2024-2025 IUL Market Data: 43+ IUL products tracked across 20 carriers with 397 indexed allocation strategies. Best caps up to 45%, participation rates up to 315%, fixed account rates 2.5%-5.5%. Data from LifeTrends analysis.
2024-2025 VUL Market Data: 29+ VUL products tracked across 15 carriers. Subaccounts range 9-91, management fees 0.15%-0.58%, fixed account rates 1.0%-4.25%. Data from LifeTrends analysis.
Whole Life 2024-2025 Data: 23+ whole life products tracked. Participating products from MassMutual (6.60%), New York Life (6.40%), Penn Mutual (6.00%). Non-forfeiture rates range 2.0%-4.5%. Data from LifeTrends analysis.
Note: Comparing DIRs should only be used to review overall product performance trends over time. It should not be used as a means by which to compare one policy versus another.
| Carrier |
2006 | 2007 | 2008 | 2009 | 2010 |
2011 | 2012 | 2013 | 2014 | 2015 |
2016 | 2017 | 2018 | 2019 | 2020 |
2021 | 2022 | 2023 | 2024 | 2025 |
Private Placement Life Insurance (PPLI): Institutionally-priced variable life insurance for qualified purchasers and accredited investors. Tax-deferred growth, tax-free access via loans (80-85% of account value), and income tax-free death benefit. Annualized fees typically 50-70 bps vs. 300-400+ bps effective tax drag.
What is PPLI?
- Institutionally-priced variable life insurance
- Available only to qualified purchasers ($5M+ investments) and accredited investors
- Allocate to both registered (mutual funds) and non-registered (alternative investments) funds
- Structured with minimum required insurance to optimize tax efficiency
- Assets held in Separate Accounts — protected from carrier credit risk
Tax Advantages (IRC References)
- Tax-Deferred Growth: IRC §7702(g)(1)(A)
- Tax-Free Reallocation: Rev. Rul. 81-225 & 82-54
- Tax-Free Access: IRC §72(e)(3) & (5) — withdrawals to basis + policy loans
- Tax-Free Death Benefit: IRC §101(a)(1)
- Access ~80-85% of account value income tax-free during lifetime
Ideal PPLI Candidates
Qualified Purchasers
$5M+ in investments under Investment Company Act of 1940
Accredited Investors
$1M+ net worth or $200K+ income per Securities Act of 1933
Tax-Inefficient Holdings
Alternative investments, hedge funds, private credit generating ordinary income
Hypothetical illustration for educational purposes only. Male age 50, $10M investment, 7% return net of 1.5% investment management fee, 75% STCG/Ordinary Income + 25% LTCG mix. Life expectancy age 90 (40 years). Not actual performance.
| Metric |
Taxable Account |
PPLI Account |
Advantage |
| Assumed Gross Return |
7.00% |
7.00% |
— |
| Federal Tax Impact |
-3.11% |
0.00% |
+3.11% |
| State Tax Impact (CA/NY/CT) |
-0.59% |
0.00% |
+0.59% |
| PPLI Fees & Charges |
0.00% |
-0.52% |
— |
| Net After-Tax Return |
3.30% |
6.48% |
+3.18% |
| Value at Life Expectancy (40 yrs) |
$46.1M |
$112.5M (benefit) |
2.4x |
Hypothetical Value Over Time ($10M Initial Investment)
YEAR 10
Taxable: $13.7M
PPLI Benefit: $21.5M
YEAR 20
Taxable: $21.8M
PPLI Benefit: $50.5M
YEAR 30
Taxable: $31.4M
PPLI Benefit: $96.6M
YEAR 40
Taxable: $46.1M
PPLI Benefit: $112.5M
Axcelus Financial (formerly Lombard International)
Leading private placement provider with $14B+ AUA, A- (Excellent) AM Best rating, 30+ years experience. A BroadRiver Asset Management portfolio company.
• 300+ Investment Options: 175+ VITs, 75+ IDFs, 50+ SMAs
• Global Booking Centers: US (PA), Bermuda, Luxembourg, Guernsey
• Catalyst™ Solution: Leverage existing in-force life insurance to purchase new PPLI with no additional medical underwriting
• Products: Individual Variable Life (IVL), Individual Variable Annuity (IVA), Group Variable Annuity (GVA)
Prudential — PruLife® Private Placement VUL
Domestic carrier with extensive IDF and VIT platform. Strong financial ratings, comprehensive product suite.
• 60+ Alternative IDFs including credit, multi-strategy, private markets
• Full Vanguard & Goldman Sachs VIT lineup
• SALI, Taylor, and Spearhead administered funds
• Available in most states (not FL, NY, Guam)
Pacific Life
Exempt PPLI — Multiple IDF platforms, comprehensive VIT access. Strong A+ financial ratings. Popular for accumulation strategies.
Zurich
International PPLI with flexible premium structures. Multi-jurisdiction capabilities for global families. Luxembourg and other booking centers.
Crown Delaware
Domestic VIT platform with institutional pricing. Registered fund focus. Simple structure for VIT-only allocations.
How Catalyst Works
Catalyst allows clients with significant existing in-force life insurance ($20M+ death benefit) to establish a new PPLI policy that leverages existing coverage for the death benefit component.
- No Medical Underwriting: Uses existing policy's death benefit
- Minimal COI Charges: Only assessed on $125K of carrier-provided death benefit
- Full Investment Flexibility: Access to complete IDF and VIT platform
- Simplified Application: Faster implementation than traditional PPLI
- Eliminates K-1s: From underlying investment partnerships
Ideal Catalyst Candidates
- Age 50+ with substantial existing life insurance coverage
- $20M+ in-force death benefit from traditional policies
- Significant assets outside of estate to invest
- Preference for alternatives or income-producing assets
- Intermediate to long-term investment horizon
- Below average health making new underwriting challenging
Key Benefit: Tax-deferred growth without needing to qualify medically for new coverage
| Feature |
Private Placement Life Insurance (PPLI) |
Private Placement Variable Annuity (PPVA) |
| Tax Deferral |
✓ Yes |
✓ Yes |
| Income Tax Elimination |
✓ Yes (death benefit) |
No (gains taxed at ordinary rates) — Yes if tax-exempt beneficiary |
| Estate Tax Elimination |
✓ Yes (if structured properly) |
No — Yes if tax-exempt beneficiary |
| Tax-Free Access During Life |
✓ 80-85% via loans (Non-MEC) |
No (10% penalty if withdrawn before 59½) |
| Death Benefit |
✓ Yes |
No |
| Medical Underwriting |
Yes (except Catalyst) |
✓ No |
| Contribution Limits |
Subject to 7702 limits |
✓ Uncapped |
| K-1 Elimination |
✓ Yes |
✓ Yes |
| Creditor Protection |
✓ Separate Account |
✓ Separate Account |
PPVA best for: uncapped deferral, no underwriting needed, philanthropic planning (tax-free to charity). PPLI best for: tax-free wealth transfer, lifetime access needs, estate planning.
Non-registered funds available only through PPLI/PPVA structures. Fund availability varies by carrier and client qualification. Some funds have capacity restrictions.
Credit Strategies
Middle Market Lending:
• Blue Owl Direct Lending IDF
• HPS Private Credit Insurance Fund
• Monroe Capital Insurance Fund
• Golub Capital Insurance Fund
• Neuberger Berman Private Debt IDF
CLO / Structured Credit:
• Clarion Structured Credit IDF
• Sound Point Structured Credit IDF
Opportunistic Credit:
• Ares Credit Strategies IDF
• Apollo Credit Strategies IDF
• Blackstone Private Credit IDF
• GoldenTree Insurance Fund
Multi-Strategy & Hedge Funds
Diversified Multi-Strategy:
• Millennium Global Estate Fund
• Blackstone IDF – Absolute Return
• Boothbay Insurance Dedicated Fund
• Third Point Insurance Dedicated Fund
• Hudson Bay Insurance Dedicated Fund
Event-Driven / Arbitrage:
• Alpine Dedicated, L.P. (Merger Arb)
• The Merger Fund VL
Long/Short Equity:
• Alkeon Insurance Growth Fund
• Arya Partners Fund (AB)
• Bowie Focused Equity IDF
Private Markets
Private Equity:
• Bain Capital IDF III
• Blackstone Private Strategies IDF
• Carlyle Private Equity Series
• Integrity Diversified PE IDF
• CAZ GP Stakes IDF
Real Estate:
• CP Lion Real Estate IDF Series
• Carlyle Real Assets Series
• BGO Strategic Capital Partners
Real Assets:
• Harvest MLP Income Fund III
• Apollo Aligned Alternatives IDF
Fund of Funds & Specialty
Diversified FoF:
• Neuberger Berman Access IDF
• EP Absolute Return Strategies
• Ironwood Insurance Fund
• Partners Capital Kestrel Fund
• Seven Bridges Multi-Strategy
Systematic / CTA:
• MLM Symmetry Insurance Fund
• Quantedge Insurance Dedicated Fund
Specialty:
• Spring Lake IDF (Municipal Bonds)
• Gold Opportunities Fund
• Athena Catholic Values Fund
Traditional mutual fund families available within PPLI structures. Class 1/Institutional shares with lower expense ratios than retail. Over 390 registered options available across carriers.
Key Fund Families
Vanguard VIF
Industry-leading low-cost index funds. Equity Index, Total Stock Market Index, Total Bond Market Index, Total International Stock, Mid-Cap Index, Real Estate Index, Growth, Capital Growth, Balanced, Conservative/Moderate Allocation
Fidelity VIP
Broad active and index options. Contrafund, Index 500, Growth, Equity-Income, Dynamic Capital Appreciation, Freedom Target Date Series (2010-2050), International Capital Appreciation
American Funds IS
Classic active management. Growth Fund, Growth-Income, Capital World Bond, Global Balanced, Asset Allocation, Washington Mutual, International, New World Fund
Goldman Sachs VIT
Strategic Growth, Mid Cap Growth/Value, US Equity Insights, Core Fixed Income, Trend Driven Allocation, Large Cap Value
BlackRock
S&P 500 Index, International Index, Small Cap Index, Global Allocation, Capital Appreciation, High Yield, 60/40 Target ETF
PIMCO VIT
Total Return, Income, All Asset, Real Return, Emerging Markets Bond, Low Duration, Global Bond Opportunities
MFS
Global Research, Growth, Value, Total Return, International Growth, Corporate Bond, Massachusetts Investors Growth
Dimensional
US Large Value, US Targeted Value, International Small/Value, Global Bond, VA Equity Allocation, Inflation-Protected
Lord Abbett
Bond-Debenture, Dividend Growth, Developing Growth, Fundamental Equity, Growth Opportunities, Short Duration Income
BNY Mellon
Stock Index Fund, Appreciation Portfolio, Government Money Market, Growth and Income Portfolio, MidCap Stock
Franklin Templeton
ClearBridge Variable Aggressive Growth, Large Cap Growth/Value, Western Asset Core Plus, Global High Yield
Grantor Trust Optimization
When trust investments are made through PPLI, the grantor's income tax liability is eliminated while trust assets continue to accumulate tax-free. Slightly reduced return for PPLI fees, but grantor tax burden eliminated entirely.
- SLAT/IDGT investments through PPLI
- Dynasty trust compounding enhanced
- Eliminate grantor tax on alternative investments
Non-Grantor Trust Planning
Trustees attracted to PPLI for multigenerational planning:
- Assets within trust grow income tax-deferred
- Tax-free distributions to beneficiaries via loans
- Trust receives income tax-free death benefit
- Effective step-up in basis for trust assets
- Insuring younger generations extends compounding
Key Considerations
Time Horizon
PPLI requires mid-to-long term investment horizon. Fees recoup over 5-7+ years. Best for 10+ year planning.
Minimum Investment
Typically $1-5M minimum premium. Qualified purchaser status ($5M+ investments) required for many IDFs.
Investor Control
IRS investor control doctrine limits policyholder direction. Must invest in IDFs offered by carrier, not direct assets.
Educational Resource: Technical understanding of IUL mechanics to help advisors explain products effectively and set appropriate client expectations.
IUL policies don't invest directly in the stock market. The carrier uses premium to purchase options that track index performance within defined limits.
Step 1: Premium Investment
Premium goes into carrier's General Account, invested in bonds/mortgages earning interest.
Step 2: Options Purchase
Carrier uses earned interest to purchase call options on S&P 500 or other indices.
Step 3: Hedging Strategy
Buy call at 101% strike, sell call at (100+cap)% strike. Creates floor and cap structure.
// Three Payout Scenarios (12% cap, 0% floor):
If S&P returns -10% → Policyholder credited: 0% (floor protection)
If S&P returns +8% → Policyholder credited: 8% (full participation)
If S&P returns +25% → Policyholder credited: 12% (cap applied)
Cost to Carrier: Floor (typically 1%) paid out of pocket + option spread costs. Cap determined by VIX index volatility and option pricing.
Regulatory Context: AG49 (Actuarial Guideline 49) was adopted in 2015 to standardize IUL illustration practices and prevent misleading projections. NAIC reopened AG49 in 2018-2019 due to multiplier concerns.
What AG49 Does
- Limits maximum illustrated rates consistently across carriers
- Requires 50/50 weighting of geometric mean lookback and 25-year historical returns
- Caps illustrated loan arbitrage at 1%
- Standardizes benchmarking methodology
Why It Matters
- Prevents "illustration wars" (pre-2015: carriers illustrated 10%+)
- Creates apples-to-apples comparisons
- AG49 max rate approximately 6.09% based on historical S&P
- Multipliers can circumvent AG49 spirit (6% + 30% = 7.8% effective)
Key Understanding: Different leverage types dramatically affect policy performance. Illustrated income can range from $45K (conservative) to $164K (ultra-leveraged) using identical premium — a 3.6x difference from leverage assumptions alone.
Standard IUL
Option Budget: 4%
AG49 Option Profits: 50%
Additional Charges: None
6% Illustrated
Lowest risk, most predictable
Index Credit Multiplier (ICM)
Option Budget: 4% + 4% charge
Multiplier: 2x on credited interest
Effective: 6% × 2 - 4% = 8%
8% Effective
Higher illustrated, more volatility
Rolling ICM
Year 1: Budget compounds
Multiplier grows to 2.5x+
Effective: 9%+ illustrated
9%+ Effective
Highest illustrated, highest risk
Risk/Return Spectrum
WL/UL
Lowest Risk
Base IUL
Low-Med
Bonus IUL
Medium
Leveraged IUL
Med-High
VUL
Highest Risk
Key Point: Multiplier charges are assessed EVERY YEAR regardless of market performance. In flat or negative years, you pay the charge but receive zero bonus.
// Break-Even Calculation:
Break-Even = Annual Charge ÷ Multiplier %
// Example: 2% charge, 30% multiplier
2% ÷ 30% = 6.7% required index return to break even
// If index returns less than 6.7%, the multiplier COSTS you money
| Scenario |
Index Return |
Multiplier Bonus (30%) |
Annual Charge |
Net Impact |
| Strong Year |
+12% |
+3.6% |
-2.0% |
+1.6% benefit |
| Moderate Year |
+6% |
+1.8% |
-2.0% |
-0.2% cost |
| Flat Year |
0% |
+0% |
-2.0% |
-2.0% cost |
| Down Year |
-15% |
+0% (floor) |
-2.0% |
-2.0% cost |
Key Conclusions
- Multipliers add volatility to volatility-controlled products
- Perform better at higher rates, worse at lower rates
- Sequence of returns matters enormously
- Circumvent AG49 spirit (6% + multiplier = 8-10% effective)
Stress Testing Results
- At Max AG49: Multiplier products slight edge
- At 6% Rate: Non-multiplier wins ($38K vs $31K income)
- At 4% Rate: Non-multiplier: $116K; Multiplier: $0 (lapse)
Balanced analysis of common criticisms with factual responses for informed client conversations.
"Be wary of overly optimistic illustrations"
Reality: Leading IUL carriers have 15-year actual track records exceeding 8%, even through the 2008 crisis. AG49 now standardizes illustration assumptions.
"Flexible caps should have you thinking twice"
Reality: Caps determined by VIX index volatility. During 2008-2009, leading carriers only lowered caps ~1%. 100+ year track records of carrier stability.
"IULs have high fees"
Reality: Average 401(k) fees run 1.5% of balance annually. Properly structured IUL averages ~1.5% over policy life. Key difference: 401(k) fees grow with balance; IUL fees stay flat.
"Taking loans in flat markets is risky"
Reality: IUL should be ONE of multiple tax-free income streams (Roth IRA, Roth 401k). In underperforming years, draw from other sources. Risk only when all eggs in IUL basket.
"Variable loans could sink your policy"
Reality: Variable loans earn index credits on loaned amounts (7%) while charging loan interest (5%) = 2% positive arbitrage when markets up. Preferred loans offer guaranteed zero net cost.