Ultrawealthy Americans are turning to private-placement life insurance contracts as a tax-free investment vehicle, often described as a 'Roth IRA on steroids.' These policies allow unlimited investments in alternative assets like hedge funds, private credit, and private real estate to grow without triggering capital gains or income taxes. However, investors must surrender control of their assets to an adviser-managed vehicle, which deters some who wish to directly manage their portfolios. The five largest carriers held over $44 billion in assets under administration in such policies by the end of 2025.

To qualify, individuals must be accredited investors with at least $1 million in assets or qualified purchasers with $5 million, and typically fund policies with at least $5 million in premiums. Fees can reach 2% to 4% annually. advisers like Tom Callahan of BFA Family Offices report that a quarter of ultra-high-net-worth families are either using or considering these contracts, including a private-equity executive planning to invest $30 million to $50 million in distributions over five years into diversified alternative assets.