Private Placement Life Insurance (PPLI)

• Established in US in ‘90’s• Designed for High and Ultra Net Worth Clients• Provides Compliant Tax Free Compounded Earnings

inside Life Insurance Policy (tax inefficient assets)• Investments Managed by IM of Client’s Choice (wide

range of investments)• Asset Protection• Open Architecture, Full Disclosure• No loads, efficient pricing• Domestic or International • Sticky Money

FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

Introduction to Insurance and PPLI

FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

TYPE OF INSURANCE NEED

TEMPORARY PERMANENT

TERM INSURANCE UNIVERSAL LIFEVARIABLE

UNIVERSAL LIFEWHOLE LIFEPRIVATE

PLACEMENT LIFE

• Temporary Protection

• No Cash Value

• Non-Renewable at Older Ages

• Availability & Capacity Constraints

• Permanent Protection

• Non-Transparent Pricing

• Premium & Death Benefit Flexibility

• Cash Value (Tax Deferral)

• Potential Rate of Return

• Permanent Protection

• No Guaranteed ROR

• Moderately Competitive Pricing

• Availability & Capacity Constraints

• Premium & Death Benefit Flexibility

• Permanent Protection

• High Investment Flexibility

• No Guaranteed ROR

• Highly Competitive Pricing (transparent)

• Significant Capacity

• Premium & Death Benefit Flexibility

• Permanent Protection

• Insurer Manages Assets

• 3-4% Guaranteed ROR

• Capacity

• Premium & Death Benefit Flexibility

• Market Generated Returns

Typical Domestic versus International Pricing

FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

*BOY, Pricing may reflect expenses in first year or amortized in attempt to enhance early year CSV’s

3

U.S. vs. Canadian PPLI

• Major Differences:– Diversification rules IRC 817(h)– Investor Control Rev. Rul. 2003-91– Insurance Dedicated Funds (IDF)– Definition of Life Insurance 7702(a) vs MTAR

– None applicable in Canada

FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

Why Joint/Dual Compliant

• IRS: Long Reach of Uncle Sam• Definition of Life Insurance 7702(a) vs MTAR, Exemption

Test Section 306• FATCA

FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

Fact Pattern

• Male 55, non-smoker, standard risk• Premium $520,000 for 4 years • Interest rate 6%• US citizen living in Canada

FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

Summary

• First of its kind• Compliant on both sides• No investor control or diversification requirements• No DAC tax• No State or Provincial premium taxes

FOR INFORMATION ONLY AND NOT FOR PUBLIC USE