Section 817(H) Diversification Rules and PPLIs

Offshore Tax with HTJ.tax · May 15, 2026 · 2m

One of the most important compliance requirements for Private Placement Life Insurance (PPLI) is often overlooked:👉 The policy’s investments must be sufficiently diversified.This requirement comes from:Internal Revenue Code §817(h)And failure to comply can jeopardize the entire tax treatment of the policy.⚖️ 1️⃣ What Does Section 817(h) Require?Section 817(h) provides that:• The investments underlying a variable insurance contract must be:👉 “Adequately diversified”This applies to:• Variable life insurance • Variable annuities • PPLI structures using segregated investment accounts📊 2️⃣ Why…