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1/6/2009
Tuesday morning
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| John Pugsley: Jurg, it seems that I met you sometime around 1978
or 79 at one of the seminars put on by Inflation Survival
Letter... At the time Americans, including those of us who were
convinced that the Swiss franc and gold were headed up, were just
learning about Swiss investments and didnt know much about Swiss
annuities or insurance companies. |
| You write:
High Commission or Other Charges on Individual Variable Annuities
Similar to an individual pure life annuity, an individual variable annuity is
subject to the problem of adverse selection, meaning that people with good
health tends to buy more annuities. The annuity companies end up paying
annuitants more in terms of the annuity benefits. To compensate for this,
annuity companies tend to charge a higher commission and hence give a lower
return to annuitants. This creates a lot of the recent variable annuity
controversies, especially when people see a hugh difference between the rates
of return on an individual annuity and that of a similar group annuity. Group
annuities usually have better rates (or lower premiums) because they are less
subject to the problem of adverse selection. Whenever possible, therefore, it
is better to have group instead of individual annuities. |
| JML: At the beginning there was a big information gap. We had
to explain to Americans how the benefits of diversifying into
foreign currencies such as the Swiss franc, as well as how
important it was to have ones assets geographically diversified.
At the same time, all I knew was Swiss insurance law and nothing
about American law. More and more American legal questions came
up -- such as, can an individual retirement account own a Swiss
policy, etc.? So I learned the answers. Until five years ago,
we didnt receive a lot of questions regarding privacy and asset
protection. When I started in business I didnt even know that
this was of any importance. There are precedents in Swiss law
that an annuity really is a very, very private investment and
under Swiss law there is no way that a creditor can attach this
investment. Coupled with this, Americans dont legally have to
report annuities as they are insurance policies and not foreign
financial accounts. Today, privacy and asset p. |
| Some folks buy variable annuities, not so much as an instrument for creating
an income stream as an accumulation vehicle. An advantage often mentioned
is that the increase in value is tax-deferred - you dont pay income tax on
the increase in value until you take distributions. |
| Swiss annuities clearly provide many advantages and benefits
to investors over annuities offered in other places. Still,
perhaps most important, and often overlooked, is the superior
asset-protection aspect of Swiss annuities. This aspect is a
crucial point for investors who wish to ensure that their
investments and growing wealth are protected from the claims of
creditors.
When annuities are structured properly, Swiss law prevents,
except in cases where intent to defraud can be proven, that
annuities, along with other insurance policies, cannot be seized
by creditors. These policies may not even be included in a Swiss
bankruptcy proceeding. |
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