How do wealthy foreigners use (special) life insurance policies

As wealthy foreigners use (special) life insurance policies purchased in the United States.

“For wealthy foreigners, there are often significant advantages to purchasing life insurance policies in American insurance companies,” explains Frank Seneco, president of the boutique company Seneco & Associates, which specializes in developing complex financial plans for wealthy clients. “Such people can often easily get better terms and guarantees embedded in an insurance contract because the statistical life expectancy in the US is higher and this often leads to better prices; and customers get access to better products that are characteristic of the insurance market life in the US. “

These special life insurance policies are designed exclusively for 
international clients who have large tangible assets and meet two of the following criteria:

Criterion # 1: Customers do not have connections with the United States, such as, for example, owning American real estate. 
Criterion # 2: These clients have a need or desire to purchase a large amount of life insurance policy, and such insurance cannot be bought in their country of residence.

There are two additional benefits of such an insurance policy that are attractive to many wealthy foreign citizens. In particular: 
– These life insurance policies are denominated in US dollars. Plus, when insurance policy payments are made, these payments have significant tax benefits and are exempt from US income tax. 
– When there are concerns about privacy.

According to Anthony J. Carone, Managing Director of the specialized law firm Carone & Associates, “These special life insurance policies do not apply if a wealthy person is a US citizen or a green card lawful US resident. They are also inappropriate if wealthy foreigners have investment or other financial ties with the United States, for example, own real estate in the United States, or they are related to the American trusts (trusts), bank accounts, or 
are equity participants in private enterprises, upre dennymi on the territory of 
the United States. “

Below are a few examples of how rich foreigners use life insurance policies purchased in the United States.

Scenario # 1: A 35-year-old South American individual wants to hedge against 
$ 25 million to protect the income stream his family receives. 
He wants to pay all his life insurance contributions as quickly as possible, while at the same time he needs permanent insurance, which remains in effect as long as he is alive. It would also be useful for him if he could have access to the cumulative part (cash value) of an insurance policy in US dollars during his lifetime.

In this case, we have structured the life insurance policy in such a way that all insurance premiums are fully paid in just five years, while at the same time the cumulative 
part (cash value) of the insurance policy has the potential to grow into a significant amount. Everything is nominated in US dollars, and the transaction itself is both transparently straightforward and confidential.

Scenario # 2: A 55-year-old citizen of a Middle Eastern country has a bank account of $ 5 million, intended after his death for his grandchildren. He wants to ensure that the grandchildren receive the money without any complications. 

A good decision was the American life insurance policy with a nominal 
value of $ 40 million. Pros: grandchildren will receive a much larger amount of inheritance; and, if necessary, the client may have access to money in life, in the form of a loan from the cash value of this insurance.

Scenario # 3: A 30-year-old European business owner must provide a guarantee for a large-scale business loan. She would not want to burden the assets of her own company.

The problem was solved by a life insurance policy purchased in the United States in the amount of $ 20 million, which will be used as a deposit in case of her death. In addition, this transaction is structured in such a way that, provided the insurance is valid for fifteen years, the client can start receiving back the value of all insurance premiums made and also have a fully paid permanent insurance policy, guaranteed to the end of life.

“In order to get the most benefit from these special types of life 
insurance policies , some degree of ingenuity is required. When this type of policy is integrated into the design of existing financial plans, there are much greater possibilities for tax mitigation,” says Seneko.

For questions, please contact the Head Office of American Corporate Services, Inc.

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