US lawmakers target private life-insurance policies used by ultra-wealthy to avoid taxes

A niche segment of US life-insurance, known as private placement life-insurance (PPLI), allows multimillion-dollar investors to funnel money into insurer-managed accounts that can invest in private equity, real-estate and other high-risk assets while deferring taxes on returns. Because the insurer is listed as the legal owner, investment income is not.

Senator Ron Wyden argues the arrangement has become a loophole for the ultra-rich, and his draft legislation would eliminate the tax shelter by taxing earnings annually and mandating transparency about who holds the policies. Existing contracts would have a limited window to convert or be terminated, and insurers failing to comply could face substantial fines. The measure has yet to gain co-sponsors and must clear a Senate Finance Committee where Republicans hold the majority, leaving its future uncertain.