Private loans pay most of their return as interest, and interest is taxed every year as ordinary income. That puts private credit among the strategies where an insurance wrapper changes the outcome most. Here is how it works, what to check, and which insurance-dedicated funds exist.
A US family holding a private credit fund directly receives interest, and pays tax on it in the year it arrives: up to 37% federal income tax plus the 3.8% net investment income tax, before any state tax. Little of the return is deferred, because a loan fund has few unrealised gains. Inside a policy that meets the tax rules, the same income is not taxed as it is earned.
| Held directly | Held in a policy | |
|---|---|---|
| Return assumed | 9.0% a year, all interest | 9.0% a year, all interest |
| Yearly cost | Federal tax at 40.8% of the income | Policy charges assumed at 1.0% of assets |
| Net growth | 5.33% | 8.00% |
| USD 10 million after 10 years | USD 16.8 million | USD 21.6 million |
| USD 10 million after 20 years | USD 28.2 million | USD 46.6 million |
An illustration of the arithmetic, not a forecast. It assumes a 9.0% yearly return paid entirely as interest, the top federal rates, no state tax, and policy charges of 1.0% a year; real policy costs, fund fees, returns and tax positions differ. The policy figure assumes the policy keeps its tax status throughout and is held until death; surrendering a policy brings the deferred gain into tax.
A policy can hold a private fund only through an insurance-dedicated fund: one the public can reach only through an insurance policy, held by insurers' separate accounts and the few other holders the Treasury rules allow, such as the insurer's general account or the manager when it seeds the fund. A family's existing holding in the ordinary version of a fund cannot simply be moved into the policy.
The separate account must meet section 817(h): no single investment above 55% of its assets, two above 70%, three above 80%, four above 90%. For an insurance-dedicated fund the test looks through to the fund's own holdings.
Under the investor control rules the policyholder may pick among the insurer's funds but may not direct the fund's investments or talk to the manager about them. The US Tax Court applied this line in Webber (2015).
Credit funds often redeem quarterly, with notice periods and limits. Compare them with the cash the policy needs for its charges, loans and withdrawals.
Loans have no market price, so ask who values them and how often. Fund fees come on top of the policy's charges and change the arithmetic above.
24 private credit funds are rated in the Q4 2026 edition, shown here with one row per manager and its highest-rated fund. 13 more are in preparation. The stars rate the controls, record and standing that a fund and its manager report to the SEC. They do not measure returns and do not say that a fund suits a particular policy.
The fifteen largest of the 28 private credit funds with gross assets on file, from the latest Form ADV of each adviser. Most are series of the SALI platform. A fund being listed says nothing about its quality or whether a given insurer offers it.
| Manager | Fund | Gross assets | Minimum, as filed | Rating |
|---|---|---|---|---|
| GC Advisors LLC | Golub Capital Insurance Fund | USD 2.77 billion | USD 1,000,000 | |
| Audax Management Company (NY), LLC (Audax Private Debt) | Audax Senior Loan IDF Fund-E, L.P. | USD 1.46 billion | None stated | |
| Shenkman Capital Management, Inc. | Shenkman Private Credit Insurance Fund I LP | USD 1.35 billion | None stated | In preparation |
| Ares Management LLC | Ares Credit Strategies Insurance Dedicated Fund | USD 944.0 million | USD 250,000 | |
| Sixth Street Insurance Dedicated Fund I Management, L.P. | Sixth Street Insurance Dedicated Fund I | USD 495.0 million | USD 10,000,000 | In preparation |
| HPS Investment Partners, LLC | HPS Private Credit Insurance Fund | USD 306.9 million | USD 10,000,000 | In preparation |
| Oaktree Capital Management, L.P. | Oaktree Insurance Dedicated Fund II | USD 221.3 million | USD 100,000,000 | |
| Apollo Capital Management, L.P. | Apollo Debt Solutions IDF, LP | USD 152.9 million | Nominal (USD 1) | |
| Blue Owl Credit Private Fund Advisors LLC | Blue Owl Direct Lending Insurance Dedicated Fund | USD 112.8 million | USD 1,000,000 | |
| Monroe Capital Management Advisors LLC | Monroe Capital Insurance Fund | USD 111.3 million | USD 5,000,000 | |
| MGG Investment Group LP | MGG Insurance Fund | USD 110.5 million | USD 1,000,000 | |
| Crescent Capital Group LP | Crescent Insurance Solutions | USD 109.0 million | USD 10,000,000 | |
| Oaktree Capital Management, L.P. | Oaktree Insurance Dedicated Fund | USD 108.9 million | USD 100,000,000 | |
| GC Advisors LLC | Golub Capital Insurance Fund IV | USD 84.4 million | USD 50,000 | |
| Pennington Partners & Co., LLC | Pennington Alternative Income IDF, LP | USD 84.4 million | USD 1,000,000 |
Strategy labels come from the fund name or, where the name is silent, from the manager's main business; the second kind is confirmed against the manager's brochure before publication.
Prepared by the PPLI.com research desk, checked on 4 November 2026. The fund list is rebuilt every quarter from new filings.
Important. Educational research only, not tax, legal or investment advice and not an offer of any fund or policy. Whether a policy keeps its tax status depends on its terms and on how it is run; take advice in the countries concerned.
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