SPOTTING TRENDS
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international investment trends

Spotting Trends Brings Something for Nothing

international investment trends

By
Gary Scott

Spotting Trends improves the results of our investing faster than any other technique. Consequently we must embrace change. Few things change faster than interest rates. Change in in interest rates compared to actuarial statistics that life insurance companies use now creates an enormous opportunity. You really can earn between $100,000 and $300,000 for doing nothing!

Sound too good to be true? Normally this would be. There are no free lunches. Except in this instance, there is.

I was certainly doubtful at first, but a May 26, 2005 Wall Street Journal article entitled “Letting an Investor Bet on When You’ll Die” started me researching. The article said:

"A controversial new life insurance pitch promises free or low cost coverage to wealthy people over 70.

"These are the latest twist in the increasing use of life insurance as an investment vehicle for third parties, rather than simply as protection for your heirs after you die. These transactions are being fueled in part by large international banks, hedge funds and other institutional investors who are looking for new sources of returns."So I contacted our international tax attorney, Joe Cox, and asked his opinion. "Can this be true?"

Let me add that Joe’s opinion really counts with me.

Not only has he been a close friend for 20 years, he has created more than $12 billion in successful estate plans in 38 years of practice. He was voted by Florida attorneys as one of the top 1.6% of lawyers in Florida and among the top 34 lawyers specializing in wills, trusts and estates according to Florida Trend magazine. He was also named as one of the top 100 attorneys in the U.S. by WORTH magazine.

Joe has specialized in the areas of estate planning, insurance, trusts and taxation for thirty-four years. He received a Juris Doctorate from the University of Tulsa School of Law, and a Master of Laws in Estate Planning from the University of Miami, School of Law. Joe is Board Certified in Estate Planning and Administration and in Taxation by the Florida Bar.

He has a great deal of international experience and has served many of my readers.

In addition to the Board Certifications, Joe is a Fellow in the American College of Trust and Estate Counsel. He is a member of the American and Florida Bar Associations and is admitted to the Federal Appellate Courts and the United States Tax Court. Joe is a frequent speaker on tax planning topics such as income taxes, insurance trusts, irrevocable trusts and offshore asset protection trusts. He has also written articles and books concerning income tax and irrevocable trusts. Joe is listed in Who's Who in America and Who 's Who in American Law.

Among his community commitments, Joe has served many organizations in a leadership position. These include: Naples community Hospital, Community Foundation of Collier County, YMCA of Collier County, Community School of Naples, Alzheimer's association, Forum Club, Senior Friendship Centers, Inc. He was named the Child Advocate of the Year.

So when Joe says something I listen. Here is what he explained to me.

"Senior life Insurance is very hot. Over $10 Billion has been placed. More is coming on stream. Simply put, people are selling their life insurance policies to hedge funds or new insurance is being purchased with non-recourse (no personal guarantee required) financing so there is no risk. Then two years later, the insurance policy is sold for about 10% of its insured value.

"All you have to do is know someone age 72 to 88 who is not too wealthy nor too sick. The investors are looking for people in this age range who are of average health and average life expectancy.

"This type of deal is perfect for those who want to help charity or leave money to their family or have some extra cash in later years. The person or family involved needs a total net worth of $5 million or more, but calculating this value can be simpler than it seems.

"Take for example, a person age 80 whose extended family has a total asset value of $5 million. That person buys a $3 million life insurance policy. A large international bank lends (on a non-recourse basis) the annual premium of $83,000. Life expectancy on an 80 year old is 12 years, so if the insured lives that long, the total premium would be $996,000. Plus an investor may pay $100,000 to buy the ownership of the policy. This totals $1,296,000 of cost. The benefit paid on death is $3 million leaving $1,704,000 of profit.

"Institutional investors buy large traunches of such policies because  of high returns and actuarial accuracy. Some insureds live longer than 12 years, but others less. Over all, when a large number of policies are written the numbers are dependable and attractive for large investors.

"This is why the large international banks are willing to finance 100% of the premium on a non recourse (no risk) basis. The insured or policy owner can sell the policy after two years (when policies become incontestable). The buyers of these policies are banks, hedge funds and sophisticated investors (such as Warren Buffet’s Berkshire Hathaway) who buy batches of such policies.

"The market rules the price, but generally they sell in the range of 10% of the insured valued. A 1.6 million dollar policy could fetch $150,000."

The windfall you gain can be passed onto charity tax free or the money can simply be used and taxed as ordinary income.

Joe Cox has already performed the necessary legal work to put over 100 of these policies in place. He is an expert on the subject and I have made him a deal. If you agree to donate 10% (or more) of any proceeds you gain from such a policy through this introduction to the Land of the Sun Foundation (See www.landofthesun.org), he will help you with a policy of this type if you qualify (or know someone who does).The Land of the Sun Foundation (LOTS) is a public charitable foundation originally formed by Joe Spano M.D., Joe Cox Esquire, Merri and me to help reduce poverty among the indigenous. Over the past decade we have been able to distribute nearly a million dollars to help create employment for the poor, mainly in Ecuador. All donations are appreciated and are tax deductible in the U.S.

Joe knows the insurance companies, the international banks who will make the loans and understands all the tax in and outs plus how to sell the policies.

You can learn more about Joe Cox and his law firm Cox &
Nici at www.coxnici.com

You can reach Joe at JCOX@COXNICI.COM

This is the first time I have ever been able to show readers a way to make such sums of money without any investment or risk. I am pleased to be able to share this idea. Merri and I hope it makes your life better!

Gary

international investment trends
international investment trends

 

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