The PPLI glossary

A variable life insurance policy offered by private placement to qualified investors, whose cash value is invested in institutional strategies. Why it matters: The wrapper that gives investment growth insurance tax treatment — the subject of this site. Full explanation →

The doctrine under which a policyholder who directs the underlying investments is taxed as their owner, voiding the deferral. Why it matters: The single most important compliance boundary in PPLI. Full explanation →

The Internal Revenue Code definition of a life insurance contract for tax purposes, with its actuarial tests. Why it matters: A policy that fails 7702 is not life insurance for tax purposes. Full explanation →

The diversification requirements for the investment accounts underlying variable contracts. Why it matters: Concentration beyond the 55/70/80/90 percent limits ends the tax treatment. Full explanation →

A policy funded faster than the seven-pay test allows, causing lifetime distributions to be taxed less favourably. Why it matters: MEC status changes the economics of loans and withdrawals. Full explanation →

A fund available exclusively through insurance separate accounts, managed by an independent manager. Why it matters: The standard route for holding alternative strategies compliantly inside a policy. Full explanation →

An individually managed portfolio within the insurer’s separate account, run by an appointed manager. Why it matters: The bespoke alternative to an IDF, subject to the same control and diversification rules. Full explanation →

An account whose assets are legally ring-fenced from the insurer’s general creditors. Why it matters: The protection that separates policyholder assets from carrier insolvency. Full explanation →

An investor holding at least $5 million in investments under the Investment Company Act definition. Why it matters: Many PPLI offerings are limited to qualified purchasers. Full explanation →

An investor meeting SEC income or net-worth thresholds under Regulation D. Why it matters: The baseline eligibility standard for private placements. Full explanation →

A loan from the carrier secured by policy cash value. Why it matters: The main route to liquidity without a taxable distribution — where the policy is not a MEC. Full explanation →

The insurance company issuing the policy. Why it matters: Carrier strength and pricing drive both security and economics. Full explanation →

The institution holding the separate-account assets. Why it matters: Custody arrangements determine where assets sit and how they are protected. Full explanation →

The owner of the policy — often a trust rather than an individual. Why it matters: Ownership determines estate treatment and control. Full explanation →

The life on which the policy is written. Why it matters: Determines when the death benefit pays and how the policy is underwritten. Full explanation →

The person or trust receiving the death benefit. Why it matters: Beneficiary designation is a succession decision, not a formality. Full explanation →

An irrevocable life insurance trust holding a policy outside the insured’s estate. Why it matters: The classic ownership structure for estate-tax efficiency. Full explanation →

A spousal lifetime access trust — an irrevocable trust benefiting a spouse during life. Why it matters: Combines estate exclusion with indirect access to the assets. Full explanation →

An intentionally defective grantor trust — out of the estate for transfer tax, owned by the grantor for income tax. Why it matters: A cornerstone of estate freezing, frequently paired with PPLI. Full explanation →

A trust designed around the generation-skipping transfer tax and its exemption. Why it matters: Moves wealth two or more generations down without a second layer of estate tax. Full explanation →

A long-duration trust preserving assets across multiple generations. Why it matters: The vehicle through which PPLI’s long horizon does its best work. Full explanation →

Deciding which strategies belong in which wrapper or account for after-tax efficiency. Why it matters: The discipline that decides what belongs inside a policy — and what does not. Full explanation →