the strategy as platforms improve.

Understanding Investor Control

One of the most important compliance considerations in both PPLI and PPVA is investor control. And it’s where many well-intentioned strategies can go wrong.

The IRS prohibits policyholders from directly or indirectly controlling the investment decisions inside a life insurance or annuity contract. That means while clients can choose among available investment options, they cannot direct trades or dictate specific actions within those accounts. Violating this rule could result in the entire contract being disqualified and treated as a taxable investment account.

The good news? Platforms today have evolved to offer curated investment options that satisfy investor interest without triggering control issues. Through proper design and documentation, clients can gain exposure to the asset classes they want without running afoul of IRS guidelines.

We regularly help advisors and fund managers structure investment menus, interface with insurance carriers, and educate clients about how to stay on the right side of investor control rules while still meeting their planning goals. In short, we often answer questions like, "Can I put my yacht in a PPLI?"

SMAs vs. IDFs: Choosing the Right Investment Structure

Another major design decision in any PPLI or PPVA structure is whether to use Separately Managed Accounts (SMAs) or Insurance Dedicated Funds (IDFs).

IDFs are pooled vehicles created specifically for insurance platforms. They’re managed in accordance with IRS investor control rules, are available only within life insurance and annuity contracts, and often offer lower fees and better scalability for platforms. For many clients, IDFs offer plug-and-play simplicity with curated access to high-quality managers.

SMAs, on the other hand, allow for a more personalized investment experience. But with that flexibility comes additional compliance burden. To be used inside a policy, SMAs must meet strict IRS guidelines and platform requirements. The manager must treat all policyholders the same, avoid custom mandates, and ensure that all trades are made at the manager’s discretion—not the client’s.

Choosing between SMAs and IDFs depends on several factors:

Desired level of customization
Available investment menu on the platform
Comfort with oversight and reporting
Cost and transparency preferences

We walk advisors and clients through this decision on every case, helping them match the right investment structure to their goals while maintaining compliance and efficiency.

Why Are People Using These Tools?

At their core, both PPLI and PPVA solve for a single, costly problem: tax drag.

Without proper planning, investors face layers of taxation on ordinary income, capital gains, estate value, and more. By using insurance-based wrappers, families and institutions can build tax-efficient structures that allow for:

Compound growth without annual taxation
Tax-efficient rebalancing
Strategic timing of distributions
Better integration with legacy and philanthropic plans

And these benefits don’t go unnoticed. Family offices, for example, are increasingly turning to PPLI as part of their long-term planning strategy. In fact, the industry has started to send a clear message to RIAs: We’re here to help you do this right.

The Evolving Landscape

The U.S. market for PPLI and PPVA has changed significantly in the past decade. Platforms have matured. Carrier due diligence has improved. Pricing has become more transparent. And more planners, especially in the independent RIA space, are embracing these solutions as an extension of good planning.

In our recent market report, we break down the forces shaping adoption. At the same time, the press has taken notice. Our founder, Jay Judas, recently wrote in InsuranceNewsNet about the growing use of PPLI by affluent families, and why legacy planning is a key driver of this shift.

Is This a Fit?

These tools aren’t for everyone. But if your client—or your own financial situation—involves:

A taxable portfolio of $5M+
A desire to invest in alternative assets
Long-term wealth transfer or legacy goals
Frustration with annual tax inefficiencies

…then PPLI or PPVA may be worth exploring further.

We routinely work with RIAs, tax attorneys, accountants, and family office teams to analyze fit and structure solutions accordingly.

Where We Come In

Life Insurance Strategies Group isn’t a platform. We’re not a carrier. We’re an independent consultancy helping financial professionals and their clients make informed, strategic decisions about advanced insurance planning.

We help you evaluate fit, compare platform options, coordinate with other advisors, and implement the strategy in a way that’s elegant, compliant, and aligned with your goals.

If you're ready to explore PPLI or PPVA, or simply want to understand them better, get in touch and let’s start the conversation.

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