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
protection for your heirs after you die. These transactions
fueled in part by large international banks, hedge funds
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
was voted by Florida attorneys as one of the top 1.6% of
Florida and among the top 34 lawyers specializing in wills,
estates according to Florida Trend magazine. He was also
named as one of the top 100 attorneys in the U.S. by WORTH
Joe has specialized in the
areas of estate planning, insurance, trusts
and taxation for thirty-four years. He received a Juris Doctorate
the University of Tulsa School of Law, and a Master of Laws
Planning from the University of Miami, School of Law. Joe
Certified in Estate Planning and Administration and in Taxation
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
American and Florida Bar Associations and is admitted to
Appellate Courts and the United States Tax Court. Joe is
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
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
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
"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.
buy large traunches of such policies
because of high returns and actuarial accuracy. Some
longer than 12 years, but others less. Over all, when a large
number of policies are written the numbers are dependable
and attractive for
"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
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!