Cover Story

The Big Payback


A billionaire wants to invest but doesn't need the returns any time soon and wants to avoid the tax on the profits.

A world of tax-beating products is available through the insurance industry. Many types of so-called permanent life insurance—including whole life, universal life, and variable universal life insurance—combine a death benefit with an investment vehicle. The returns and the death benefit are free of income tax. If the policy is owned by a certain type of trust, the estate tax can be avoided as well. "It is a crucial piece of any high-net-worth tax planning in my experience," says Michael D. Weinberg, president of an insurance firm that specializes in planning for high-net-worth individuals.

Next: IRA Monte Carlo

Drucker is a reporter-at-large for Bloomberg News.

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