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your lifetime—the funds grow tax-free (minus the insurance charges) and pay out income-tax free at your death. In the other scenario, you decide during your life that you want to take some money out of the policy. Simply with- draw the amount you
pany, select from a large number of hedge funds. Or, you can work with a third-party advisor. You can even switch advisors or have more than one. The insurance carrier will help guide you as to required diversification.
Blackman on Taxes
want, free of tax. If you want to access
Two components to
If you have a large investment portfolio, whether CDs, munic-
more than the poli- cy’s cost basis (i.e. the premiums paid), you can borrow at rea- sonable rates from the policy—also income tax-free.
your PPLI account —a tax-deferred
investment account and an insurance benefit.
ipal bonds, hedge funds, stocks or bonds, or any of the other endless parade of investment vehicles, a PPVA or PPLI is a smart wealth-multi- plying strategy. Your
With a PPLI, you’re
buying life insurance and must pass an insurance physical. Premium costs depend on your age and health.
Investment Flexibility
In either a PPVA or a PPLI, you can, with the help of the insurance com-
wealth compounds at an accelerated pace, because you won’t lose one cent to income taxes.
Thanks to Aaron Abrahms, a partner at Winged Keel Group, New York City, NY, for providing technical advice for this column. MF
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