FREQUENTLY ASKED QUESTIONS

Can I transfer a US annuity to PPLI?

Generally yes. This process is called a 1035 exchange. Before applying, clients should first check with their US insurer whether they would allow for a transfer to a carrier in a different country as sometimes US carriers have internal policies that preclude them from transferring funds out of the US.

Do I have ready access to my funds in PPLI?

Yes, you can access funds in your PPLI at any time by submitting your signed instructions and payment details. If the policy account has enough liquidity the wire will take place immediately. If there is not enough liquidity in the policy account, the insurer will sell the required portion of the investments (which you can dictate) and make the payment as soon as the account is in receipt of the proceeds. Wire transfers from Switzerland to larger US financial institutions generally take a one or two business days.

What are the typical fees associated with PPLI

For a standard type of PPLI plan, the investor should consider an establishment and an annual fee charged by the insurer. There is also the investment fees that need to be considered in the equation, and that would be those of the asset manager and custody & transactions fees.

 

The fees will then largely depend on the investment amount. Because of BFI’s long-time relationship and volume with different insurance and banking service provider, our clients can benefit from attractive terms on both sides.

Can my PPLI include precious metals investments?

PPLI carriers usually allow for different types of precious metals investments.  Generally, the types of precious metals that can be included in PPLI are physical metals (bullion bars and coins), ETF’s, precious metal funds, mining shares, and other related investments that are normally tradable.  Collectibles and similar are not allowed directly into the policy. Other options may be available for such situations.

If I hold physical metals within a PPLI, could I take physical delivery of those metals upon request?

Carriers do allow for in-kind redemptions, however in the case of physical metals it needs to be organized similar to a payment of cash, meaning that the metals have to be delivered to an institution, such as a bank or Global Gold for an account of the policyholder.

Is it better to purchase physical metals through PPLI or directly with Global Gold?

It will largely depend on the reasons to incorporate the physical metals as part of your portfolio. In this context, PPLI offers advantages in the realms of asset protection, beneficiary designation and tax benefits. Global Gold on the other hand offers direct ownership of the metals and is probably suitable for those investors that acquire physical metals as an insurance against a large scale banking and financial crisis.

Will I need to travel to set up a PPLI structure?

Travelling is generally mandatory. Reason being that international PPLI is not registered in the US and they can only be offered to qualified individuals on private placement basis. Nonetheless, travelling is still highly recommended in order to personally meet the different parties involved. We will be happy to meet with you and to organize meetings possibly fitting banks and asset managers.

Has a Legal Opinion been issued?

Most carriers have obtained legal opinions on their products from large and top legal firms. These opinions can generally be made available to the prospective policyholders but they will be asked to not rely on them as personal advice and will be invited to obtain a personal legal opinion if so desired.

 

Normally, if the policy is created in line with the IRC and thus, with the legal opinion of the insurer, there may not be the need to incur in the expenses of a legal opinion. Nevertheless in some more significantly complex cases a legal a personal legal opinion would make sense.

Does PPLI offer privacy and confidentiality?

PPLI is reported in your FBAR and 8938 forms annually. However, there is a large extent of privacy when using PPLI in the sense that (1) the policy is not registered in any public registry, (2) the policy is issued by jurisdictions with strong confidentiality regulation; and (3) the transactions occurring within PPLI are made in the name of the insurer as the owner of the PPLI funds. Thus, your name is not readily or publicly available.

Can I invest through my IRA?

Yes, the IRA custodian must be located in the US and it is the funds underlying that account that can be invested in international investments, such as a Private Placement Deferred Variable Annuity (PPVA). Note that IRA’s do not allow for life insurance as an investments, and hence PPLI are not possible to be included. However, as said before PPVA are possible. 

Check with your current IRA custodian whether they would allow your IRA to invest in PPVA.   Otherwise we can recommend an IRA custodian to you.

What are the disadvantages?

PPLI offers a number of options and flexibility and can become complex. That is one of the reasons too, why it is made available to qualified investors only. PPLI is certainly not a do-it-yourself and will require that you engage expert advice.

How much do I have to invest to work with you guys? Is there a minimum investment? How much is it?

How much you invest in an international PPLI type of plan will largely depend on your specific needs and goals. Nevertheless, given the insurers and asset managers minimum requirements to be able to offer a cost-efficient solution, a minimum of $1 million dollars or equivalent should be considered.

What role does BFI Consulting play in the context of PPLI?

BFI serves as your representative and advisor. We have a 20+ years of expertise in advising private individuals and families on the different matters that surround PPLI. Our contribution is best compared to that of a general contractor. Together with our clients, we analyze their needs and objectives and design a PPLI plan. We then coordinate the implementation of the PPLI structure with the different parties: the insurer, the bank(s), the investment adviser, fiduciaries as needed, etc.

 

Once established, BFI monitors and administers the structures and provides with transparent and timely performance reports. Our overall array of services provides our clients with a one-stop, family office type of relationship.

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