US Senate finance committee chair Ron Wyden has written to Prudential Financial, Zurich Insurance Group, Lombard International and the American Council of Life Insurers (ACLI) as a part of his investigation into the rising use of personal placement life insurance (PPLI) schemes by rich US taxpayers.
In the letters, Wyden stated he believes PPLI insurance policies are getting used “as a tax shelter for the wealthiest Americans”.
He added that the US Senate is “concerned that these insurance vehicles are being used, without a genuine insurance purpose, to invest in hedge funds and other investments while avoiding billions of dollars in federal taxes”.
PPLI is a multi-jurisdictional wealth planning software out there on a non-public placement foundation to rich households and excessive internet price people. The product relies on life insurance and annuity insurance policies that permit for tailor-made and internationally diversified funding methods.
It is usually also referred to as “private banking insurance” or “insurance wrapper”. PPLI presents a planning construction, similar to trusts, corporations, foundations and funds that permits an internationally diversified portfolio to be wrapped throughout the authorized construction of a life insurance coverage.
Investigation
Wyden’s letters are a part of an investigation – which began together with his first letter to Lombard International on 15 August 2022, adopted by letters to Prudential Financial, Zurich Insurance Group and the ACLI on 21 September 2022.
He is investigating using PPLI insurance policies and different loopholes exploited by the wealthiest 1% of Americans to keep away from paying their justifiable share in taxes. Within the 21 September letters, he requested the three corporations how they “may be assisting millionaires and billionaires minimise or eliminate taxes on investment income”.
Within the 21 September letter, Wyden requested round 10 questions on PPLI to the businesses. The questions surrounded the scope of PPLI business and advertising and marketing of the merchandise. Wyden additionally requested the mixture quantity of business the carriers are doing in PPLI, how they calculate the worth, how PPLI is marketed and the authorized justification of claims, in addition to different areas.
International Adviser has contacted Prudential Financial, Zurich Insurance Group, Lombard International and the ACLI for a remark, however the insurers didn’t reply in time for publication.
ACLI spokesperson Whit Corman stated to IA: “We are reviewing Senator Wyden’s letter now. The fundamental purpose of life insurance is to protect families financially in the worst of times. Today, consumers have a choice of policies to meet their needs with cash-value life insurance being a key component to American families’ long-term financial security, along with home ownership and retirement savings.”
In August 2022, life assurance supplier Lombard International Group agreed to promote its US and Bermuda business to various fastened revenue supervisor BroadRiver Asset Management and its affiliated entities.
DoJ investigation
Wyden’s investigation follows a current inquiry by the US division of justice concerning the involvement of PPLI insurance policies in numerous offshore tax evasion schemes.
In May 2021, Swiss Life pleaded responsible to utilizing PPLI insurance policies and associated funding accounts as “insurance wrappers” to assist 1000’s of US taxpayers’ conceal their possession of belongings offshore and evade paying US taxes.
