Abstract

The authors start with a brief reminder of the changes experienced in the hedge fund industry over the last 25 years to focus on a feature that has barely changed: hedge funds are typically tax-inefficient. They then review the main benefits associated with the use of variable life insurance or annuity policies and point to the fact that these benefits go beyond tax-efficiency. They conclude that, although hedge fund life insurance and annuities are not for everyone, in the right circumstances, they can provide very significant benefits to both policyholder investors and hedge fund managers. Recent developments have restricted some forms of hedge fund life insurance and annuities, but have not limited the very significant tax advantages of properly structured policies.

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