Private Placement Life Insurance · Insurance Dedicated Fund

Institutional private equity, inside the most tax-advantaged structure in the U.S. code.

A compliant PPLI structure paired with our proprietary Private Equity Insurance Dedicated Fund — engineered so private-market returns compound free of annual tax drag and transfer with significant estate tax advantages.

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0%
Tax on growth inside the policy
Evergreen
Continuously offered structure
Quarterly
Liquidity, up to 5% of NAV
0%
Carried interest

01 — The Problem We Solve

Your best-performing asset class deserves the most efficient structure.

The most sophisticated investors hold their best-performing asset class in the most efficient structure available. The PPLI structure resolves three frictions that erode everyone else's returns.

Tax Drag on Private Equity Returns

Federal, state, and net investment income taxes can claim a third or more of private equity gains held in taxable accounts. Compounded over a fund's life, that drag routinely erodes tens of millions from terminal value.

No Compliant Access Point

Institutional-grade private equity rarely exists in a form an insurance separate account can hold. Without a purpose-built Insurance Dedicated Fund, the tax structure and the asset class cannot legally meet.

Estate Planning Inefficiency

Traditional investment structures pass to heirs encumbered by embedded gains and estate tax exposure. Wealth built over decades is repriced by the tax code at precisely the wrong moment.

02 — How It Works

Five steps. One integrated structure.

Select any step to examine the mechanics. Each element is independently established practice — the value lies in the disciplined combination.

Step 1 — Client funds a compliant PPLI policy

The client (or a trust established for their benefit) purchases a private placement life insurance policy from a specialty carrier. Premium structure is flexible — typically funded over several years to satisfy §7702 testing — with institutional pricing and a minimum commitment sized for ultra-high-net-worth balance sheets.

◆This structure must comply with the investor control doctrine and insurance company diversification rules under IRC §817(h). The policyholder selects the IDF; the IDF's manager — not the policyholder — directs all underlying investment decisions.

03 — The Fund

Our Private Equity Insurance Dedicated Fund

A purpose-built private partnership available exclusively to insurance company separate accounts — the investment engine inside the policy.

Strategy
Diversified PE
Multi-manager private equity
Target Net IRR
13.0%
Adjustable assumption — flows into the tax model below
Structure
Evergreen
No vintage year — continuously offered
Liquidity
Quarterly
Up to 5% of NAV

Approach

The fund allocates across established private equity managers selected for durable underwriting discipline, realized track records across cycles, and alignment of interest. Manager selection is conducted with the same rigor an institutional limited partner would apply — reference-checked, operationally diligenced, and continuously monitored.

As an evergreen vehicle, the fund commits across deal vintages on a rolling basis, avoiding the concentration risk of a single fundraising year and providing continuous deployment of new premium.

Critically, the fund is organized as an Insurance Dedicated Fund: its interests are available only to insurance company separate accounts, and its portfolio is managed to satisfy the diversification requirements of IRC §817(h) at all times. This is the structural feature that permits private equity returns to compound inside a life insurance policy.

Fund Terms at a Glance

StructureDelaware limited partnership — evergreen, insurance-dedicated
JurisdictionUnited States
LiquidityQuarterly, up to 5% of NAV
Target Return13.0% net IRR (adjustable assumption)
Management Fee1.00%
Carried InterestNone

04 — The PPLI Advantage

Model the difference yourself.

A standard taxable account versus the PPLI structure across four IDF strategies — private equity, hedge fund, multi-strategy, and private credit, each modeled inside the same policy with identical policy costs. Move the assumptions; everything updates live.

Standard Taxable Account
$33.8M
PPLI + Private Equity IDF
$47.1M
Structural Advantage+$13.3M39% more after-tax wealth vs. taxable
Alternative strategies — same policy, same costsEnding value
PPLI + Hedge Fund IDF$27.3M
PPLI + Multi-Strategy IDF$18.8M
PPLI + Private Credit IDF$22.7M

For illustrative purposes only. Not tax or legal advice.

After-Tax Value Over Time

All PPLI lines compound tax-free at their assumed net return, less identical policy-level costs — the carrier's banded M&E schedule, cost of insurance, and administrative charges, plus a one-time premium load at inception. The taxable line reflects annual distribution taxation and liquidation tax on deferred gains.

PE 13% · Private Credit 9% · Hedge Funds 10% · Multi-Strategy 8%
Core Assumptions
Policy Cost Assumptions
M&E charge — carrier schedule (banded on account value, applied automatically each year):
0.75% to $10M  ·  0.65% $10–40M  ·  0.60% above $40M
Alternative IDF Strategies (inside PPLI)
In brief.The taxable account holds the same private equity exposure outside any structure: 2% of the balance is treated as an annual taxable distribution, with deferred appreciation taxed at liquidation. Every PPLI scenario — private equity, hedge fund, multi-strategy, and private credit — compounds tax-free at its assumed net return, less the carrier's banded M&E schedule, the cost-of-insurance and administrative charges above, and a one-time premium load at inception. Policy cost assumptions are calibrated to an actual specimen PPVUL carrier illustration (May 2025). Full formulas and year-by-year figures are in the Data & Calculations panel below.

Model Assumptions

Every figure on this page derives from the parameters below. Slider-controlled values update live; fixed values reflect the structure of the model.

ParameterCurrent ValueNotes
Initial investment (P)$5,000,000Single premium, fully allocated at inception in all scenarios.
Private equity return (r·PE)13.00%Net of the fund's 1.00% management fee. Used for both the taxable account and the PPLI + PE IDF scenario — the asset is identical; only the structure differs.
Hedge fund IDF return (r·HF)10.00%Net return assumption for a hedge fund strategy held as an IDF inside the same PPLI policy.
Multi-strategy IDF return (r·MS)8.00%Net return assumption for a multi-strategy IDF inside the same PPLI policy.
Private credit IDF return (r·PC)9.00%Net return assumption for a private credit IDF inside the same PPLI policy.
Time horizon (n)20 yearsModeling period in years.
Blended tax rate (τ)40.00%Combined federal + state + 3.8% NIIT. Applies only to the taxable account — both to annual distributions and to deferred gains at liquidation.
Distribution yield (d)2.00% (fixed)Share of the taxable account balance treated as a currently-taxable distribution each year, consistent with the firm's time-series model.
M&E charge (c·ME)Banded (schedule)Mortality & expense risk charge assessed annually on total account value, per the carrier's published schedule from an actual specimen PPVUL illustration (May 2025): 0.75% on account value to $10M, 0.65% from $10M to $40M, 0.60% above $40M. The model applies the band matching each year's beginning account value automatically. Current year-1 effective rate: 0.75%.
Cost of insurance (c·COI)0.10%Mortality charge for the death benefit, expressed as an annual percentage of account value. In the specimen illustration, COI runs from near zero in early years to roughly 0.4% of account value at advanced ages, averaging well under 0.15% over the policy's life under a minimized-death-benefit design.
Administrative & servicing (c·AD)0.25%Policy administration, consulting/servicing, and trust-level professional fees, expressed as an annual percentage of account value.
One-time premium load (L)1.80% (one-time)Applied once at inception: federal DAC tax (1.0%), state premium tax (situs-dependent; ~0.08% above the first premium band in low-tax states such as South Dakota), and distribution/placement charge (0.5%). Specimen illustration total: ~1.8% of premium.
Total recurring policy cost (c·t)1.10% in year 1c·t = c·ME(V·t−1) + c·COI + c·AD. Applied identically to all four PPLI scenarios.
Tax inside policy0% (fixed)No tax on dividends, interest, or realized gains within a compliant §7702 policy.

Policy cost assumptions are calibrated to an actual carrier illustration for a survivorship PPVUL policy (5-pay design, minimized death benefit under §7702 guideline premium testing). One-time fixed costs of policy underwriting and entity setup (typically $5,000–$11,000 in aggregate) are immaterial at the modeled premium sizes and excluded.

05 — Portfolio Construction

The structure in a whole-portfolio context.

No strategy exists in isolation. Set the share of a fully diversified portfolio held through PPLI, then compare which asset class benefits most from sitting inside the structure — while everything else remains in a standard taxable account.

Portfolio Inputs
PPLI sleeve: $5.0M funded as policy premium.
Time horizon, blended tax rate, policy costs, and the private equity, hedge fund, and private credit return assumptions are inherited from the model above.
Standardized Allocation & Tax Treatment
Asset ClassStandard → ModeledReturn / taxation (taxable account)
Public Bonds20% → unchanged4.5% — interest fully taxed annually
Public Equities30% → unchanged9.0% — 2% dividend taxed annually, gains deferred
Hedge Funds10% → unchangedSlider above — gains taxed annually (short-term)
Private Equity20% → 20% in PPLISlider above — 2% distribution, gains deferred
Private Credit10% → unchangedSlider above — income fully taxed annually
Real Estate10% → unchanged7.0% — 3% income taxed annually, gains deferred

Allocation shown for the current best scenario — Private Equity held in PPLI at the full PPLI allocation, with any balance of that class in standard account treatment. Above the standard weight, the other classes rescale automatically. Updates live with the slider above.

Method. In each modeled scenario, the full PPLI allocation above is held insidethe policy as the PPLI class (same banded M&E, COI, administrative charges, and premium load as the main model). Below the class's standard weight, the balance of that class stays in the standard taxable account and the other classes are unchanged. Above it, the PPLI class expands to the full allocation and the other classes scale down pro-rata to fill the remainder. Each scenario is compared against the identical allocation held fully taxable — so the difference is purely the structure. Deferred gains are taxed at the blended rate as if liquidated at the horizon. Real estate is simplified — depreciation, leverage, and §1031 deferral are excluded.
Same Allocation — All Taxable
$90.2M
Best PPLI Class: Private Equity
$103.5M
Pure Structural Advantage+$13.3M14.8% vs. the same allocation, taxable
Asset class held inside PPLIWith PPLIAll taxableAdvantage
Private Equity$103.5M$90.2M+$13.3M
Hedge Funds$100.3M$89.1M+$11.3M
Private Credit$96.5M$88.1M+$8.4M
Public Equities$95.2M$90.2M+$5.0M
Public Bonds$91.2M$90.2M+$1.1M
Real Estate$90.1M$87.1M+$3.0M

Each row compares the identical allocation with and without the structure — the named class at the full PPLI percentage inside the policy versus the same position held taxable. The difference is the pure structural effect.

For illustrative purposes only. Not tax or legal advice.

Pure Structural Advantage at Horizon — by Asset Class Held in PPLI

Each bar is the dollar advantage of holding the full PPLI allocation of that asset class inside the structure, versus the identical allocation held fully taxable. Above a class's standard weight, the remaining classes rescale pro-rata — the comparison always holds the asset mix constant between the PPLI-held and taxable cases.

06 — Asset Class Volatility

Risk, by asset class — a 25-year view.

Return without risk context is half a picture. The figures below summarize a quarter century of volatility across the major asset classes, drawn from our research on historical asset class returns.

Asset ClassReported Volatility (Std. Dev.)Character
Public Equities15–20%High liquidity and daily pricing, but significant volatility — the last 25 years include four major drawdowns (2000–02, 2008, 2020, 2022).
Public Bonds~4–5%The portfolio's low-volatility anchor (Bloomberg U.S. Aggregate), with annualized returns of roughly 3.5–4.5% over the period — and interest fully taxed annually.
Private Equity~9–12% (reported)Approximately 13% net annualized returns since 2000 (MSCI; Cambridge Associates pooled net 12.09%) — among the highest risk-adjusted returns of any major asset class over the period. Quarterly appraisal-based valuations smooth reported volatility.
Private Credit~3–5% (reported)Contractual income with low reported volatility (Cliffwater Direct Lending Index) — but taxed as ordinary income, making it among the least tax-efficient classes in a taxable account.
Hedge Funds~7–9%Diversifying return streams between equities and bonds in volatility terms; gains are frequently short-term in character and taxed annually.
Real Estate~5–8% (reported)Income plus appreciation with appraisal-based (NCREIF) valuations that smooth reported volatility relative to listed markets.

Source: Historical Asset Class Returns: A 25-Year Perspective for Family Offices (Integrity IDF Insights), drawing on Cambridge Associates, MSCI Private Capital Solutions, the Cliffwater Direct Lending Index, NCREIF, and Bloomberg. Private-market volatilities are as reported by appraisal-based indexes and understate economic risk relative to daily-priced markets.

07 — Why Us

The structure is only as good as its execution.

Structuring Expertise

PPLI is unforgiving of design error. Our team has spent years engineering policies that satisfy IRC §7702 testing, the investor control doctrine, and §817(h) diversification simultaneously — coordinating carriers, trust companies, and tax counsel so the architecture holds together under scrutiny, not merely on paper. We treat compliance as a design constraint from day one, never as an afterthought.

Fund Access

Because we manage our own Insurance Dedicated Fund, clients are not handed a generic menu of off-the-shelf separate account options. The fund was built for one purpose: to deliver diversified, institutionally underwritten private equity exposure in a form an insurance separate account can lawfully hold — evergreen, continuously deployed, and free of carried interest.

Institutional Network

Decades of relationships with private equity managers, specialty insurance carriers, independent trust companies, and the small community of advisors who genuinely understand this intersection. When a structure requires an actuary, a qualified appraiser, or counsel with specific doctrine experience, the right specialist is already at the table.

08 — Compliance & Structure Notes

Built inside the rules — deliberately.

What keeps this structure compliant

IRC §7702. Every policy is designed and tested to qualify as life insurance under the Internal Revenue Code, preserving the tax treatment of inside buildup and death benefit.

Investor control doctrine.The policyholder may select among available insurance dedicated funds but may not direct, recommend, or influence the underlying investments. All portfolio decisions rest solely with the IDF's investment manager.

Diversification rules — IRC §817(h). The separate account underlying each policy must satisfy ongoing diversification requirements. Our IDF is managed to these standards continuously.

Insurance-dedicated availability. The IDF is an Insurance Dedicated Fund available exclusively to insurance company separate accounts. It is not offered to direct investors.

Prospective policyholders should engage qualified tax and legal counsel before implementing any PPLI structure. Nothing on this page constitutes tax, legal, or investment advice.

09 — Begin the Conversation

Ready to explore the structure?

Initial consultations are confidential and without obligation. We work directly with principals, family offices, and their advisors.

Important Disclosures

This material and the information contained herein are provided solely for general informational, educational, and marketing purposes. The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this presentation is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Nothing in this material constitutes investment research or a sales prospectus, and it is not a recommendation to buy or sell any security, investment instrument, or product. All investments carry a certain risk, and there is no assurance that an investment will provide positive performance over any period of time. An investor may experience loss of principal. Investment decisions should always be made based on the investor's specific financial needs and objectives, goals, time horizon, and risk tolerance. Past performance is not indicative of future results.

Although all information and opinions expressed in this material were obtained in good faith from sources believed to be reliable, no representation or warranty, express or implied, is made as to its accuracy, sufficiency, completeness, or reliability. All information is subject to change without notice, and Integrity Financial Corporation is under no obligation to update or keep current the information contained herein. Certain information herein is derived from independent third-party sources, including index providers and an insurance carrier illustration, and Integrity Financial Corporation makes no representation or warranty relating to any such third-party information. Asset classes, asset allocations, and investment instruments shown are indicative only; all charts, models, and scenarios are for illustrative purposes only.

Integrity Financial Corporation is an independent investment advisor registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Integrity Financial Corporation including its investment strategies, fees, and investment personnel can be found in its Form ADV Part 2, which is available upon request.

Private Placement Variable Annuity (PPVA) and Private Placement Life Insurance (PPLI) are unregistered securities products and are not subject to the same regulatory requirements as registered products. As such, PPVA and PPLI should only be presented to accredited investors and qualified purchasers as described by the Securities Act of 1933. PPLI policies involve fees and expenses, including mortality and expense risk charges, cost of insurance, and administrative charges. The Insurance Dedicated Fund described herein is available exclusively to insurance company separate accounts and is not offered to direct investors.

Interactive models and calculators on this page are hypothetical illustrations provided for educational purposes only. Projected values depend on assumptions that may not be realized and do not represent the performance of any actual account or fund. Hypothetical results have inherent limitations and do not reflect actual trading or the impact of material economic and market factors. Target returns are objectives only and are not guaranteed. Tax treatment depends on individual circumstances and is subject to change; structures described herein must satisfy applicable requirements, including IRC §7702, the investor control doctrine, and IRC §817(h) diversification rules. Prospective purchasers should consult their own qualified legal, tax, and financial advisors before making any decision.

Investments of the type described herein may not be readily realizable. Interests in the Insurance Dedicated Fund are illiquid, valuations of private-market assets are appraisal-based and may be difficult to determine, and access to policy cash value is limited by the terms of the policy and the fund, including the liquidity limitations described above. Some investments may be subject to sudden and significant declines in value, and upon realization an investor may receive back less than the amount invested. Investors should carefully consider, with their own advisors, whether any investment or structure described herein is appropriate for their circumstances.

To the extent permitted by law, neither Integrity Financial Corporation nor any of its directors, officers, employees, or agents accepts or assumes any liability, responsibility, or duty of care for any consequences, including any loss or damage, of any person acting, or refraining from acting, in reliance on the information contained herein or for any decision based on it.

This material may not be redistributed or reproduced in whole or in part without the prior written permission of Integrity Financial Corporation.

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