For high-net-worth individuals looking to grow and protect wealth, private placement life insurance (PPLI) has become a go-to tool. But as more clients seek out this strategy, reinsurance capacity can become a constraint, especially for older clients or those with large in-force policies.
That’s where Private Mortality Coverage (PMC) comes in.
At Investors Preferred, PMC is redefining what’s possible in advanced life insurance planning by offering a flexible solution for cases that might otherwise be stopped short by traditional limits.
PMC is a custom solution that pairs the tax-deferral and investment flexibility of PPLI with mortality coverage sourced from private insurance capacity rather than the traditional reinsurance marketplace. In other words, it’s life insurance, but without many of the limitations you’ve come to expect from the conventional system. Instead of relying solely on reinsurance capacity, PMC utilizes privately arranged mortality coverage to support policy issuance.
The result? More flexibility in design, more capacity when needed, and more control for clients and their advisors.
PMC isn’t for everyone, but it can be an effective option for clients who:
This structure is often used in trust-owned cases, such as dynasty or grantor trusts, legacy planning, or where traditional life insurance capacity is insufficient.
PMC helps resolve many of the common challenges that arise in PPLI case design, especially for clients with complex needs. One of the biggest roadblocks is capacity: traditional reinsurers often have limits, particularly for older clients or those with large amounts of existing coverage. PMC broadens access by tapping into alternative mortality sources. It also brings a high level of customization to the table, allowing advisors to wrap existing policies or tailor structures around specific planning objectives. And because the policy holds investments within a life insurance chassis, gains can grow tax-deferred, potentially allowing wealth to pass outside the taxable estate when the structure is properly designed3.
The advantages don’t stop there. PMC delivers many of the core benefits associated with private placement life insurance: tax-deferred investment growth, potential asset protection under favorable jurisdictions like South Dakota4, and transparent, institutional pricing. PMC offers flexibility with regards to investment strategy, with options that include insurance-dedicated funds or separate accounts managed by their own advisor (subject to carrier approval)5.
In short, PMC isn’t just a workaround. It’s a refined planning tool for advisors serving clients who demand clarity, control, and long-term efficiency.
Let’s take a simplified example:
A 70-year-old non-smoking male has a $90 million dynasty trust that holds $30 million in life insurance and $60 million in investments. Working with his advisory team, $22 million in liquid assets and the existing policy are allocated to a policy structured using PMC.
The policy is owned by a South Dakota LLC and benefits from a trust-owned structure. Over time, the trust ends up holding a $52 million life insurance policy, with cash value growing tax-deferred, and continues to manage $68 million in investment assets6.
In this example, the cost of insurance improves in later years, and the policy’s projected internal rate of return (IRR) at year 30 is approximately 6.30%7.
It’s not just about enhancing return. It’s about giving the trust more efficient tools to do its job: transfer wealth, protect legacy, and preserve capital.
PMC isn’t just a workaround. It’s a strategic enhancement. It can complement existing estate plans, preserve access to tax-efficient investment growth, and expand capacity for clients whose financial complexity demands custom solutions.
At Investors Preferred, PMC is part of a broader commitment to flexible, advisor-driven planning. Whether used on its own or blended with traditional reinsurance, it’s a valuable addition to the private placement toolkit.
Want to learn more about how PMC could support your next case? Reach out to the Investors Preferred team. Or ask us for a sample illustration to see how it could apply to your client’s unique situation.
This material is for informational and educational purposes only and is not intended as tax, legal, or investment advice. Clients should consult with qualified advisors before implementing any planning strategy. Products are offered by private placement only and are not registered with the SEC. Availability is limited to licensed jurisdictions.
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[1] PMC is available only qualified purchasers (as defined in the Investment Company Act of 1940).
[2] Client eligibility is determined based on several underwriting factors and is subject to product availability and approval in licensed jurisdictions.
[3] Tax-deferral is available so long as the policy meets the definition of life insurance under IRC §7702 and the investment portfolio complies with the diversification requirements of IRC §817(h).
[4] Asset protection varies by state. South Dakota is frequently used for its favorable asset protection and tax treatment but does not guarantee creditor protection in all situations.
[5] All investment options must be approved by Investors Preferred and comply with IRS rules regarding investor control. Not all managers or asset classes may be available.
[6] Example is hypothetical and for illustrative purposes only. Assumes a 7.00% annual return, 60% portfolio turnover taxed at an effective rate of 53.5%, and mortality & expense charges as disclosed by Investors Preferred.
[7] Policy charges, investment performance, and tax law changes may materially affect future results. No guarantees are made or implied.
