          
          
          
                    SWISS ANNUITIES -- SAFE AND SECURE
          
          
          
          
          What Is An Annuity?

               An annuity is a tax advantaged way to put aside
          money for retirement, or other, objectives.  Annuities
          may be among the best ways to create retirement income. 
          They allow savings to grow tax-deferred, building
          assets faster than other investments.
               The way this works is that money is invested with
          an insurance company.  Annuities may be a good
          investment for many long-term goals, but several
          features make them especially well suited for
          retirement savings:
               * No Annual Investment Ceiling.  There is no limit
          to the amount that can be put into an annuity each
          year.  Other tax-advantaged plans such as IRAs should
          not be overlooked for retirement savings, but the
          amount that can be contributed each year is limited.
               * The Power of Tax-Deferral. Money will grow
          faster than in a taxable vehicle with a similar rate of
          return for several reasons.  Not only does the interest
          accumulate tax-free until withdrawal, but funds that
          otherwise would have been used to pay taxes remain in
          the account for additional earnings.  And if the
          payments are not taken until retirement, the recipient
          is probably in a lower tax bracket at that time.
               * Security for One's Family.  If the purchaser
          dies before distributions begin, their family (or other
          beneficiaries) can receive the full value of the
          annuity.  By naming a beneficiary, the annuity may even
          bypass probate and eliminate the associated costs and
          publicity.
               * Simplicity. There are no annual IRS forms to
          file, and there is no entry on Form 1040 until the
          payments actually begin.
          
               An annuity can offer the investment returns of a
          mutual fund, but deferring the tax until after
          retirement.  Though unglamorous, an annuity is one of
          the investment industry's fastest-growing products. 
          The annuity also contains some of the tax-deferred
          benefits of an individual retirement account or
          employer-sponsored 401(k) plan.  Although it has been
          available for more than 20 years, sales have boomed in
          the last few years.
               With an annuity, savings grow, tax deferred, until
          withdrawn, with no restrictions on how much can be
          invested -- unlike an IRA or other retirement plan.
               And because an annuity is also an insurance
          product, it promises a guaranteed regular income after
          retirement, regardless of how long the investor lives.
               Sales of domestic annuities in the U. S. are now
          running around $50 billion per year.  But the real
          reason for the growth is that as the American
          population ages, it is waking up to the fact that
          retirement self-sufficiency is an important issue. The
          annuity has some ideal characteristics for them.  
               An annuity, often described as the opposite of
          life insurance, is a financial contract with an
          insurance company. These can be structured so they make
          regular monthly payments for life, no matter how long
          the recipient lives.
               While technically the investor doesn't own the
          investments the annuity makes, he benefits from their
          investment. And because he doesn't own the investments
          -- the insurance company does -- savings can grow, and
          the gains are tax-deferred.
               Just as with an IRA, no taxes are due on
          investment gains while the funds remain in the annuity
          account.  This helps savings grow faster, and it allows
          individuals to better control when they will pay taxes.
               Taxes are due when money is withdrawn.  Just as
          with an IRA or 401(k) account, withdrawal of funds
          before age 59 1/2 incurs a 10 percent penalty. 
               While these investments do enjoy tax-deferred
          status as do other retirement accounts, individuals
          still get greater tax savings under traditional IRA or
          401(k) plans, at least to the degree that contributions
          to those accounts are also tax deductible.  But once
          beyond the level of what can be deducted, annuities are
          for investors who want to build substantial tax-free
          growth, not just be limited to a government-mandated
          maximum amount of savings.
               In an IRA or other retirement account, initial
          investments under certain limits are deposited before
          taxes.  That allows wage earners to shield current
          income from tax, as well as allow investments to
          accumulate on a tax-deferred basis.
               With an annuity, the initial investment is made
          with post-tax dollars, although after that, investment
          gains are tax-free until withdrawn.  
               This is a supplemental retirement tool, after all
          the other things.  In an annuity one can set aside as
          much money each year as retirement or other future
          plans require.  Other tax-advantaged plans such as IRAs
          should not be overlooked for retirement savings, but
          the amount that can be contributed each year is
          limited.
               Owning an annuity also can prevent some tax
          liability that often hits mutual fund holders.  When a
          mutual fund is purchased, at the end of the year they
          pay a capital gains distribution, and even if they
          reinvest it, it is a taxable event.  With a variable
          annuity, any profit made, as long as it stays there,
          grows tax-deferred.
               Other considerations in selecting an annuity
          include important safety questions, such as the
          financial health of the insurance company guaranteeing
          the investment.
               Because annuities are insurance products, the fees
          paid by investors are different than for mutual funds.
          Typically, there are no front-end load fees or
          commissions to buy an annuity, but there are
          "surrender" charges for investors who withdraw funds
          early in an American annuity, usually during the first
          five or six years.  (This is not the case in the Swiss
          annuities discussed later.).
               The money in an annuity will grow much faster than
          in a taxable vehicle with a similar rate of return, for
          several reasons.  Not only does interest accumulate
          tax-free until withdrawal, but funds that would
          otherwise have been used to pay taxes remain in the
          account for additional earnings.  And by the time of
          retirement, the recipient is usually in a lower tax
          bracket, and will thus pay less tax on the annuity
          payments.
               Although salesman like to point out that an
          annuity's value is "guaranteed," that promise is only
          as strong as the insurer making it.  An annuity is
          backed by the insurer's investment portfolio, which in
          America may contain junk bonds and troubled real estate
          investments.  If an American insurer has financial
          problems, the investor may become just another creditor
          hoping to be paid back.  For example, when the New
          Jersey state insurance department took over bankrupt
          Mutual Benefit Life, the state temporarily froze the
          accounts of annuity holders, preventing them from
          withdrawing money unless they could prove a significant
          financial hardship.
               Some American annuity marketers inflate their
          yields by playing games with the way they calculate
          them; others advertise sumptuous rates that have more
          strings attached than a marionette.  The most
          widespread form of rate deception is the bonus annuity,
          in which insurers tack on as much as eight percentage
          points to their current interest rate.  But many of
          these alluring bonuses can be illusory.  In most cases
          the bonus rate is only paid if the annuity is held for
          many years, and then taken out in monthly installments
          instead of a lump sum.  If the investor asks for the
          cash in a lump sum, the insurer will retroactively
          subtract the bonus, plus the interest that compounded
          on the bonus, plus a penalty on the original
          investment.
               Even more insidious are tiered-rate annuities --
          so named because they have two levels of interest
          rates.  They ballyhoo an above-average interest rate. 
          But as with their bonus-rate cousins, the accrued
          earnings in the account reflect this so-called
          accumulation rate only when the payout is made over a
          long time.  A straight withdrawal, by contrast, will
          knock the annuity down to a low "surrender value" rate
          for every year invested.
               Other insurers simply resort to the time-
          dishonored practice of luring customers with lofty
          initial rates that are lowered at renewal time.
               All of this nonsense has given the American
          annuity industry a bad name, and it is not surprising
          that most investors simply hang up the telephone when
          an annuity salesman calls.  
               Enter the clean, simple, honest Swiss annuity.
          
          
          Swiss Annuities
          
               Swiss annuities minimize the risk posed by U. S.
          annuities.  They are heavily regulated, unlike in the
          U.S., to avoid any potential funding problem.  They
          denominate accounts in the strong Swiss franc, compared
          to the weakening dollar.  And the annuity payout is
          guaranteed.
               Swiss annuities are exempt from the famous 35%
          withholding tax imposed by Switzerland on bank account
          interest received by foreigners.  Annuities do not have
          to be reported to Swiss or U.S. tax authorities.  
               A U.S. purchaser of an annuity is required to pay
          a 1% U.S. federal excise tax on the purchase of any
          policy from a foreign company.  This is much like the
          sales tax rule that says that if a person shops in a
          different state, with a lower sales tax than their home
          state, when they get home they are required to mail a
          check to their home state's sales tax department for
          the difference in sales tax rates.  
               The U.S. federal excise tax form (IRS Form 720)
          does not ask for details of the policy bought or who it
          was bought from -- it merely asks for a calculation of
          1% tax of any foreign policies purchased.  This is a
          one time tax at the time of purchase; it is not an
          ongoing tax.  It is the responsibility of the U. S.
          taxpayer, to report the Swiss annuity or other foreign
          insurance policy.  Swiss insurance companies do not
          report anything to any government agency, Swiss or
          American -- not the initial purchase of the policy, nor
          the payments into it, nor interest and dividends
          earned.

               
                   Special Advantages of Swiss Annuities
               
               * They Pay Competitive Dividends and Interest. 
               
               * No foreign reporting requirements.  A swiss
          franc annuity is not a "foreign bank account," subject
          to the reporting requirements on the IRS Form 1040 or
          the special U. S. Treasury form for reporting foreign
          accounts.  Transfers of funds by check or wire are not
          reportable under U. S. law by individuals -- the
          reporting requirements apply only to cash and "cash
          equivalents" -- such as money orders, cashier's checks,
          and travellers' checks.

               * No forced repatriation of funds.  If America
          were to eventually institute exchange controls, the
          government might require that most overseas investments
          be repatriated to America.  This has been a common
          requirement by most governments that have imposed
          exchange controls.  Insurance policies, however, would
          likely escape any forced repatriation under future
          exchange controls, because they are a pending contract
          between the investor and the insurance company.  Swiss
          bank accounts would probably not escape such controls. 
          (To the bureaucrats writing such regulations, an
          insurance policy is a commodity already bought, rather
          than an investment.)

               * Protection from creditors.  No creditor,
          including the IRS, may attach a Swiss annuity, if the
          purchaser's wife or children are named as
          beneficiaries.  Liens cannot be attached to these
          assets.  This way, the purchaser knows that at least a
          portion of his wealth is beyond the reach of a
          litigious society and will, indeed, go to his
          designated heirs.

               * Instant liquidity.  With the Swiss Plus plan,
          described later, an investor can liquidate up to 100%
          of the account without penalty (except for a SFr500
          charge during the first year.)

               * Swiss safety.  As already discussed, Switzerland
          has the world's strongest insurance industry, with no
          failures in 130 years.

               * No Swiss tax.  If an investor accumulates Swiss
          francs through standard investments, he will be subject
          to the 35% withholding tax on interest or dividends
          earned in Switzerland.  Swiss franc annuities are free
          of this tax.  In the U. S., insurance proceeds are not
          taxed.  And earnings on annuities during the deferral
          period are not taxable until income is paid, or when
          they are liquidated.

               * Convenience.  Sending deposits to Switzerland is
          no more difficult than mailing an insurance premium in
          the United States.  A personal check in U. S. dollars
          is written and sent overseas (50 postage instead of
          29).  Funds can also be transferred by bank wire.

               * Qualified for U.S. Pension Plans.  Swiss
          annuities can be placed in a U. S. tax-sheltered
          pension plans, such as IRA, Keogh, or corporate plans,
          or such a plan can be rolled over into a Swiss-annuity. 
          (To put a Swiss annuity in a U.S. pension plan, all
          that is required is a U.S. trustee, such as a bank or
          other institution, and that the annuity contract be
          held in the U.S. by that trustee.  Many banks offer
          "self-directed" pension plans for a very small annual
          administration fee, and these plans can easily be used
          for this purpose.)

               * No Load Fees. Investment in Swiss annuities is
          on a "no load" basis, front-end or back-end.  The
          investments can be canceled at any time, without a loss
          of principal, and with all principal, interest and
          dividends payable if canceled after one year.  (If
          canceled in the first year, there is a small penalty of
          about 500 Swiss francs, plus loss of interest.) 
          

                                Swiss Plus

               A new Swiss annuity product (first offered in
          1991), Swiss Plus, brings together the benefits of
          Swiss bank accounts and Swiss deferred annuities,
          without the drawbacks -- presenting the best Swiss
          investment advantages for American investors.
               Swiss Plus, is a convertible annuity account,
          offered only by Elvia Life of Geneva.  Elvia Life is a
          $2 billion strong company, serving 220,000 clients, of
          which 57% are living in Switzerland and 43% abroad. 
          The account can be denominated in the Swiss franc, the
          U.S. dollar, the German mark, or the ECU, and the
          investor can switch at any time from one to another. 
          Or an investor can diversify the account by investing
          in more than one currency, and still change the
          currency at any time during the accumulation period --
          up until beginning to receive income or withdrawing the
          capital.  
               If you are not familiar with the ECU, it is the
          European Currency Unit, a new currency created in 1979. 
          It is composed of a currency basket of 11 European
          currencies, and its value is calculated daily by the
          european Commission according to the changes in value
          of the underlying currencies.  The ECU is composed of a
          weighted mean of all member currencies of the European
          Monetary System.  Since the ECU changes its balance to
          reflect changes in exchange rates and interest rates
          between these currencies, the ECU tends to limit
          exchange rate risk and interest rate risks.
               Although called an annuity, Swiss Plus acts more
          like a savings account than a deferred annuity.  But it
          is operated under an insurance company's umbrella, so
          that it conforms to the IRS' definition of an annuity,
          and as such, compounds tax-free until it is liquidated
          or converted into an income annuity later on.
               Swiss Plus accounts earn approximately the same
          return as long-term government bonds in the same
          currency the account is denominated in (European
          Community bonds in the case of the ECU), less a half-
          percent management fee.
               Interest and dividend income are guaranteed by a
          Swiss insurance company.  Swiss government regulations
          protect investors against either under-performance or
          overcharging.
               Swiss Plus offers instant liquidity, a rarity in
          annuities.  All capital, plus all accumulated interest
          and dividends, can be freely accessible after the first
          year.  During the first year 100% of the principal is
          freely accessible, less a SFr 500 fee, and loss of the
          interest.  So if all funds are needed quickly, either
          for an emergency or for another investment, there is no
          "lock-in" period as there is with most American
          annuities.
               Upon maturity of the account, the investor can
          choose between a lump sum payout (paying capital gains
          tax on accumulated earnings only), rolling the funds
          into an income annuity (paying capital gains taxes only
          as future income payments are received, and then only
          on the portion representing accumulated earnings), or
          extend the scheduled term by giving notice in advance
          of the originally scheduled date (and continue to defer
          tax on accumulated earnings).

          
          Protection Of Assets In Swiss Annuities From Lawsuits

               Growing the wealth is important, but so is
          protecting it from false claimants, and Switzerland
          excels at this.  Almost anybody with wealth in the U.
          S. is at risk, as discussed in the early sections of
          this report.  With everything that can happen to
          savings, it is nice to know that there is something,
          somewhere, nobody can touch.
               According to Swiss law, insurance policies --
          including annuity contracts -- cannot be seized by
          creditors.  They also cannot be included in a Swiss
          bankruptcy procedure.  Even if an American court
          expressly orders the seizure of a Swiss annuity account
          or its inclusion in a bankruptcy estate, the account
          will not be seized by Swiss authorities, provided that
          it has been structured the right way.
               There are two requirements: A U. S. resident who
          buys a life insurance policy from a Swiss insurance
          company must designate his or her spouse or
          descendants, or a third party (if done so irrevocably)
          as beneficiaries.  Also, to avoid suspicion of making a
          fraudulent conveyance to avoid a specific judgment,
          under Swiss law, the person must have purchased the
          policy or designated the beneficiaries not less than
          six months before any bankruptcy decree or collection
          process.
               The policyholder can also protect the policy by
          converting a designation of spouse or children into an
          irrevocable designation when he becomes aware of the
          fact that his creditors will seize his assets and that
          a court might compel him to repatriate the funds in the
          insurance policy.  If he is subsequently ordered to
          revoke the designation of the beneficiary and to
          liquidate the policy he will not be able to do so as
          the insurance company will not accept his instructions
          because of the irrevocable designation of the
          beneficiaries.
               Article 81 of the Swiss insurance law provides
          that if a policyholder has made a revocable designation
          of spouse or children as beneficiaries, they
          automatically become policyholders and acquire all
          rights if the policyholder is declared bankrupt.  In
          such a case the original policyholder therefore
          automatically loses control over the policy and also
          his right to demand the liquidation of the policy and
          the repatriation of funds.  A court therefore cannot
          compel the policyholder to liquidate the policy or
          otherwise repatriate his funds.  If the spouse or
          children notify the insurance company of the
          bankruptcy, the insurance company will note that in its
          records.  Even if the original policyholder sends
          instructions because a court has ordered him to do so,
          the insurance company will ignore those instructions. 
          It is important that the company be notified promptly
          of the bankruptcy, so that they do not inadvertently
          follow the original policyholder's instructions because
          they weren't told of the bankruptcy.
               If the policyholder has designated his spouse or
          his children as beneficiaries of the insurance policy,
          the insurance policy is protected from his creditors
          regardless of whether the designation is revocable or
          irrevocable.  The policyholder may therefore designate
          his spouse or children as beneficiaries on a revocable
          basis and revoke this designation before the policy
          expires if at such time there is no threat from any
          creditors.
               These laws are part of fundamental Swiss law. 
          They were not created to make Switzerland an asset
          protection haven.  There is a current fad of various
          offshore islands passing special legislation allowing
          the creation of asset protection trusts for foreigners. 
          Since they are not part of the fundamental legal
          structure of the country concerned, local legislators
          really don't care if they work or not.  And since most
          of these trusts are simply used as a convenient legal
          title to assets that are left in the U.S., such as
          brokerage accounts, houses, or office buildings, it is
          very easy for an American court to simply call the
          trust a sham to defraud creditors and ignore its legal
          title -- seizing the assets that are within the
          physical jurisdiction of the court.  
               Such flimsy structures, providing only a thin
          legal screen to the title to American property, are
          quite different from real assets being solely under the
          control of a rock-solid insurance company in a major
          industrialized country.  A defendant trying to convince
          an American court that his local brokerage account is
          really owned by a trust represented by a brass-plate
          under a palm tree on a faraway island is not likely to
          be successful -- more likely the court will simply
          seize the asset.  
               But with the Swiss annuity, the insurance policy
          is not being protected by the Swiss courts and
          government because of any especial concern for the
          American investor, but because the principle of
          protection of insurance policies is a fundamental part
          of Swiss law -- for the protection of the Swiss
          themselves.  Insurance is for the family, not something
          to be taken by creditors or other claimants.  No Swiss
          lawyer would even waste his time bringing such a case.
          
          
                 Swiss Income Annuities Can Be Tailor-Made
          
               The main purpose of an annuity is to provide you
          with a constant income for as long as you live.  But
          people's needs and circumstances differ, and to
          accommodate them a variety of beneficiary options is
          available for both single and joint annuities.
               In weighing the merits of the different annuity
          plans, several factors come into play.  Whether you are
          male or female, how old you and your spouse will be
          when your life income begins, and the size of your
          deposit -- all these have a bearing,a s well as the
          kind of beneficiary option you want.
               Your age plays a crucial role in these
          considerations.  The older you are, the more income
          difference there will be between an annuity without
          refund and one with any of the beneficiary options.  If
          you can take out such an annuity at age 55, the
          difference in life income created under each option is
          not that much, because at age 55 the life expectancy
          for both males and females exceeds 25 years.  According
          to statistics, therefor, the insurance company will
          probably have to pay out the entire amount regardless
          of what option the contract includes.
               The older you are, however, the more relevant the
          option becomes: whether the contract expires at death
          with no further payments (without refund) or whether
          some or all of the unused portion is refunded to a
          beneficiary (10 years certain, with refund).  The life
          income will accordingly vary greatly.
               Choosing among the various beneficiary options
          requires you to ask yourself a few questions.  For
          example, is there anyone whose well-being depends on
          your financial support?  If there is indeed someone
          such as a spouse, then you should consider a plan that
          provides for that person (or persons, if children are
          involved) after your death.  In the case of a spouse,
          this might involve one of the following options: 10
          years certain, with refund; a joint annuity; or perhaps
          a single annuity for your spouse as well as for you.
               If you have no immediate dependent (or would leave
          no survivor who would be in hardship without you) and
          you are over 65, you may do best with a straight-life
          annuity paying the highest income for as long as you
          live.
               This means that after your death the insurance
          company stops all payments.  This option offers the
          highest life income per franc of premium deposit --
          regardless of whether you life one day or 30 years
          after the annuity is taken out.  But the price you pay
          is that your beneficiaries get nothing.
               To provide for beneficiaries, annuities are
          available "with refund," or for "10, 15 (or any number)
          years certain."  Let's look at these options.
               "With refund" simply means that at death, the
          unused portion of the premium paid is refunded to the
          beneficiary in a lump sum.  The payment is determined
          by subtracting from the original premium the amount of
          guaranteed income paid out.
               "Ten years certain" means the income is paid for a
          minimum of 10 years.  In other words, should you die
          after receiving only two payments, your beneficiary
          will receive the income for a further eight years.  The
          principle is the same for a joint annuity; if the
          second person dies after only two annuity payments, the
          beneficiary will receive the remaining eight.  Of
          course, in either case, the income is guaranteed for
          the life of the insured parties.
          
          
          An advantageous "bank account" with your Swiss
          insurance company
          
               Most international investors finance these
          programs by single deposits.  Many have chosen to
          dollar-cost-average into these investments by making
          annual deposits and many arrange for these payments
          through a Swiss bank account.
               However, you don't have to have one to pay your
          insurance premiums.  In fact, such an account would be
          reportable under U.S. laws, thus removing one of the
          advantages of Swiss insurance. Instead, there is
          another way to make your premium payments through a
          premium deposit account.
               This method has so many advantages, it is
          surprising that so few people know about it.  In
          effect, a premium deposit account is an interest-
          bearing "bank" account opened at your insurance
          company.  It has two distinct advantages over a regular
          Swiss bank account.
               First, it is not reportable to the tax authorities
          because you are making payments to an insurance
          company, not a bank. Second, it pays interest rates
          about 1% higher than bank deposit (savings) accounts. 
          Moreover, there is no withholding tax on the interest;
          all payments are tax free.
               On the other hand, you cannot buy gold,
          securities, or anything else with this account.  It can
          only be an interest-bearing Swiss franc account
          designed to make automatic premium payments.  when the
          annual premium is due, it is simply debited from your
          account.
               You can predeposit as much as you want to your
          account (the minimum deposit is SFr100).  Simply send
          the funds to your insurance company and use your policy
          number as you would your bank account number.  By the
          way, as with a bank account, you'll receive an annual
          statement of your premium deposit account.
               One final point.  Since insurance companies make
          surcharges of 2%, 3%, and 5% for semi-annual, quarterly
          and monthly premium payments respectively, you should
          simply stick with annual payments and use your premium
          deposit account for small deposits during the year,
          whenever you feel the exchange rate is particularly
          favorable or if you simply have extra cash available.
          
          
                   U.S. Tax Treatment of Swiss Annuities
          
               The estate tax implications of annuities will
          depend on which beneficiary option the contract
          includes.  As far as taxes on the income payments are
          concerned, the calculations are based on the amount of
          life income received each year.
               The lion's share of this income is tax free. 
          Let's get a picture of how much is beyond the grasp of
          the tax man.
               The IRS divides the total premium payment by the
          number of years theoretically left to you, based on
          life expectancy tables for your age at the time you
          start receiving payments.
               Let's say a 65-year-old man, expected to live 15
          years, purchases a $10,000 Swiss annuity.  This premium
          payment divided by 15 years equals $666.67 per year. 
          This is the non-taxable part.
               While the life income from this annuity is a fixed
          amount in Swiss francs, the dollar income he receives
          each year will fluctuate.  Let's say he actually
          received $850 during the first year.  Only the
          difference, $850 minus $666.67 or $183.33, is taxable
          as ordinary income.  If he receives, say, $950 during
          the second year,he'll pay tax on $283.33.  Thus, any
          profits resulting from currency appreciation are taxed
          as ordinary income in the year they are received. 
          (Likewise, any currency depreciation can be claimed as
          a loss.)
               If the annuitant lives beyond his life expectancy,
          all payments received after this period elapses are
          taxed as ordinary income.  Referring to the foregoing
          example, if our 65-year-old annuitant, expected to live
          a further 15 years, actually dies at, say,age 85, the
          last five years of his life income will be taxed as
          ordinary income.  On the other hand, should he die
          earlier than expected, the unrecovered portion of his
          premium is deductible on his final income tax return.
               It is your responsibility to report earnings to
          your government.  No Swiss company or office reports
          anything -- not the purchase of a policy or the opening
          of an account, nor payments, nor currency profits.  It
          is solely up to you.
               The IRS recently ruled that a U.S. taxpayer can
          swap an annuity issued by a U.S. insurer for one issued
          by a foreign insurer that does not engage in business
          in the United States.  The exchange is tax free when
          all the requirements for Section 1035 are met.  The IRS
          says that there is no requirement that both insurance
          contracts be issued by U.S. insurers for the exchange
          to be tax free.  (Letter Ruling 9319024).
          
          
          
          
