Some states fully protect the cash value and death benefits from life insurance and annuities, provided you buy them before you incur the liability. A common protective strategy is to convert exposed investments into exempt or protected insurance or annuity products. We see many variations on this theme, and some are quite complex. For example, international private placement variable universal life insurance policies (IPPVULIs) are popular planning tools. Or you can structure private annuity contracts to convert exposed assets into less exposed future or deferred income streams which would be less valuable to creditors. Similarly, IRS qualified international private placement deferred variable annuity contracts give you tax deferral and protection, as well as greater investment flexibility. Other planning opportunities exist with insurance-related products. And they are worth considering if these products meet your financial objectives beyond lawsuit-proofing. But you must ask your financial advisors about these insurance/annuity based strategies to avoid unintended tax or other planning pitfalls. Also consider whether these products are right for you both from an investment and tax viewpoint.
Is life insurance and/or annuities creditor protected?