How COI Charges Impact PPLI Returns

About this episode

This episode discusses the impact of Cost of Insurance charges on the performance of Private Placement Life Insurance.

One of the most important—but least understood—factors affecting Private Placement Life Insurance (PPLI) performance is: 👉 COI — Cost of Insurance charges These charges can materially affect long-term policy returns, especially over time. ⚖️ 1️⃣ What Is COI? COI stands for: 👉 Cost of Insurance It represents the recurring insurance expense charged by the carrier for: • Mortality risk • Policy administration • Insurance coverage obligations 💸 2️⃣ How COI Affects Policy Performance COI charges are deducted from: • The policy’s cash value This means: 👉 Less money remains invested inside the policy. 📉 3️⃣ Direct Impact on Returns Because COI functions as an ongoing expense: • It reduces: Net investment growth Compounding efficiency Long-term Internal Rate of Return (IRR) Even if the underlying investments perform well: 👉 Higher COI charges can materially reduce overall policy performance. 📊 4️⃣ Why COI Becomes More Important Over Time A critical feature of many policies: 👉 COI charges generally increase with age. As the insured gets older: • Mortality risk rises • Insurance expenses increase Result: ⚠️ The drag on returns tends to grow over time. 🧠 5️⃣ Long-Term IRR…

Topics covered

• Cost of Insurance
• PPLI performance
• long-term returns
• insurance expenses
• investment growth

Keywords

• PPLI
• Cost of Insurance
• insurance charges
• investment returns
• long-term growth

Mentioned in this episode

Organizations: HTJ.tax

Products: Private Placement Life Insurance

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