Swiss Annuity
Encyclopedia
A Swiss
annuity is similar to an American annuity
, in which insured parties pay a premium
which will be returned to them in time. However, unlike American and European annuities
Swiss annuities can be used in offshore tax planning and are not subject to the usual tax
and bankruptcy
reporting requirements.
ing counterparts, the Swiss insurance industry is robust and vibrant, due to the Swiss being one of the most heavily insured populations on the planet. The country is home to over 100 insurance companies, 10 of them reinsurers. In the 150 year history of the Swiss insurance industry, its companies have never failed to meet their obligations or closed.
Switzerland consistently runs a budget surplus and is unaffected by the current European Union
financial crisis. It has also voted to halt the further integration with the EU and its tax code.
Internal Revenue Service
tax reporting requirements or Swiss income taxes. They are also protected from collections in bankruptcy proceedings.
Beneficiary
options for Swiss annuities include "revocable," which means the beneficiary can be changed at any time, or "irrevocable," meaning the beneficiary has to agree to be removed from the policy.
Irrevocable beneficiaries, with no restriction on their identities, and revokable beneficiaries, listing the spouse or the descendants of the policy owner, are eligible for this protection.
Swiss annuities are not subject to the one percent excise tax commonly imposed on purchases of foreign life insurance or annuity policies due to the double tax treaty signed by the U.S. and Switzerland in 1998.The annuities are also not taxed by the Swiss government.
The classic annuities are also split into two different types: classic intermediate annuities and classic deferred annuities. Classic intermediate annuities pay a life income in Swiss francs within one year of the policy's inception for as long as the annuitant lives. It can be paid on one of two lives. Deferred annuities are formed with a single premium deposit, although some companies allow for multiple annual deposits to be made. The annuity account value can be partially or fully withdrawn at any time or be converted to an intermediate account.[8]
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....
annuity is similar to an American annuity
Annuity (US financial products)
In the United States an annuity contract is created when an insured party, usually an individual, pays a life insurance company a single premium that will later be distributed back to the insured party over time...
, in which insured parties pay a premium
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
which will be returned to them in time. However, unlike American and European annuities
Annuity (European financial arrangements)
An annuity can be defined as a financial contract which provides an income stream in return for an initial payment with specific parameters. It is the opposite of a settlement funding...
Swiss annuities can be used in offshore tax planning and are not subject to the usual tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
and bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
reporting requirements.
History of Swiss Insurance Companies
Like its bankBank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
ing counterparts, the Swiss insurance industry is robust and vibrant, due to the Swiss being one of the most heavily insured populations on the planet. The country is home to over 100 insurance companies, 10 of them reinsurers. In the 150 year history of the Swiss insurance industry, its companies have never failed to meet their obligations or closed.
Switzerland consistently runs a budget surplus and is unaffected by the current European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
financial crisis. It has also voted to halt the further integration with the EU and its tax code.
Swiss Annuities
Unlike other American and European annuities, Swiss annuities offer asset protection for life insurance products that are guaranteed by law. If properly administered, Swiss annuities are not subject to USUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
tax reporting requirements or Swiss income taxes. They are also protected from collections in bankruptcy proceedings.
Beneficiary
Beneficiary
A beneficiary in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. For example: The beneficiary of a life insurance policy, is the person who receives the payment of the amount of insurance after the death of the insured...
options for Swiss annuities include "revocable," which means the beneficiary can be changed at any time, or "irrevocable," meaning the beneficiary has to agree to be removed from the policy.
Asset Protection
Swiss annuities cannot be subject to collection remedies and cannot be part of policy owner's bankruptcy estate. If a court decides to levy or attach the policy, Swiss courts will not authorize creditors or bankruptcy trustees control of the annuity and do not acknowledge the jurisdiction of foreign courts of law. In the event the policy holder is judged to be bankrupt, ownership transfers to the beneficiaries of the policy. The transfer is automatic and cannot be challenged.Irrevocable beneficiaries, with no restriction on their identities, and revokable beneficiaries, listing the spouse or the descendants of the policy owner, are eligible for this protection.
Tax Considerations
Income from Swiss annuities are not subject to American income taxes. Americans can also swap their existing American life insurance annuity plans for Swiss annuity plans with no tax penalty under IRS section 1035.Swiss annuities are not subject to the one percent excise tax commonly imposed on purchases of foreign life insurance or annuity policies due to the double tax treaty signed by the U.S. and Switzerland in 1998.The annuities are also not taxed by the Swiss government.
Strategic Swiss Annuities
Strategic annuities take advantages of Swiss privacy laws to protect assets and to protect the policy holder during bankruptcy. Insurers do not provide investment advice or management.Classic Swiss Annuities
Classic Swiss annuities are the basic kinds of annuities found in most other countries. Premiums paid into the annuity are managed by the insurance company and is an asset of the company.[8]The classic annuities are also split into two different types: classic intermediate annuities and classic deferred annuities. Classic intermediate annuities pay a life income in Swiss francs within one year of the policy's inception for as long as the annuitant lives. It can be paid on one of two lives. Deferred annuities are formed with a single premium deposit, although some companies allow for multiple annual deposits to be made. The annuity account value can be partially or fully withdrawn at any time or be converted to an intermediate account.[8]