Definition of Private Replacement Variable Life (PPVL)

life insurance policy in which the cash value and in some circumstances the death benefit will vary according to the investment performance of an underlying portfolio usually comprised of equities. Thus, this product is considered to be a variable life insurance policy. In order for a PPVL policy to be sold in any state, the insurance company must be approved to distribute that product in the state and the product must be approved for distribution. Section 817 of the Internal Revenue Code, which discusses the tax treatment of variable policies, and Regulation 1.817.5, which discusses the diversification requirements for life insurance policies, variable dollar annuities and endowment insurance policies pertain to the tax considerations for the PPVL. All variable life insurance policies are considered securities and are subject to federal securities law. One life insurance product currently being directed on a private placement basis is corporate-owned variable life insurance.