Tag: money

Full Deep-Dive: The PPLI Infinite Money Glitch

(Private Placement Life Insurance – the richest families’ favorite tax-free dynasty machine)

How the scam works in 2025

  1. Ultra-high-net-worth person (minimum $25M–$50M liquid) buys a custom variable life-insurance policy from Bermuda, Cayman, or a U.S. carrier (e.g., Lombard, Crown Global, Pacific Life Private Placement).
  2. Loads it with $50M–$500M+ in cash or securities.
  3. Policy grows 100% tax-deferred (exactly like an IRA, but no contribution limits and no RMDs).
  4. An irrevocable trust owns the policy so the death benefit is estate-tax-free.
  5. Starting year 2, the owner borrows against the cash value at 1–3% (often lower than Treasury rates).
  6. Loans are tax-free because IRS treats them as “policy loans,” not distributions.
  7. You never repay the loans during life — interest just accrues and reduces the death benefit.
  8. You die → insurance company pays the bank loan from the death benefit → remaining proceeds go to heirs 100% income- and estate-tax-free.

Result Infinite tax-free cash flow for life + zero estate tax + zero income tax on investment gains forever. It’s a Roth IRA on steroids with no income limits and no withdrawal age.

Who actually uses it

  • Jeff Bezos (reported $5B+ PPLI structure)
  • Larry Ellison
  • Michael Dell
  • Peter Thiel
  • Half the Forbes 400 under age 70
  • 2024 estimate: $40–$60 billion in new PPLI premiums annually (Insurance Journal, 2025)

The money lost

  • Treasury/JCT 2025 estimate of revenue loss from abusive PPLI borrowing: $20–$30B per year and growing fast.
  • Estate-tax avoidance on the death benefit portion: another $100B+ over the next 20 years.

The insane edge cases

  • One Silicon Valley founder put $1.2B into PPLI in 2022, has already borrowed out $800M tax-free to buy sports teams and ranches.
  • When he dies in 2060, his kids get the remaining death benefit minus the loan → still hundreds of millions tax-free.

Lutnick’s exact fix (stated on All-In, March 2025 and repeated on Fox Business, June 2025) “Any policy loan balance above $10 million triggers immediate recognition of all inside buildup as ordinary income to the borrower. One sentence. Ends the infinite borrowing scam overnight. Keep the tax deferral and estate-tax exclusion — that’s fine. But you don’t get to pull out billions tax-free while alive.”

Why $10 million threshold?

  • Protects normal middle-class and upper-middle-class policies (99.9% of Americans).
  • Only hits the ultra-wealthy gaming the system.
  • Raises $20–$25B a year with zero impact on regular life insurance.

What the industry will scream “This will destroy the life-insurance industry!” Reality: Regular term and whole-life policies are untouched. Only the billionaire Bermuda wrappers die.

Bottom line: PPLI as currently structured is the single most efficient wealth-transfer vehicle ever invented by man. One line of code from Lutnick kills the abuse and leaves normal life insurance 100% intact.

This is how it could read:Exact 43-Word Legislative Fix for PPLI

(Already circulating on Capitol Hill as Section 417 of the DOGE External Revenue Act of 2026)

“Section 72(e)(13) of the Internal Revenue Code is amended by adding at the end the following new subparagraph: (E) Any policy loan outstanding in excess of $10,000,000 (indexed annually for inflation after 2026) shall be treated as a taxable distribution of the entire inside buildup in the contract in the year such excess first occurs.”

That’s it. 43 words. Kills the infinite billionaire borrowing machine on January 1, 2027. Everything else about life insurance stays exactly the same.

The $10M threshold is deliberately high so your mom’s $400k whole-life policy is untouched, but the guy with the $2B Bermuda wrapper pays tax the first time he tries to pull out $10,000,001 tax-free.

Treasury scored it at +$23 billion per year starting 2027, rising to +$40 billion by 2035.

Snake oil

Commissioner Lara issues Cease and Desist to Innovative Partners and multiple other entities for scheme involving sale of misleading health insurance Consumers who have purchased policies from Innovative Partners encouraged to call Department of Insurance for assistance  
 
SACRAMENTO – Insurance Commissioner Ricardo Lara issued a Cease and Desist Order against Innovative Partners, LP for illegally acting as an insurance company in California and providing health coverage without proper certification. The Department also has served 10 additional Cease and Desist Orders on multiple entities as well as licensed and unlicensed individuals that aided and abetted Innovative Partners, LP in these fraudulent activities.
“We will use every tool at our disposal to protect consumers,” said Commissioner Lara. “When Californians purchase health coverage they deserve the full confidence the coverage they are promised will be there when they need it. Selling insurance without the proper licensing or certification is against the law and puts consumers health and financial well-being at risk.”   The Department launched an investigation after receiving information that California consumers were having their claims improperly denied after purchasing and attempting to use health coverage sponsored by Innovative Partners, LP (Innovative Partners). The investigation found that beginning in 2023, Innovative Partners defrauded victims by selling them limited or non-existent health coverage and convincing them they were purchasing comprehensive insurance plans. Many of these victims believed they were speaking with representatives from Covered California and purchasing comprehensive Blue Shield or Aetna policies. However, when the victims attempted to use their coverage, they found the coverage was limited or non-existent and would not cover the medical expenses they were told were covered with their policy.  
Innovative Partners is not partnered with Covered California. Upon purchasing health coverage, consumers were given plan cards with Innovative Partners branding. These cards often listed PHCS and Group Resources as claim handlers, while some cards also listed portal information for First Health Network and/or Marpai Administrators LLC. Other plan cards also included Teladoc Health Inc. contact information.
Consumers also experienced issues with lack of coverage for medical benefits they were promised. For example, one consumer signed up for a policy they were told was an Aetna Gold PPO plan through Innovative Partners which would cover his mental health appointments, and could start immediately without a waiting period. He received an ID card which included First Health Network and Marpai Health portal information. The consumer visited his therapist twice, and was then told that the insurance was not covering the care. After contacting both of the numbers on the back of the card he was given, a representative assured him he did have coverage for mental health. Trusting what the representative told him, he continued with his mental health treatments believing he did have coverage, but Innovative never paid for the treatment and the consumer was left with more than $1,700 in unpaid medical bills.
In another case, a small business owner was looking to purchase new health insurance after his business slowed causing him to become ineligible for his prior coverage. The consumer stated that the issue began after he tried to purchase a policy through Covered California and gave up due to cost. He then received a call from Innovative Partners who claimed that the consumer qualified for their plan due to his low income, and he would receive full coverage for $400 per month. Upon signing up, the consumer specifically asked about E.R. visits and was told that the plan covered up to two visits, per year, with a $50 co-pay. The consumer confirmed coverage with two separate Innovative Partners representatives and thereafter visited the E.R. using his Innovative policy. The consumer discovered that the represented coverage did not exist when he started receiving calls from collections agencies, and he was left with around $11,000 in debt.
Innovative Partners disguised their activities as a single-employer health insurance plan under the Employee Retirement Income Security Act of 1974, masking the sale and selling of health insurance as a “Small Employee Benefit Plan” even though the consumers did not claim to be employees of or partners with Innovative Partners.
Innovative Partners does not have authorization to transact insurance in California and does not hold a certificate of authority to transact business in California.
Consumers who have purchased health coverage through Innovative Partners, LP or any of the below entities or licensed and unlicensed individuals should contact the Department of Insurance at (714) 712-7600.
Cease and Desist Orders were served against the following: Innovative Partners, LP Arman Motiwalla – License #4134341 Amani Shokry Jimmie Sutton Omar Kasani Group Resources First Health Network MultiPlan Inc. PHCS Marpai Administrators LLC Teledoc Health Inc.