“If the investor has too much control, the investor is taxed immediately,” IRS spokesman Anthony Burke said in an email. “If the investor withdraws the amount, the investor must pay tax.”

Word Spreading

Tax status makes a clear difference. If a 45-year-old, non-smoking man were to contribute $2.5 million to an IDF for four years, the investment would be worth $113 million within 40 years with a 6.5 percent internal rate of return, according to a presentation by wealth-planning law firm Giordani, Swanger, Ripp & Jetel. The account value would be $48.8 million if the investor paid taxes, the document shows.

Word is spreading at closed gatherings such as this month’s Private Placement Life Insurance and Variable Annuities Forum in Boston. That’s where Hodari spoke in front of some of the 250 attendees, who included employees of Goldman Sachs, Dan Loeb’s Third Point LLC, GoldenTree Asset Management, Golub Capital and York Capital. There was a similar meeting in New York in September. Third Point, GoldenTree, Golub and York all declined to comment.

Paulson Offering

SkyBridge Capital, the firm formerly run by Anthony Scaramucci, started its first offering late last year. A SkyBridge representative declined to comment.

Billionaire John Paulson offered an IDF in 2013 for his merger arbitrage fund, through an insurer called Philadelphia Financial.  Blackstone Group LP made a bet on the business by agreeing to buy Philadelphia Financial a year later. It’s now Lombard International. It sells Goldman Sachs and Millennium funds, according to a marketing document that says the offering is not intended for retail investors. Lombard also works with several JPMorgan hedge funds, and Morgan Stanley markets the products. Blackstone, Morgan Stanley and Lombard all declined to comment.

Blackstone has spent more than $600 million over the past few years through its Tactical Opportunities unit to acquire businesses that offer private-placement insurance.

Wealth Gap

“A handful of larger managers have long offered such products,” JPMorgan said in a white paper last year. “What is new, though, is the increase in the number of managers interested in launching IDFs and growing demand among private bank platforms seeking to partner with managers on such offerings.”