PPLI PrimerPPLI Primer

Charles L. Ratner, national director of personal insurance counseling, Ernst & Young LLP, Clevela

Cash value life insurance — through its tax-deferred growth of the cash value, tax-free access to that cash value and a tax-free death benefit — can provide tax-sensitive investors with benefits that include income tax deferral, conversion and diversification. These benefits can enable life insurance to compare favorably with other forms of investment that generate significant taxable income annually and upon disposition. But of course, the astute investor making that comparison has to be convinced that the favorable tax characteristics of the life policy overcome its inherent frictional costs.

Any type of cash value product can generate these...