P R I V A T E
P L A C E M E N T
V A R I A B L E
U N I V E R S A L
L I F E I N S U R A N C E
ENSPIRE enables investors to:
Create a lasting legacy
Explore alternative investment options
Diminish the impact of taxes
B U I L D M O R E T H A N A P O R T F O L I O .
Build a legacy.
Sensible strategies
build smart portfolios.
2
Three essential components craft the successful
portfolio: time, asset diversification, and wealth
preservation. While most investors are familiar with
the building blocks of time and diversification, wealth
preservation often requires more effort, particularly for
affluent investors contending with the voracity of taxes.
Top bracket taxpayers who already pay 39.6% in federal
taxes must also factor state and local taxes as well as
the taxation of capital gains and qualified dividends as
part of the annual erosion equation. Taxes on the whole
can be the wrecking ball of wealth preservation, leaving
investors to seek tax-smart strategies as a form of
damage control.
Even the wisest investors may unknowingly contribute
to their wealth erosion by not planning for income
and estate taxes. In many instances, though never named
on an election form, the IRS may end up as
an estate “primary beneficiary”.
An astute strategy helps shield investor assets from
the wealth erosion of taxes. A systematic investment
approach, sometimes called a Structured Alpha, is meant
to optimize the drivers that affect an investor’s risk and
return. High net worth investors should consider a plan
that combines the benefits of tax-buffering options with
long-term wealth accumulation.
A $1 million investment with an assumed annual return of 8% over 20 years produces
a very different outcome when the strategy is equipped to address tax erosion:
TAX-DEFERRED Investor A Investor B TAXABLE Now 20 Years $1M $1M
$4.6M
Grows Tax Deferred
$3M
Growth is Subject to Annual 39.6% Taxes
Investor A chooses a solution that grows
tax-deferred, and is not subject to income
nor estate taxes, as it is owned by an irrevocable
life insurance trust.
Investor B opts for a traditional,
taxable option that is subject to
income tax of 39.6% for those in
the highest tax bracket.
Tax deferral made a
$1.6M difference
in this scenario.
But tax deferral is only
one aspect of tax smart
investing. Strategies to
confront retirement income
and estate taxes should
be considered as well.
P R I V A T E P L A C E M E N T I S P O R T F O L I O
power
.
Private placement securities — like private placement life insurance —
offer a select group of accredited investors the option to effectively raise
capital without regard to the registration requirements of the federal
Securities Act of 1933, the Investment Company Act of 1940, or the rules for
public disclosure. As long as federal qualifications are met, private placements
are void of any public offering, public solicitation, or advertising; but they
must comply with state laws and all anti-fraud provisions of securities laws.
The blueprints of private placements products vary, so investors are
encouraged to consider their investment options. Generally, contributions
are significant and applied immediately for long-term, tax-free growth.
Costs are comparably low, and asset protection is reasonably high.
Private placements offer affluent investors greater alternative investment
options with more asset control and protection from tax-provoked wealth
erosion. The reward is a wealth-building tool with high profit potential.
B U I L D I N G A L E G A C Y I S A
mindset
.
The mindful investor questions what his or her legacy will be — and what
strategy can generate the most potential. Building a legacy reaches beyond
the framework of common investments, and ENSPIRE private placement
products allow investors to leverage existing wealth against the risks of
time and taxes to create and protect a lasting intergenerational legacy.
Specifically, ENSPIRE Vision
™Private Placement Variable Universal Life (PPVUL)
is designed to help investors achieve a truly lasting legacy.
4
A new Vision for
wealth accumulation
and protection
T R A D I T I O N A L L I F E I N S U R A N C E C A N B E A P O L I T E B U T T R I T E T R U T H .
ENSPIRE’s private placement platform is a true legacy building strategy.
ENSIRE’S approach completely reimagines variable universal life insurance by retaining its benefits and eliminating its
baggage. ENSPIRE harnesses the power of private placement with variable universal life insurance with emphasis on
improved simplicity, responsibility, transparency, and control.
VUL Advantages
▲
Tax-deferred growth
▲
Tax free allocations
▲
Tax free distributions
▲
Tax free death benefit
VUL Disadvantages
▼
Cumbersome underwriting
▼
Higher costs
▼
Hidden fees
▼
Restricted investment control
While variable universal life insurance (VUL) offers a number of important tax advantages it is often overlooked
as a tool for wealth building because it is typically associated with high costs and cumbersome processes.
Introducing ENSPIRE Vision
SM
Private Placement
Variable Universal Life (PPVUL).
I N S U R A N C E … R E I M A G I N E D
5
ENSPIRE Vision
SMPPVUL
Traditional VUL Offerings
Simple
Swift underwriting, with a goal of issuing policies
30 days faster than the industry average with
electronic signature processing, on-site evaluation,
and the most efficient account administration.
Complex
Traditional applications take up to 90 days
with extensive trails of paperwork, physical
assessments, approvals and underwriting.
Controllable
Extensive investment offerings complement
other portfolio assets in a entirely
open and supported architecture that
optimizes performance.
Restricted
Common insurance investments manage
risk by restricting when, where and how the
investment is allocated, not necessarily how
the investor chooses.
Transparent
Open product design with no
hidden fees, no surrender charges,
no upfront loads, and no distribution fees.
Concealed
Typical policies carry various fees and
surcharges for processing, servicing, and
management often buried within the contract.
Responsible
ENSPIRE’s more accountable,
cost efficient product design is only
0.75% for M&E service fees.
Expensive
Average VUL insurance costs as much
as 1.5% for M&E services, twice that
of ENPSIRE private placement products
1.
$
$
* State Street and McKinsey Global Institute, Global Capital Markets, December 31, 2013. 6
Why choose ENSPIRE?
Achieving the best results requires choosing the best resources.
ENSPIRE believes in the power of premier partnerships and has built
a unique brand of private placement wealth management that offers
industry-leading expertise. The collaboration of these partners creates a more
viable, visible option for investors seeking to create a successful legacy.
THE REINSURER
Gen Re is the leading provider of investment
protection and is a member of the Berkshire
Hathaway family of companies. The company’s
superior A++ rating from A.M. Best, Aa1
financial strength rating from Moody’s, and AA+
claims paying ability rating from Standard &
Poor’s reflects the company’s commitment to
wealth management. Currently, Gen Re holds
$14 billion in capital and $6 billion in premiums
under management.
ENSPIRE Investments is committed to helping affluent investors build legacies that optimize
returns and minimize taxes via our platform of reengineered private placement solutions.
ENSPIRE embraces the ideals of simplicity, responsibility, transparency and partnership as
the best methods of growing wealth to the level of a legacy above and beyond traditional
portfolios. To that end, ENSPIRE selects best-in-class partners to achieve superior results.
M E E T T H E P A R T N E R S :
THE POLICY ISSUER
IPL of South Dakota, USA, is a specialized insurer
with the singular strategic focus of providing private
placement insurance solutions for the affluent
investor to efficiently accumulate and transfer
wealth to successive generations. IPL is recognized
as an industry innovator of the proper use of
separately managed accounts with exceptional
partners in Administration, Custodians, RIA,
Investment Managers, Reinsurers and Advisors.
THE CUSTODIAN
State Street Bank is among the world’s
longest-standing and secure financial
institutions that holds and manages
money for millions of people, currently
responsible for 11 percent of the
world’s assets.* As part of the ENSPIRE
team, State Street Bank provides the
cash-holding services of the
investments.
Responsible for 11 percent
Creating the Trust
Issuing the Contract
Building the Investment
Building a Legacy
Building a Legacy
ENSPIRE Investments are solely focused on assisting the affluent investor
to build, manage, and protect a lifetime of wealth through strategic,
tax erosion-resistant alternative sources.
Underwriting
and Qualifying
Underwriting and Qualifying
Our simplified, proactive application process uses electronic signatures, on-site
evaluations, a dedicated underwriter, and direct communication to ensure more
convenient, secure set-up with reduced time, paperwork, and cost. With exception
of the in-home medical tests, nearly all processes are handled electronically for
improved speed and accuracy.
W I T H E N S P I R E P R I V A T E P L A C E M E N T S ,
I N V E S T O R S B U I L D M O R E T H A N P O R T F O L I O S —
They build legacies.
7
Issuing the Contract
We are entirely U.S.-based and managed. Upon initiating the investment,
monies are instantly wire-transferred into the holding account, and the PPVUL
policy is issued by Investors Preferred Life Insurance Company. From this
moment, the death benefit is in effect and begins its own wealth accumulation
process in tandem with that of the initial investment.
Building the Investment
We are in strategic partnership with State Street Bank to provide secure
custodianship of the investor’s cash contributions that provide the foundation
for long-term wealth growth. Investors working with their advisors have an
unparalleled selection of funds with no revenue sharing and full control of
the underlying investments. This is when the elements of time and compound
interest merge with tax deferred benefits, creating greater savings without the
erosion of taxes.
Creating the Trust
Once qualified, we enlist the favorable tax advantages of the South Dakota
state tax code to establish the trust. If a trust already exists, the investor’s
funds are set up within a South Dakota limited liability corporation (LLC)
to leverage the same tax advantages.
Investors may appoint their Investment Advisor as trustee of the account to
ensure a seamless, intergenerational transition of the wealth legacy.
Protecting the Investment
ENSPIRE private placement death benefits are fully backed by Gen Re, the
industry’s best reinsurance provider with the industry’s best available ratings
for financial strength.
Be ENSPIRED.
Client: Jack
Age: 45
Occupation: Executive at an industry-leading technology firm.
Investment Goals:
▲
To accumulate as much wealth as possible by using
a smart investment building block
▲
To create tax-free retirement income
▲
To leave a wealth legacy that can transfer income tax-free
to his heirs
8 $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1M $2.1MENSIPRE PPVUL Policy Summary:
▲
Preferred non smoker status
▲
Level death benefit
▲
Premium: $2 million for 5 years
The Strategy: in order to optimize performance, Jack
wants the lowest death benefit permitted, to qualify as
life insurance versus a modified endowment contract
(MEC). This means he can take tax-free distributions.
$2M premium
annually for the
first 5 years
$2.1M tax-free distributions
annually for 20 years
Initial Death
Benefit:
$41M
Age: 45
DAY O N E
Jack reduces his death
benefit to just under $2.5
million in order to maximize
his cash value growth. This
change complies with IRS
rules regarding life insurance
and does not create a MEC.
Y E A R 1 2
Death Benefit:
Just Under
$2.5M
Age: 57
Jacks starts taking
$2.1M tax-free annually
Y E A R 2 5
Age: 70
Death Benefit:
Almost
$25M
Cash Value:
$34.4M
$20M even after taking
$42M of retirement
income!
Y E A R 4 6
Age: 91
Death Benefit:
Almost
$20M
Cash Value:
$17.3M
Assumed 7% annual rate of return with all policy fees factored into the results.
B U I L D M O R E T H A N A P O R T F O L I O .
DISCLOSURES
Private Placement Variable Universal Life (PPVUL) is an unregistered security product and is not subject to the same regulatory requirements as registered products. Therefore, PPVULs should only be presented to accredited investors or qualified purchasers as described by the Securities Act of 1933. PPVULs combine the protection and tax advantages of life insurance with the investment potential derived from a comprehensive list of investment options. The insurance component provides death benefit coverage and the investment component provides the potential for increasing the policy’s value. The value of the investments will fluctuate, and when redeemed, may be worth more or less then their original cost. Also, there is a cost to the life insurance, which will be deducted from the investments.
Purchases, withdrawals and death benefits may be subject to tax, which can vary by jurisdiction. It is recommended that the PPVUL be purchased in conjunction with tax and legal advice from trusted advisors. This presentation contains information which has been deemed to be accurate, but in no way should replace that advice.
The content of this presentation is intended for informational use only, and should not be construed as investment, legal or tax advice or a contract. The financial information contained in this presentation is purely hypothetical, and in no way represents a guarantee of, or predicts the future of, investment and product performance.
In order to purchase a PPVUL, the policy owner and the insurance company will need to enter into a written contract, the terms of which will be described in the Offering Memorandum and PPVUL Policy. Investors should fully consider the PPVUL possible advantages and disadvantages prior to investing. Please read the Offering Memorandum carefully prior to investing in this product.
Securities offered through Bluestone Investment Banking Group, Member FINRA, SIPC.
Insurance Dedicated Fund – The PPVUL investments must be on a separate platform dedicated to the specific contract. This platform will be determined by the life insurer. The platform will have transactional and reporting links established for the FA or FA’s firm.
Investor Control – The assets within the PPVUL must not be controlled by the underlying policyholder, therefore , the FA must have clear discretionary authority to make the investment decisions within the PPVUL. Because of this lack of investor control, many investments which the underlying client may have been precluded from owning would then be open to the FA to invest. This may be particularly attractive to FAs who have clients who work in the financial services industry and US expats.
IRC Section 817(h) – 55/70/80/90 – The FA must not allocate more than: 55% into one security, 70% into two securities, 80% into three securities or 90% into four securities. If this rule is broken, the PPVUL may not qualify as a life insurance contract and therefore lose its tax advantaged status. PPVUL Expenses – Expenses for the contract may include costs for life insurance, asset based administration fees, and jurisdictional taxes. This costs will be transparent to the FA and investor prior to entering the contract. Minimum Death Benefit Qualification – Depending on the amount invested and the clients age, there will be a minimum death benefit which will need to be established in order for the PPVUL to be deemed a life insurance contract. Some clients may not be able to be approved for life insurance, depending on their health.
DISCLOSURES
Private Placement Variable Universal Life (PPVUL) is an unregistered security product and is not subject to the same regulatory requirements as registered products. Therefore, PPVULs should only be presented to accredited investors or qualified purchasers as described by the Securities Act of 1933. PPVULs combine the protection and tax advantages of life insurance with the investment potential derived from a comprehensive list of investment options. The insurance component provides death benefit coverage and the investment component provides the potential for increasing the policy’s value. The value of the investments will fluctuate, and when redeemed, may be worth more or less then their original cost. Also, there is a cost to the life insurance, which will be deducted from the investments.
Purchases, withdrawals and death benefits may be subject to tax, which can vary by jurisdiction. It is recommended that the PPVUL be purchased in conjunction with tax and legal advice from trusted advisors. This presentation contains information which has been deemed to be accurate, but in no way should replace that advice.
The content of this presentation is intended for informational use only, and should not be construed as investment, legal or tax advice or a contract. The financial information contained in this presentation is purely hypothetical, and in no way represents a guarantee of, or predicts the future of, investment and product performance.
In order to purchase a PPVUL, the policy owner and the insurance company will need to enter into a written contract, the terms of which will be described in the Offering Memorandum and PPVUL Policy. Investors should fully consider the PPVUL possible advantages and disadvantages prior to investing. Please read the Offering Memorandum carefully prior to investing in this product.
Securities offered through ENSPIRE Investments, Member FINRA, SIPC. Insurance Dedicated Fund – The PPVUL investments must be on a separate platform dedicated to the specific contract. This platform will be determined by the life insurer. The platform will have transactional and reporting links established for the FA or FA’s firm.
Investor Control – The assets within the PPVUL must not be controlled by the underlying policyholder, therefore , the FA must have clear discretionary authority to make the investment decisions within the PPVUL. Because of this lack of investor control, many investments which the underlying client may have been precluded from owning would then be open to the FA to invest. This may be particularly attractive to FAs who have clients who work in the financial services industry and US expats.
IRC Section 817(h) – 55/70/80/90 – The FA must not allocate more than: 55% into one security, 70% into two securities, 80% into three securities or 90% into four securities. If this rule is broken, the PPVUL may not qualify as a life insurance contract and therefore lose its tax advantaged status. PPVUL Expenses – Expenses for the contract may include costs for life insurance, asset based administration fees, and jurisdictional taxes. This costs will be transparent to the FA and investor prior to entering the contract. Minimum Death Benefit Qualification – Depending on the amount invested and the clients age, there will be a minimum death benefit which will need to be established in order for the PPVUL to be deemed a life insurance contract. Some clients may not be able to be approved for life insurance, depending on their health.
