How a PPLI policy is put in place: from jurisdiction choice to annual review

Before you start: parties and timeline

A typical allocation of roles, which varies by carrier and country:

Timeline. End to end, typically weeks to months, driven mainly by the carrier's review, the custodian's onboarding and the complexity of any in-kind assets. No carrier commits in advance to acceptance or a fixed timetable.

Stage 1: planning

1. Step 1: Confirm objectives and eligibility

   What happens. The family states what the policy is for — succession, deferral where the law allows it, portability, protection — and checks the eligibility test.

   Documents. Statement of objectives; summary balance sheet; evidence for the eligibility test — in Singapore, accredited-investor status under SFA s4A (for example net personal assets exceeding S$2 million) plus an express opt-in; in the US, accredited-investor status (for example net worth over US$1 million excluding the primary residence, per the SEC) and often qualified-purchaser status (US$5 million in investments under 15 USC 80a-2(a)(51)).

   Time. Usually the shortest step, once the documents exist.

   Who. Policyholder, adviser, and counsel where an entity or trust is the applicant.

   Common sticking points. Treating eligibility as suitability: MAS expects institutions to consider suitability for accredited investors too. Families needing short-term liquidity, or wanting to manage the portfolio themselves, are often a poor fit regardless of wealth.

2. Step 2: Obtain tax and legal advice in every relevant jurisdiction

   What happens. Counsel in each country where the policyholder, insured and beneficiaries are resident or citizens reviews the proposed design: who owns the policy, PPLI or PPVA, and what home-country rules apply to policies whose investments the holder can influence.

   Documents. Family tree with residence and citizenship of each person; existing trust and company documents; draft structure chart; written advice from each counsel.

   Time. Often the longest planning step when several countries are involved.

   Who. Independent tax and legal advisers, coordinated by the family or its lead adviser.

   Common sticking points. US connections discovered late (a US-citizen child or beneficiary brings in §7702, §817(h), investor control and FBAR); home-country anti-self-selection rules such as Ireland's PPLP regime; advice obtained for the policyholder's country only. See tax compliance.

3. Step 3: Choose the jurisdiction and the carrier

   What happens. With the tax constraints known, the family and advisers compare booking jurisdictions and carriers on the dimensions in the comparison table: asset-segregation mechanism, policyholder priority, investment rules, eligibility, reporting and the carrier's acceptance criteria.

   Documents. Carrier due-diligence pack: regulatory status of the issuing entity, solvency report, group structure, sample policy wording, schedule of charges, approved custodians and managers.

   Time. Typically several weeks, including carrier pre-screening of the case.

   Who. Adviser and counsel; the carrier's new-business team for pre-screening.

   Common sticking points. Choosing a jurisdiction before the custodian and manager are confirmed as acceptable to the carrier; comparing headline fees rather than full charge schedules; assuming one jurisdiction suits every family member. Carriers and custody lists the due-diligence questions.

Stage 2: onboarding and underwriting

1. Step 4: KYC, source of wealth and source of funds

   What happens. The carrier and the custodian each run anti-money-laundering checks on the policyholder, insured, beneficiaries and any controlling persons of entities and trusts.

   Documents. Identity and address documents; CRS and FATCA self-certifications with tax identification numbers; organisational documents for entities and trusts; a source-of-wealth narrative with supporting evidence (business sale agreements, audited accounts, inheritance documents, tax returns); source-of-funds evidence for the specific premium.

   Time. Typically weeks; longer for wealth built across several businesses or countries.

   Who. Policyholder and family office; carrier compliance; custodian compliance; sometimes accountants who prepared historic records.

   Common sticking points. Gaps in the trail for older wealth; figures that differ between narrative and evidence; missing self-certifications for trust beneficiaries or controlling persons.

2. Step 5: Medical and financial underwriting

   What happens. For PPLI, the carrier assesses the insured person's health and the financial justification for the sum insured. A PPVA may not require medical underwriting because it carries little or no life cover.

   Documents. Application and health questionnaire; medical examinations or reports as requested; financial underwriting evidence linking the sum insured to wealth and objectives; for US-compliant policies, the information needed to design the policy to meet §7702 (cash value accumulation or guideline premium test).

   Time. Typically weeks; longer if specialist reports or reinsurer review are needed.

   Who. Insured person; carrier underwriters; reinsurer where the carrier requires it.

   Common sticking points. Medical findings that make cover expensive or unavailable (a PPVA may then be considered); sums insured the carrier considers unjustified; delays obtaining medical records across borders.

Stage 3: account set-up and funding

1. Step 6: Open the custody account and appoint the investment manager

   What happens. The carrier opens an account in its own name with the custodian bank and appoints or approves the investment manager under a written mandate. In Luxembourg, for example, the custody agreement must be approved by the Commissariat aux Assurances before assets are deposited (ACA, 2019).

   Documents. Custody agreement; investment management agreement; investment profile or mandate (risk level, asset classes, limits); internal fund or dedicated-fund terms; a written communications policy defining what the policyholder may and may not discuss with the manager.

   Time. Typically weeks, running in parallel with steps 4 and 5 where the carrier allows.

   Who. Carrier; custodian; investment manager; counsel reviewing the mandate.

   Common sticking points. Custodian onboarding of the carrier entity; managers new to the carrier needing approval; mandates drafted too narrowly. A mandate that in effect mirrors the holder's instructions creates investor-control risk for US taxpayers (Rev. Rul. 2003-91; Webber).

2. Step 7: Fund the policy — cash or in kind

   What happens. The premium is paid in cash or, where the carrier accepts it, by transferring existing securities to the custody account. The policy is issued once funding and all conditions are met.

   Documents. Premium payment instructions; for in-kind premiums, a full asset list submitted for pre-approval, valuations and transfer forms; policy schedule and contract on issue; free-look notice where applicable.

   Time. Usually quick for cash; longer for in-kind transfers across custodians.

   Who. Policyholder; existing and new custodian; carrier; tax counsel on the transfer.

   Common sticking points. Assets refused at pre-approval (concentrated positions, assets the family controls, illiquid or hard-to-value holdings); transfers that are taxable disposals in the holder's country; confusion over the free-look period — in Singapore, MoneySense states that life insurers grant 14 days, refunding premiums less medical and other expenses; for investment-linked policies check how unit-value changes are treated.

Stage 4: after issue

1. Step 8: Ongoing administration and annual review

   What happens. The policy is administered every year and reviewed whenever circumstances change.

   Documents. Periodic statements and valuations; carrier confirmations of §817(h) diversification where US rules apply (see US domestic PPLI); records of communications with the manager; updated self-certifications; for US persons, FBAR filings where foreign accounts, including a policy with a cash value, exceed US$10,000 in aggregate at any time (IRS).

   Time. Ongoing; an annual review plus event-driven reviews.

   Who. Carrier (reporting, valuation, compliance testing); custodian; manager; policyholder; tax advisers in each relevant country.

   Common sticking points. An unreported change of residence; informal investment suggestions to the manager; missed home-country filings; assuming CRS or FATCA reporting replaces the holder's own tax returns.

   Tax outcomes depend on the residence of the policyholder, insured and beneficiaries. Obtain advice in each relevant jurisdiction, including Singapore, Hong Kong and mainland China where applicable. For illustrative cases of who considers PPLI and when it does not fit, see scenarios. If you need help applying this to your situation, you can register an enquiry through the contact options on this site.