You Don’t Have A Return Problem,You Have A Tax Structure Problem
After tax returns are what matter. Sophisticated investors design portfolios to minimize tax drag and let capital compound uninterrupted.
The Result?
Materially larger after-tax wealth that compounds over decades.
You worked hard to build your wealth. Work with Lumida to grow it tax efficiently.
Key Benefits?
→ Defer or eliminate annual taxes on gains and income
→ Access institutional strategies (credit, hedge funds, private investments) without tax inefficiency
→ Preserve liquidity via policy loans — no forced sales or capital gains triggers
→ Transfer wealth efficiently to heirs with tax advantages
Who is this For?
PPLI is designed for a narrow set of ultra-high-net-worth investors. It may be appropriate if you meet most of the following criteria:
→ Significant net worth. Over $25 MM+ in assets. Typically more compelling as assets approach $50 MM to $100MM+
→ Exposed to high tax drag investments. You invest in taxable strategies that throw off income or capital gains such as hedge funds, private credit, and real estate
→ Have a long-term horizon Comfortable investing in 10 to 15+ year time frames and willing to coordinate with tax and investment advisors
Build Wealth That Compounds More Efficiently
Two portfolios with identical pre-tax returns can end up dramatically different after taxes.
In a typical portfolio gains taxed annually. Capital leaks every year via taxes. The pace of compounding slows
In a tax-optimized portfolio your assets can grow tax-deferred or tax-free. This allows more capital to stay invested. Compounding accelerates
Where Insurance Fits? Private Placement Life Insurance (PPLI)
The primary purpose for insurance isn't for protection. The insurance is a legal container for tax efficiency. Insurance is used as a vehicle for tax mitigation.
Inside a properly structured PPLI:
→ Investments grow tax-deferred or tax-free
→ Trading and income don't trigger taxes
→ The insurer is the legal owner → you retain economic benefits
→ Access institutional strategies via Insurance Dedicated Funds (IDFs) — independent managers handle compliance and decisions
PPLI is perfect for tax-inefficient assets:
→ Private credit & lending
→ Hedge funds
→ Private equity
→ Active or high-turnover strategies
Additional Features:
→ Access liquidity via policy loans (no credit check, no forced repayment)
→ Estate planning — the death benefit passes efficiently, often estate-tax-free in trusts
Timing Is Everything
These structures work best when implemented early — before significant appreciation or liquidity events. Waiting reduces the opportunity..
Lumida helps design those structures so more capital stays invested, compounds longer, and transfers more efficiently over time.
How Sophisticated Families Think Differently
Most tax planning is reactive.
You earn income. Then you ask how to reduce the tax.
The wealthy do the opposite.
They decide where assets live first, then decide how those assets are invested.
That decision determines:
→ Whether gains are taxed annually or not
→ Whether income creates friction
→ Whether compounding is interrupted
This is not about exploiting tax loopholes. It is about applying the uncommon tax insight to your advantage like other sophisticated families.
Why This Changes Compounding
When Investments Are Taxed Every Year, Capital Leaks.
When taxes are deferred or removed:
→ More capital stays invested
→ Reinvestment happens faster
→ Compounding accelerates
This matters most for strategies that are otherwise tax-inefficient.
→ Credit.
→ Hedge funds.
→ Private investments.
→ Active strategies.
The return does not change. The after-tax result does.
Private Placement Life Insurance
PPLI is a specific structure that has value when:
→ Asset values are meaningful
→ The time horizon is measured in decades
→ Estate planning is part of the objective
Inside a properly structured PPLI policy:
→ Investment growth can compound tax-free
→ The death benefit can pass efficiently to heirs
→ Assets remain private and insulated
→ This is why PPLI is often used by family offices.
Not because it boosts returns. Because it changes what happens after returns are earned.
When held inside a trust, PPLI can also remove assets from the taxable estate while allowing continued growth inside the structure.
That combination is difficult to replicate elsewhere.
Liquidity Without Breaking the Structure
Another overlooked feature of insurance structures is liquidity.
Certain policies allow borrowing against the accumulated value.
This can create access to capital:
→ Without selling investments
→ Without triggering capital gains
→ Without dismantling the structure
The loan is secured by the policy itself. There is no credit check. No forced repayment schedule.
Used correctly, this allows families to meet liquidity needs while keeping assets fully invested.
It reduces forced decisions during market stress or personal events.
Why Timing Matters
These structures work best when built early.
→ Before appreciation.
→ Before liquidity.
→ Before assets become locked in.
Once value increases, the opportunity narrows.
Most people learn about these strategies too late. After the tax bill is unavoidable.
What the Guide Is Meant to Do
The Tax Mitigation Guide explains:
→ How these insurance structures work in practice
→ Why they are used by family offices
→ Where the trade-offs are
→ When they make sense, and when they don’t
Our Role
Lumida’s role is to design and coordinate these structures.
Lumida is an SEC Registered Investment Advisor with specialized expertise in alternative investments including hedge funds, digital assets, private credit and other complex strategies.
Lumida works with sophisticated families and exited Founders to protect and grow their wealth.
We sit at the intersection of:
→ Investment strategy
→ Tax planning
→ Legal architecture
We do not sell insurance products. We are a fiduciary.
We design systems that hold over time and adapt as circumstances change.
FAQ
Is this just another insurance product?
No. These strategies do not use insurance for protection or payouts.
Insurance is used as a legal and tax structure.
The value comes from how investments are held and taxed inside the structure, not from the insurance itself.
Retail insurance products do not offer this functionality.
Why can investments grow without annual taxes inside insurance?
Because the insurance company is the legal owner of the assets.
You retain the economic benefit, but the assets sit on the insurer’s balance sheet.
As a result:
Trading inside the policy does not trigger capital gains
Income is not taxed as it is earned
Taxes are deferred or eliminated depending on structure
This treatment is defined in tax law and has existed for decades.
Why can’t I just manage the investments myself inside the policy?
Direct control breaks the structure. The separation of control and decision making is what preserves the tax treatment.
If the investor selects or controls specific investments, the IRS treats the investor as the owner.
That removes the tax benefit.
This is why a sophisticated Investment Advisor like Lumida is required, and it’s also why Insurance Dedicated Funds exist.
The client does not lose their voice. The separation is one of Execution vs. Strategy.
Client Control: The client works with the advisor to define the Investment Objectives, Risk Profile, and Mandate for the policy. This is the strategic direction.
Advisor Role: The relationship is advisory and collaborative; the client provides market views and suggestions to the advisor.
Independent Execution: An independent professional manager then selects the specific assets and executes trades within the client-defined mandate.
This separation is legally required to preserve the tax-deferred status of the PPLI structure
What kinds of investments can be held inside these structures?
Typically, institutional strategies.
This can include:
Credit and lending strategies
Hedge funds
Private investments
Diversified alternative portfolios
The structure is most useful when investments are otherwise tax-inefficient.
How is Private Placement Life Insurance different from a Roth IRA or trust?
Both public and private strategies.
The insurance structure does not restrict the type of asset. It restricts who controls investment decisions.
As long as:
An independent manager selects the investments
The portfolio meets diversification requirements
The policyholder sets objectives, not trades
Public market strategies can operate inside the structure just like private ones.
In practice, this often includes:
Public equities
Credit and income strategies
Systematic or rules-based portfolios
Actively managed public funds
This is why insurance structures are frequently used with public strategies.
Public markets tend to generate:
Frequent trading
Short-term gains
Ordinary income
Outside the structure, that creates annual tax drag.Inside the structure, those same strategies can compound without yearly taxation.
The investment strategy stays the same. The after-tax outcome changes.
That is where much of the value comes from.
Can I access my capital once it’s inside the structure?
Yes, in certain cases.
Some policies allow borrowing against the policy’s value.
This can provide liquidity:
Without selling assets
Without triggering capital gains
Without breaking the structure
The loan is secured by the policy itself. Interest applies, and misuse can reduce benefits, which is why structure and oversight matter.
Who is this typically appropriate for?
These strategies are generally used when:
Asset values are meaningful
Time horizons are long
Tax exposure is material
Estate planning is a consideration
They are not designed for short-term planning or small balances. The upfront complexity only makes sense when the long-term tax benefit outweighs the cost.
Unlock the Power of Tax-Optimized Wealth: Download our Tax Mitigation Guide and learn how sophisticated families grow and protect wealth for generations.
Disclaimer
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