Interview with Marco Gantenbein, TEP
Managing Director of Swiss Annuity Consulting Group, Zurich
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Marco Gantenbein, TEP, is an international insurance specialist and the Managing Director of Swiss Annuity Consulting Group, Zurich/Switzerland, a leading niche insurance consultancy focused on Swiss annuities and life insurance products. After completing Zurich Business School and training at a well-known Swiss insurance company, he lived and worked abroad. After returning to Switzerland, he worked for many years as an insurance consultant in both the private and business sectors. During this time he received his Swiss Federal Insurance Diploma and in addition to managerial experience he acquired considerable expertise in complex insurance solutions for private as well as business clients. Mr. Gantenbein is also one of the co-authors of the Switzerland Business & Investment Handbook, having contributed the chapter on Swiss Annuities and Life Insurance. He is also the co-editor of the Swiss Annuities & Life Insurance Handbook: Secure Returns, Asset Protection, and Privacy. |
The following interview was conducted by the staff of swissnetwork.com at Mr. Gantenbein’s office in Zurich in January 2006.
Mr. Gantenbein, you are the director of an internationally recognized insurance consulting and brokerage firm that specializes in advising clients from all over the world on Swiss annuities. So allow me to start with perhaps the most basic question: Why should I buy an annuity?
MG: Life spans in the developed countries have been increasing for over a hundred years. It is now common for people who reach retirement age to live 20 years or more in retirement, most of those years in good health. It’s good to live a long and full life, but you want to be sure that your income lasts as long as you do, and its purchasing power is as strong as you are. How can you manage the risk of "outliving your assets"? The answer is: with an annuity. Annuities are a unique financial product that, along with social security, retirement plans, and other savings, can greatly enhance your retirement security. Now in addition to the general advantages of annuities, Swiss annuities in particular offer further, unique features and advantages that are unknown or not available in the same way elsewhere.
Why is a Swiss annuity different?
MG: There are of course many reasons. I believe that the most important are the fact that a Swiss annuity is one of the safest forms of investments, the unique asset protection that Swiss law extends to Swiss annuity and life insurance contracts, and the enormous flexibility and wide range of insurance products that allows also non-standard solutions.
You say Swiss annuities are very safe. Why is that?
MG: Practically everywhere, the safety of an annuity investment depends on the strength of the insurance company. In Switzerland – quite apart from the fact no Swiss insurance company has ever had to close its doors – all client funds are strictly separated from the insurance companies’ operating assets. Every insurance company is required to maintain what is called a security fund, with very strict investment and liquidity requirements. It is about as safe as you can get. Furthermore, Swiss law strongly protects life insurance and annuity policies, which is another important factor that make Swiss annuities so safe.
What types of annuities are available in Switzerland?
MG: Quite generally, there are many types of annuities, and even the most sophisticated products are available in Switzerland. Annuities can be classified for example by the nature of the underlying investment (fixed or variable annuities), by the primary purpose
of either accumulation or pay-out (deferred or immediate annuities), by the nature of pay-out commitment (fixed period, fixed amount, or lifetime annuities), or by premium payment arrangement (single premium or flexible premium annuities). An annuity can be classified in several of these categories at once. For example, you can buy a single premium deferred variable annuity. The most important categorization is probably in fixed and variable annuities.
Can you explain the difference between fixed and variable annuities?
MG: In a fixed annuity, the insurance company guarantees that you will earn a minimum rate of interest during the time that your account is growing. The insurance company also guarantees that the periodic payments will be a guaranteed amount per dollar in your account. These periodic payments may last for a definite period, such as 20 years, or an indefinite period, such as your lifetime or the lifetime of you and your spouse.
In a variable annuity, by contrast, you can choose to invest your purchase payments from among a range of different investment options, typically mutual funds. The rate of return on your purchase payments, and the amount of the periodic payments you will eventually receive, will vary depending on the performance of the investment options you have selected.
You often hear that Swiss annuities offer unique asset protection. Can you tell us the reasons?
MG: Under Swiss law – and these provisions are already in place for more than 100 years, and have been extensively tested and tried in the Swiss courts – annuity and life insurance policies are completely protected and cannot be seized by any creditors or included in any debt collection or bankruptcy procedure. Swiss law provides iron clad asset protection. Even if a foreign court should specifically order the seizure of a Swiss annuity or its inclusion in a bankruptcy estate, the insurance policy will not be seized by the Swiss courts, provided that it has been structured the right way.
What does one need to do then to get this kind of asset protection?
MG: There are essentially three important requirements: Firstly, a person who buys a Swiss annuity must designate as beneficiaries his or her spouse or descendants. If done so irrevocably, he or she may also designate a third party as beneficiary. If the policyholder has designated his spouse or his children as beneficiaries however, the policy is protected regardless of whether the designation is revocable or irrevocable. Secondly, to avoid any suspicion of making a fraudulent conveyance, the person must have purchased the policy or designated the beneficiaries not less than one year – in some cases five years – before any collection proceedings are initiated or bankruptcy decree is issued. Finally, the insurance policy should be physically deposited in Switzerland. This can be for example in a Swiss bank safe or the policy could be deposited with an attorney.
How much should I invest in a Swiss annuity?
MG: There are of course no limits on the amount that you can invest in an annuity. Whether you are considering a deferred or immediate annuity, the amount of money you should consider putting into an annuity depends on your immediate actual and potential financial needs, your long-term financial goals, your current savings/investment portfolio and its current asset allocation, your asset protection needs, and the range of alternatives available to you. Depending on these factors, certainly a considerable part – I would say up to half – of your overall net worth can be placed in a Swiss annuity as it represents one of the safest forms of investments, safer even than most government bonds.