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Private Placement Life Insurance (PPLI)

Private Placement Life Insurance (PPLI). Established in US in ‘ 90 ’ s Designed for High and Ultra Net Worth Clients Provides Compliant Tax Free Compounded Earnings inside Life Insurance Policy (tax inefficient assets) Investments Managed by IM of Client ’ s Choice (wide range of investments)

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Private Placement Life Insurance (PPLI)

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  1. Private Placement Life Insurance (PPLI) • Established in US in ‘90’s • Designed for High and Ultra Net Worth Clients • Provides Compliant Tax Free Compounded Earnings inside Life Insurance Policy (tax inefficient assets) • Investments Managed by IM of Client’s Choice (wide range of investments) • Asset Protection • Open Architecture, Full Disclosure • No loads, efficient pricing • Domestic or International • Sticky Money FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

  2. Introduction to Insurance and PPLI TYPE OF INSURANCE NEED TEMPORARY PERMANENT • Temporary Protection • No Cash Value • Non-Renewable at Older Ages • Availability & Capacity Constraints • Permanent Protection • Non-Transparent Pricing • Premium & Death Benefit Flexibility • Cash Value (Tax Deferral) • Potential Rate of Return • Permanent Protection • Insurer Manages Assets • 3-4% Guaranteed ROR • Capacity • Premium & Death Benefit Flexibility • Market Generated Returns • Permanent Protection • No Guaranteed ROR • Moderately Competitive Pricing • Availability & Capacity Constraints • Premium & Death Benefit Flexibility • Permanent Protection • High Investment Flexibility • No Guaranteed ROR • Highly Competitive Pricing (transparent) • Significant Capacity • Premium & Death Benefit Flexibility TERM INSURANCE UNIVERSAL LIFE VARIABLE UNIVERSAL LIFE PRIVATE PLACEMENT LIFE WHOLE LIFE FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

  3. Typical Domestic versus International Pricing *BOY, Pricing may reflect expenses in first year or amortized in attempt to enhance early year CSV’s FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

  4. U.S. vs. Canadian PPLI • Major Differences: • Diversification rules IRC 817(h) • Investor Control Rev. Rul. 2003-91 • Insurance Dedicated Funds (IDF) • Definition of Life Insurance 7702(a) vs MTAR • None applicable in Canada FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

  5. Why Joint/Dual Compliant • IRS: Long Reach of Uncle Sam • Definition of Life Insurance 7702(a) vs MTAR, Exemption Test Section 306 • FATCA FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

  6. Fact Pattern • Male 55, non-smoker, standard risk • Premium $520,000 for 4 years • Interest rate 6% • US citizen living in Canada

  7. FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

  8. FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

  9. FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

  10. Summary • First of its kind • Compliant on both sides • No investor control or diversification requirements • No DAC tax • No State or Provincial premium taxes FOR INFORMATION ONLY AND NOT FOR PUBLIC USE

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