Everybody likes a guarantee, whether it be that your investments will grow at a certain rate each year, your car will run trouble free for 5 years, or the retailer will honour your return of goods if you are not fully satisfied. To borrow from any dictionary, a guarantee is a formal assurance (often in writing) that certain conditions will be fulfilled.

However, the downside is that this often comes with an additional fixed cost, whether explicit or embedded in the price of the good or service, and often this cost turns out to be disproportionate to the perceived peace of mind or value the guarantee brings. What if you could just pay for the guarantee only when you need it, and only for the level of guarantee that you need?

Innovations in Private Placement Life Insurance are developing to provide a way of offering protection of the value of a certain amount payable to loved ones upon the death of a policyholder, whilst still offering full upside growth potential of the assets underlying the insurance contract.

By moving the mind-set of protection away from the hedging of asset values using complicated and often expensive market derivatives contracts, to instead using periodic short term life cover to make up any shortfall against an initial investment, the process can be materially simplified and the cost consequently reduced.

PDF of Full Article appears below.

• Innovation in PPLI