What is a segregated account in PPLI?
A PPLI structure has two layers: the insurance contract, and the portfolio that backs it. The portfolio sits in a segregated account, recorded apart from the insurer's own assets, and the value of the structure follows that portfolio. The same arrangement goes by other names. US insurers call it a separate account, and an account can be divided into sub-accounts, each following its own investment strategy.
How it works
In Bermuda, the Segregated Accounts Companies Act 2000 allows a registered company, including an insurer, to link assets and liabilities to individual segregated accounts. Assets linked to an account are held as a separate fund, available only to meet the liabilities linked to that account, and protected from the company's general creditors and from claims on its other accounts. A segregated account is not a separate legal person. In a company registered under the Incorporated Segregated Accounts Companies Act 2019, each account is instead a company in its own right.
In practice
- The insurer opens the account when it issues the structure, and the premium, in cash or in specie, is linked to it.
- A custodian holds the assets, and an investment manager approved by the insurer runs them to the agreed mandate.
- Returns are credited to the account and charges deducted from it, so the cash value reflects that portfolio.
- Creditors of the insurer's general account have no claim on assets linked to the account.
In a PPLI structure
Segregation protects the portfolio from the insurer's other liabilities, and it lets one structure hold a portfolio designed for one family, including listed securities, private equity, private credit, property and digital assets, within the insurer's approved asset classes. The insurer holds legal title to the assets. The policy terms give the policyholder a contractual right to the cash value and the death benefit, and no interest in the assets themselves. A trust or foundation is often the policyholder.
Common questions
What is the difference between a segregated account and a separate account?
They describe the same arrangement: assets backing particular contracts, kept apart from the insurer's general account. Separate account is the usual US term, and segregated account is the Bermuda statutory term. Sub-accounts are divisions within an account, each following its own strategy.
Are assets in a segregated account protected if the insurer fails?
Under the Bermuda statute, assets linked to a segregated account are available only for the liabilities linked to that account, and protected from the insurer's general creditors. The portfolio still carries its own investment risk.
Go deeper: how PPLI works and asset protection and diversification.
Sources
- Segregated Accounts Companies Act 2000 (Bermuda), section 17 (BMA consolidated text)
- Government of Bermuda, Registrar of Companies: segregated account companies
- Incorporated Segregated Accounts Companies Act 2019 (Bermuda)
- Government of Bermuda, Registrar of Companies: incorporated segregated account companies
- IRS Internal Revenue Bulletin 2003-33: Rev. Rul. 2003-91 (separate account and sub-accounts)
Last reviewed November 2026.
A segregated account is a ring-fenced account within an insurer that holds the assets backing a PPLI structure, kept apart from the insurer's general account and protected from its general creditors.
