Most frequently asked questions about swiss annuities (80 questions)

[Source : MTB International, Zurich, Switzerland]

We recommend to carefully read and understand this section and your patience would be appreciated very much.

What are insurance companies you work with?

We work with the following insurance companies in terms of swiss annuities

- Pax Life, Basel, Switzerland
- Skandia Life, Zurich, Switzerland
- Swiss Life, Zurich, Switzerland*
- Vaudoise Life
- Forces Vives, Lausanne
- Zurich Life
- Valorlife
- Winterthur Life, Winterthur, Switzerland

Why i have to subscribe to your services if i can directly contact the insurance companies to buy the policy?

It doesnt matter if you directly work with swiss insurance company or through us, it costs the same. We dont charge you either. Instead you will benefit with our expertise and experience. Very importantly, all insurance companies in switzerland would ask for a swiss advisor who must be domiciled in switzerland, especially if you are a foreigner purchasing the policy.

You can either send a personal check to the insurance company, or have your funds wired directly to the insurance company’s bank account. You will receive the direct bank coordinates of the swiss insurance company in the quotation. You can ask your home bank to do the currency conversion and then send payment to the insurance company.

What documents must I send with my application?

Proof of the birth date of the person - a copy of either a birth certificate, passport, drivers license, or other official document. The insurance company will also ask for proof for source of funds like bank account statment.

Is there a minimum investment required to purchase a swiss annuity?

Yes. To purchase a Swiss annuity investment you will need to invest at least USD 50,000 for fixed annuities and USD 1 million or more for DVA (deferred variable annuities).

What are the upfront charges and fee involved?

Swiss fixed annuities do not provide any fees schedules. By Swiss Insurance Law, insurance companies are obliged to show only the net figures on their quotations and fees are therefore not disclosed. Deferred Variable Annuities (DVAs) come with a full fee schedule, because they are from Liechtenstein-based insurance companies. The fees will vary from company to company and also on the investment amount. We do not ask for any fee from our clients because our broker fee are also included with net figures. If you want you can compare different insurance companies with net figures.

What are the returns?

The technical interest rate (a guideline provided swiss financial authority FINMA) for swiss annuities CHF is of 1.75%. The returns of a annuity will take into account a number of variables like insured persons age, policy duration and others factors involved. We cannot provide approximate numbers and the actual figures will be presented to you by the insurance company, when you request a quote.

How do i request a quotation online?

Please complete our online application and one of our representatives will get in touch with you by email or phonel.

Is joint annuity possible?

yes, joint annuity is possible. We do not recommend joint annuities, if the age gap is too high (greater than 6 yrs) as the resulting payouts will be too low.

Can i buy more than one insurance policy?

yes, it is possible to purchase more than one policy from different insurance companies.

Do you have office or representative in US or in other countries?

No, we neither do have office or representatives US or in other countries. We are solely subjected to Switzerland the the swiss laws.

Is it legal to transfer money to switzerland?

As long as your source of funds legitimate (free from any criminal activity) and pay taxes, you have nothing to worry about. It is perfectly legal to transfer money to switzerland from US or other countries as there is no exchange controls. If you are from US, you may have to report if you are transferring USD 10'000 or more.

Is it possible to purchase a swiss annuity from IRA or 401k plan?

yes, it is possible to place a swiss annuity under your retirement plans such as IRA/401k . You will need a US custodian (bank or institution) who can accept swiss annuities. Not all US custodians accept swiss annuities. We can give you the name of a reliable U.S. custodian along with the quote.

Is it possible to convert an existing US annuity to swiss annuity?

yes, it is possible.

How do i pay taxes on the earnings accrued in the annuity?

Upon written request, the insurance company will send you a statement showing principal and the earnings, which you can use it for filing taxes. Please note that we do not provide legal, tax advice to our clients. We ask you to consult a tax expert in your home country for professional advice with regard to filing taxes.

Can i borrow against my annuity?

yes, upto 80% of the policy value

Can i add funds to existing annuity at later point of time?

No. it is not possible, if you want you can buy a second annuity.

How are the dividends paid out?

The dividends will be reinvested into the contract.

How do i make partial withdrawals?

No. If you would like to make partial withdrawals, we recommend creating various annuities. In that way you can simply surrender one without having to surrender the total value of all policies.

What happens if i die or upon death of insured person?

If the insured person dies, the contract will be cancelled and the remaining value of policy will be paid to beneficiaries. If the policy holder (owner) dies before the insured person, then there is a possibility for the insured person to become the the owner.

Common Questions

1. What does a Swiss annuity offer?

A Swiss annuity is an innovative, currencyconvertible contract designed to fit the global diversification needs of today’s investor. The core of this investment is a single premium annuity that guarantees a fixed rate of interest over the coming years, plus profit-sharing dividends. It therefore belongs in your fixed-income portfolio. But for savers, it also provides excellent capital growth opportunities.

2. How does a Swiss annuity work?

Your investment is placed with one of Switzerland’s premier insurance companies for a given term (also referred to as the accumulation period or period of deferment). Your principal earns interest and dividends until you redeem your annuity in alump sum or start drawing an income (annuitizing). After income payments have begun, the unpaid balance ofyour capital still collects interest and dividend earnings that are paid out with your life income.

3. What are the upfront charges?

There are no upfront fees or charges on your investment. All your invested capital will immediately begin to accumulate earnings.

4. Is there a minimum investment required to purchase a swiss annuity?

Yes. To purchase a Swiss annuity investment you will need to invest at least USD 50,000 or CHF 50'000 or equivalent in another currency to start.

5. Can I Increase my investment at a later date?

no, but you can buy a second annuity.

6. How liquid is my Investment?

It is 100% liquid after the first year. You can then withdraw any or all of your money Including interest and profit-sharing dividends. If you need to redeem your certificate within the first 12 months, you will be charged a handling fee of 500 Swiss francs and you forfeit any first-year interest and dividend earnings.

7. When does my Investment mature?

You determine the duration of your contract at the time of purchase, but you are free to change it at any time during the contract term. That is, you may extend or shorten your chosen term (effective on the next anniversary date of your certificate) or withdraw the cash value of your investment at any time. This flexibility ensures that your investment matures when you need either the funds or the income.

8. Can I make other changes to my certficate at later date?

Of course. You can make changes to your certificate at your discretion as It relates to, for example, currency denominations, beneficiary clauses, and payment instructions. The only exceptions are the Person Insured and of course, an irrevocable Beneficiary. These may not be changed at a later date. No special forms are required, simply send your instructions in writing to the insurance company.

9. Who should Invest in a Swiss annuity?

A Swiss annuity certificate provides such safety and flexibility that It makes good sense for almost everyone at almost any age.

10. How does a Swiss annuity minto my portfolio?

A Swiss annuity is a savings plan, i.e., a basic block for accumulating wealth and also a pension fund providing a guaranteed income for a specified period or for life. In addition, you can benefit from geographic and currency diversification as well as the asset protection features of a Swiss insurance policy.

11. How much can i invest In a Swiss annuity?

There is no upper limit.

12. What about Swiss taxes?

As a non-resident of Switzerland, you are not liable for any Swiss taxes. Your earnings are never taxed. They accumulate tax-free and at maturity, are not subject to the 35% Swiss withholding tax unlike traditional Swiss bank accounts.

13. What are the earnings from a Swiss annuity?

All Swiss annuities earn guaranteed interest (a technical interest rate) of 1.75 to 3% on the capital, plus profit-sharing dividends. While the technical interest rate is guaranteed.(it may only be adjusted for new policies), the annual dividends depend on the general level of interest rates in Switzerland and on the insurance company’s investment performance. The dividends are adjusted to market interest rates annually and are, therefore, not guaranteed for the future.

14. What exactly is the “technical Interest rate”?

The technical interest rate is the guaranteed interest rate that Is credited to the investment portion ofyour annuity certificate. The investment portion is your payment less internal
contract charges. According to the rulings of the Swiss Insurance Association, insurers are entitled to deduct an amount for administration charges and an individual premium of mortality. The interest rate earned is slightly reduced by these charges.

15. What type of total return can I expect?

Interest earnings are supplemented annually by profit-sharing dividends, thus ensuring your annuity certificate earns competitive market rates. For Swiss franc annuities, these are
approximately the same rate as Swiss government bonds. Historically the average dividend rate paid out on Swiss franc annuities has been 1%-1.5%, thus resulting in an overall gross yield of 4%-4.5%. In addition, total returns for your annuity will be boosted with the right choice of currency. Due to the long term strength of the Swiss franc, Investors have made substantial exchange rate gains with Swiss franc investments. Since the collapse of the “Bretton Woods” system offixed exchange rates, the
Swiss franc has appreciated not only against the dollar but in relation to the other major currencies. In the last 25 years, the exchange value of the franc increased from $0.26 to $0.81 (annual averages), or an appreciation of 212%. This represents an annual compound growth rate of 5%.

16. How soon does my Investment start earning Interest?

Your annuity certificate starts earning interest the day your premium payment has been credited to the insurance company’s account.

17. Are profit-sharing dividends paid out or reinvested?

During the accumulation phase, dividends are automatically credited to the annuity principal. During the Income payment period, they are paid out together with the guaranteed income.

18. How do returns compare with other investments?

A Swiss annuity compares very favorably when you look at the net return on other investments (i.e., return after deducting fees, commissions, annual management charges, withholding taxes and income taxes). Remember, with a Swiss annuity there are no upfront charges or withholding taxes on your annuity investment.
The advantages are even more compelling if you factor in the safety (your capital and income are guaranteed), liquidity and privacy of your investment.

19. In which currencies is a Swiss annuity offered?

Recognizing the international investor’s interest in broad currency diversification, a Swiss annuity is offered in

• CHF - Swiss franc
• EUR - Euro
• USD - US dollar
• GBP - British pound
• NOK - Norwegian Krone
• CAD - Canadian dollar
• AUD - Australian dollar
• NZD - New Zealand dollar

Almost all swiss insurance companies offer policy in CHF/EUR currency.

20. Can I make switch between currencies?

Yes. With a Swiss annuity’s currency-convertible feature, you always have the option to switch currencies whenever you desire. Send a written request to the insurance company for the conversion. The insurance company may not act immediately and may take upto to five working days to complete the transaction as per policy conditions.

21. Is there any charge for switching currencies?

That depends on from one insurance company to other. Some charge a small fee while others deduct the fee from policy value.

22. Can I invest in more than one currency simultaneously?

Yes. You would then receive a separate certificate for each currency investment. For a 50/50 Swiss franc and US dollar investment, for example, you receive two certificates, one in Swiss francs and another with the equivalent In dollars. (Minimum investment per currency: US$20,000 or equivalent.)

23. Why can't i choose the currency that offers the highest interest rate?

Not necessarily. In the long run, the development of exchange rates could be a more decisive factor than interest rates. Such factors as inflation rates, savings rates, fiscal balances, current account balances and economic growth greatly affect the value of a currency in the long run. A Swiss franc investment with a return of say, 4%,
could turn out to be substantially better than an ECU one at 8%.

24. What currency should I choose then?

Obviously It makes sense to choose a currency that provides consistently good growth in comparison to other currencies. The Swiss franc has been stronger than any other currency in the world over the past 25 years.

25. When should I convert my home currency into Swiss francs?

As with any investment, you should buy when prices are low. That is, use any temporary period of weakness in the Swiss franc to convert your money. If you prefer not to try to time the markets, buy a series of equally-valued certificates in your currency and convert them into Swiss francs at regular Intervals. In volatile markets, cost-averaging ensures that you won’t pay peak prices.

26. How soon can I expect to see currency appreciation?

With a long holding period, the long-term trends are what counts. It is next to impossible to pinpoint the exact week or month your investment currency will take off relative to other currencies.

27. What about inflation?

Inflation reduces your return on investment because the proceeds buy fewer goods than in previous periods. Since Inflation affects a currency’s strength vis-a-vis other currencies, investing in low-inflation currencies Is one way offset the loss of an Investment’s purchasing power.

28. What about the Swiss franc’s purchasing power?

Over the last 25 years, the Swiss franc’s appreciation would have offset more than 70% the loss through inflation in the US dollars buying power. The same general trend Is true with respect to other major currencies; the Swiss franc retained its purchasing power best of all. With,Switzerland’s continuing low inflation rates (close to 1% annually), the Swiss franc will most likely maintain its strong position against the dollar as well as other currencies.

29. Does the Insurance company Invest the different currencies (offered by a Swiss annuity) separately?

Yes. The different currencies offered by a Swiss annuity are invested and held separately. For example, for Swiss francs, the purchases for Swiss franc denominated annuity includes Swiss real estate, government bonds and other firstclass Swiss investments. Similarly, US dollar denominated investments are purchased for US dollar annuities.

30. how is the exchange rate set, when converting from my home currency or switching between currencies?

Foreign exchange rates published In newspapers are on “round lot” of US$5 million traded among banks. These interbank rates are only “lndicators~ of what an individual investor might expect. Your deposits are always converted to the selected currency according to the prevailing exchange rate at the Swiss bank handling your payment.

31. Can I have my own bank convert my home currency into the Investment currency(ies)?

Yes. Your home bank can convert your home currency and make a Swiss franc or other currency transfer to Switzerland. However,experience has shown that this method is more costly (because of fees and less attractive exchange rates) than if you send your home currency funds directly to the insurance company and have them execute the currency exchange for you.

32. If I request a switch In currencies, how quickly this done?

Currency conversion is executed within five banking days upon the insurance company’s receipt of your written request for conversion.

33. Why should I invest abroad when there are plenty of interesting investments In my own country?

If you only have your money in domestic company stocks or mutual funds, your portfolio will invariably suffer heavy losses if your local stock market takes a plunge. So you need to diversify into other asset categories, such as bonds or precious metals. Similarly, investing outside your own country is an important way reduce the risk of a collapse in asset markets your country. The Nobel Prize-winning Modern Portfolio Theory has proven that you can increase your overall return and reduce risk through diversification.

34. How much of my assets should I place in overseas investments?

There are no hard and fast rules for the amount you should invest abroad. While some experts suggest as much as 40% of your portfolio, a lot depends on your individual situation, such as when you need the funds or income from your investments, your tolerance for risk, and how view the prospects of foreign economies. For some individuals seeking asset protection possibilities, the percentage may be larger for “safe-in-any-case” nest egg.

35. How can I be sure that Switzerland is the right country to send my money to?

Switzerland has earned its reputation as the world’s foremost safe haven through over 700 years of democratic government, the country’s vowed political neutrality and respect for financial privacy.

36. How does Switzerland compare with other countries?

Switzerland has been consistently rated No.1 for political, financial and economic stability by the International Country Risk Guide.

37. As an overseas investor, how complicated to invest In Switzerland?

It’s at least as easy as opening a bank account in your own country, since you need not even leave home. You just need a pen and fill up few forms. Its that simple.

38. Do you have any particular advice for those new to international Investing?

When taking the important first step abroad, safety should be your top priority. Invest in the safest investments and with secure institutions only.

39. Why are Swiss annuities a “better deal” than the traditional Swiss bank account?

Basically, Swiss annuities provide the international investor with approximately the same yield as Swiss government bonds yet are not subject to the 35% Swiss withholding tax on interest income charged to traditional Swiss bank accounts. For US based investors, Swiss annuities are not reportable as a foreign financial account to the Internal revenue Service (IRS). Interest is guaranteed, and all interest and dividend earnings accumulate tax-deferred. In addition, Swiss annuity certificates can provide you with asset protection possibilities in a simple and inexpensive way.

40. Is a Swiss annuity judgment-proof?

According to Swiss law, insurance policies - including Swiss annuities - when properly structured, are not attachable and cannot be included in any bankruptcy proceedings or be seized by creditors. This applies even if a judgment or court order specifically orders the seizure of your annuity or Its inclusion in the estate in bankruptcy settlement. Please refer to the legal opinion for a more in-depth analysis of judgments and bankruptcies.

43. Is there any age limits when purchasing a Swiss annuity?

Swiss annuity certificates can legally be issued to age 85. When the owner of a policy reaches age 85, that policy owner must decide whether to redeem his or her investment or to take a life come.

44. Can a Swiss annuity be held jointly?

Yes it can.

45. How many different parties can be Involved?

The purchase of an annuity certificate may Involve five different parties: The person, company or other legal entity who pays for the investment (premium payer). The person, company or other legal entity who owns the certificate (applicant or policy holder). The natural person on whose life the figures are calculated (Insured person). The person, company, or other legal entity who gets benefits or receive the certificate value in case of death of the person insured (beneficiary). The agent/broker is usually your insurance agent domiciled in switzerland.

46. Why do I need to state investment duration?

According to Swiss insurance regulations, insurance companies must state in writing the exact amounts they guarantee. To calculate these amounts, the investment duration is required. You can later shorten or lengthen this period.

47. What procedure do I follow to redeem my Swiss annuity certificate?

To redeem your certificate, first return the original policy along with a payment-instruction letter to the insurance company. They will then send you a cash value statement of your policy. Sign and return this statement. After receiving the signed statement, the insurance company will proceed to make the payments as per your instructions. You may pickup the funds in cash at the Insurance company’s headquarters, or request a check or a bank transfer to a designated bank account.

48. How iong does this procedure take?

The entire procedure takes approximately four weeks. The redemption process can be accelerated by about 10 days if you authorize your Swiss representative to sign and return the cash-value statement on your behalf.

49. What happens at the end of the accumulation period?

If you do not choose to extend the term, you have two options at the end of the accumulation period; you may get back the full certificate value including all accumulated interest and dividends, or choose to receive an income for either a specified period or for as long as you live.

50. How are annuity payments scheduled?

Annuity payments are available quarterly, semiannually, and annually. You can choose how you want the annuity payouts, e.g., by check to you or directly to a bank account anywhere In the world.

51. Can I borrow against my annuity?

Your Swiss annuity has an account value (cash value) that is at your disposal at any time. You can also use this value as collateral for a loan from the insurance company. There are some tax consequences and they should be considered when borrowing against your annuity. Please consult your tax advisor in your country.

52. What Interest rate is applicable to such a loan?

Market rates apply (roughly the rate on Swiss government bonds plus 1.5% to 2%). However, your annuity certificate continues to earn interest and dividends on the full (pre-loan) investment amount.

53. Once I choose to receive a life income, is there any charge for having my annuity payments transferred abroad?

Any standard banking expenses e.g., transfer costs or costs for issuing a check, will be debited from your account.

54. What does it cost me when I take my money out of a Swiss annuity?

Nothing. There are no redemption fees when you cash in your Swiss annuity investment after the first year.

55. Are there any annual management fees?

The cost factors on an insurance or annuity investment indude a “term-insurance premium”, administration and placement costs and a small interest margin for the insurance company. In traditional insurance products, the bulk of these expenses are charged upfront. For Swiss annuities, these costs are spread over many years, thus giving the investor a much better initial investment base. However, the guarantee interest of 3.25% is reduced by administrative and other costs, resulting in a slightly smaller net amount paid.

56. Can any future changes be implemented once I’ve made my Initial Investment?

Only if you decide to switch the currency denomination of your certificate. Then the a handling fee is charged to your certificate (which varies from one insurance company to another).

57. Can I make partial withdrawals on my certificate?

No. We ask you create multiple annuity policies so that you can surrender one instead of making partial withdrawal.

58. What happens upon my death?

If, as in most cases, you are both the Person Insured and the Owner of the certificate, the certificate value is paid in a lump sum to the beneficiary(ies) you have named.

59. What If I am the Owner of the certificate but not the Person Insured?

Unless you have specifically designated another Owner in writing to the insurance company, the ownership of the certificate is paid to your legal or designated heirs according to your last will and testament.

60. Can a legal entity be the Owner of the certIficate?

Yes. Any legal entity such as a trust, corporation, pension plan, foundation or establishment can be the Owner as well as the Beneficiary of the annuity certificate. Refer to the legal opinion for an analysis of trust and corporation annuity ownership.

61. In the application for an annuity certificate, what does it mean to be the beneficial owner?

As both owner and beneficial owner, you are not acting on behalf of another person to invest his or her funds. In case you are doing so, by law, insurance companies and banks are required to ask you who the beneficial owner Is.

62. Does my choice of owner affect the value of my Investment?

No. Whether the owner of the certificate is a person or legal entity (pension plan, trust, corporation, etc.), the certificate value remains the same.

63. Does my choice of the person Insured affect the value of my investment?

It depends. The investment’s value remains virtually identical during the accumulation period. If you choose to annuitize, however, the annual income that is then paid for life will obviously vary according to the age ofthe person insured (because of different life expectancies).

64. Am I protected against future exchange controls?

Although exchange controls have existed in various countries and may be reintroduced one day for people who hold overseas bank accounts, these have never been applied to foreign annuities. It seems unlikely that a country would force repatriation of foreign annuities in the future.

65. What happens If I move to another country?

Your Swiss annuity certificate remains valid regardless of where you live.

66. How private is my investment?

Swiss law forbids the disclosure of assets held by an individual in a Swiss bank or insurance company to any person or government authority.

67. What should I do If I lose my Swiss annuity certificate?

If the policy becomes lost, mislaid or stolen, notify the insurance company immediately in writing. They will then issue a “Declaration of Loss”, which requires your signature. This declaration replaces your original policy. If your original policy turns up, you should advise the insurance company again in writing.

68. Can the guaranteed rate of interest ever be changed?

No. It can’t. You are assured to receive the guaranteed interest rate for the life of your annuity certificate.

69. Can I have the Life income payments from my annuity certificate paid into a bank account outslde my home country?

Yes. You can. Simply send your instructions in writing to the insurance company.

70. Can I find out the value of my certificate whenever I need to?

Yes. You can request information about your certificate’s value anytime.

71. When do I receive my account statements?

You will receive your first statement, including all interest and profit-sharing dividends earned, on the first anniversary of your certificate. Thereafter, you will receive a full account statement at the end of the year and on the anniversary date. If not you have to instruct your insurance company to send yearly statements on earnings.

72. How closely do I need to monitor my investment?

Since you are guaranteed a certain rate of growth in terms of the currency you have chosen and will additionally receive profit-sharing dividends, the value of your investment in that currency does not fluctuate as with stocks, bonds, etc. But the currency in which your Swiss annuity certificate is denominated will rise or fall against your home currency. So your choice of investment currency matters, particularly in the long run.

73. Who stands behind my Swiss annuity?

The insurance carriers recommended have consistently maintained careful control over their balance sheets and are in impeccable financial condition. They represent some of Switzerland’s oldest and biggest life insurance companies, stable and long-term oriented.

74. How can I be sure my Investment is safe?

In the more than 140-year history of the Swiss insurance industry, there has never been a single failure of a Swiss insurance company. Policy holders in Switzerland enjoy a level of security and protection greater than in any other country.

75. Is an Independent general rating of Swiss Insurance companies available?

No. Swiss insurance companies are not analyzed by the well known rating companies. In any event, only five insurance companies have special policies for the international investor, and all of these are either old, established blue-chip companies or are owned by one.

76. Are Swiss insurance companies regulated?

The insurance sector is well regulated and under supervision of FINMA which oversees the proper functioning of insurance sector. Federal regulators require that life companies fully cover their obligations with secure investments and sufficient cash flow.

77. How many Swiss insurance policies have been defaulted on?

None.