Investor Control Rules for Insurance Wrappers

Offshore Tax with HTJ.tax · May 8, 2026 · 2m

One of the most important principles governing private placement life insurance (PPLI) and insurance wrappers is this:👉 The policyholder cannot effectively control the investments.If they do, the IRS may disregard the insurance structure for tax purposes.⚖️ 1️⃣ What Are the Investor Control Rules?Under U.S. tax principles tied to the Internal Revenue Code:• The policyholder must not exercise direct or indirect control over investment selection inside the policy👉 Otherwise:• The policyholder may be treated as owning the underlying assets directlyThis can destroy the intended:• Tax deferral •…