Consider Offshore Life Insurance For Asset Protection
January 10, 2011 by Bob Livingston
Governments in Europe have their eyes on the private pension funds of their citizens. And some in and around the administration of President Barack Obama have expressed their desire to get their hands on the retirement funds of Americans.
This is just one of the many tactics governments are considering as a means of propping up their failing systems.
In Europe, according to a Jan. 2 article in The Christian Science Monitor, “The most striking example is Hungary, where last month the government made citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn (billion) of individual retirement savings.”
What we have is a system where government policies that lead to the current economic crisis have stripped your IRA or 401(k) retirement fund of value (the stock market remains about where it was 10 years ago) and have stripped your savings of value through inflation. Additionally, governments are seeking ways to grab what little retirement funds you have left. And should you reach the end of your time on earth and still have something left to pass onto your heirs, the government is going to make sure it gets its cut through the estate tax before your heirs see any of it.
So how can you protect yourself — and your beneficiaries — from the grubby hands of government? One alternative is move your money offshore. And one of the safest places to put your money offshore is in an offshore insurance account.
The truth is, most Americans need life insurance. In fact, if someone depends on you financially you must have life insurance if you want to provide cash to your family after your death. This cash comes in the form of the death benefit, which can replace your income in the event of your death.
Offshore investments often receive a bad rap, with some believing that moving your money out of the United States is tantamount to treason. Others don’t quite take it that far, but do believe it is at least unpatriotic. But what is patriotic about submitting your savings to the government? And what is patriotic about running the risk that the government will suddenly take from you what you’ve rightfully earned?
Offshore life insurance is a great method of asset protection and life insurance for law-abiding Americans. And using offshore trusts and bank accounts can be an excellent way for U.S. citizens to legally protect their assets from loss through lawsuits.
Ordinary Life Insurance vs. Offshore Life Insurance
Ordinary life insurance provides four tax-free benefits:
- Tax-free build-up of cash value, including dividends, interest and capital gains.
- Tax-free borrowing against cash value.
- Tax-free receipt of the death benefit.
- Freedom from estate and generation-skipping taxes.
These benefits are available in any life insurance policy designed to comply with U.S. tax laws. But, a U.S. tax compliant life insurance policy issued by a carrier outside the U.S. offers additional benefits:
- Increased asset protection. While some states have enacted laws that provide limited protection for life insurance policies, there is no protection for life insurance proceeds under Federal laws.
- Access to global investments. Offshore insurance policies provide tax-advantaged access to international asset managers to offshore funds that are generally not available to U.S. investors.
- Increased privacy. Domestic assets, including life insurance policies, can be easily discovered by private investigators with access to any of the hundreds of asset-tracking service that now exist. But assets held offshore are off the domestic radar and cannot easily be identified.
Are there other advantages to an offshore insurance policy? You bet. How about lower operating costs and less regulation which results in lower premium costs; investments available in foreign currencies, ability to segregate funds to protect them from insolvency of the insurance carrier; no tax on earnings; and ability to exclude proceeds from the gross estate tax for Federal estate tax purposes?
And finally, one of the biggest benefits of all: You can borrow or make withdrawals from your insurance or draw it out as retirement income. This is one of the few ways left to get our assets out of reach of the taxing authorities and away from government confiscation, legally!
All-in-all, offshore life insurance offers many advantages and should be considered as part of a wealth and asset protection plan.
For more information on offshore life insurance you can order our research manual, The Offshore Life Insurance Advantage, written by attorney J. Richard Duke, named one of the “Top 100 Attorneys” by Worth® magazine. It covers all the legal ramifications and benefits of offshore life insurance policies.