It was back in the early 1980’s when the Rockefeller family first negotiated using customized separate accounts for their insurance needs. Since then many asset managers have created separate accounts with insurance companies to manage those assets inside a PPLI policy.
Executive Planning Inc. has been in business since 1985. A specialized life insurance firm that has tremendous experience in the BOLI and COLI markets. Understanding the inherent pricing issues of all variable life polices, the owner Paul F Berlin CLU created a new way of pricing a PPLI policy and was issued a US Patent (#8,660,863), which takes all the guessing out of the pricing of these policies. Since all the current PPLI policies have current and guaranteed sets of assumptions, people buying these policies are bound by the insurance company executives promising to keep their current set of charges. However, as we have seen over the past 36 months, with the low interest rate environment, many carriers have gone to raising the internal charges of universal life policies. Transamerica did this in the BOLI space; what was once an unheard of industry practice is becoming the norm.
The patent prices the PPLI policy with one guaranteed asset based insurance charge. An asset based insurance charge is important because it solves the inherent net amount at risk issue ALL current PPLI policies have (and all variable policies in general).
NET AMOUNT AT RISK: Here is how current products work: they take the difference between the death benefit and cash value and charge you a term charge based on that difference. The problem arises when there is a down market. The net amount of risk (DB – CV = NAR) INCREASES, therefore, so do the insurance charges. This is the inherent flaw in that way of current pricing. The Patent solves all of this with the asset-based charge, because if the separate account decreases in value, so does the asset based insurance charge!!
The client can “wrap” their platform with an insurance dedicated fund (IDF). The Asset Manager is designated as the exclusive manager of the IDF from the insurance company, and only the insurance company can deposit money into the account. This is the ideal wealth accumulation product.
Click HERE to read “MANAGING INSURANCE CAPACITY FOR ENHANCED RISK-ADJUSTED RETURNS – The New Paradigm for the High Net Worth Market”.
Click HERE to read the article “Private Placement Life Insurance (PPLI) Makes Hedge Funds Less Taxing” from Trusts and Estates Publication.
GUARANTEED ASSET BASED INSURANCE
Why a Guaranteed Asset based insurance charge is the ultimate way in pricing a life insurance policy:
Click HERE to read the “PPLI POLICY STRUCTURE – THE GOOD, THE BAD, THE UGLY”
Click HERE to read “THE HITS JUST KEEP ON COMING”