The following is an overview of the most common terms used with regard to Swiss annuities.

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An IRS-approved, tax-free transfer of funds from one insurance policy to another insurance policy, from an insurance policy to an annuity, or from one annuity to another annuity or from one company to another company.

The age at entry is a deciding factor in the calculation of a premium when a life insurance contract is being drawn up. It corresponds to the difference between the commencement date of the insurance and the date of birth of the prospective insured person. Age at entry is expressed in whole years with fractions over six months being rounded up to the greater whole year.

Age of the insured person at the expiry of the insurance contract.

To convert a rate of any length into a rate that reflects the rate on an annual (yearly) basis. This rate is also known as "annualized return" and is similar to "run rate".

or

To convert a taxation period of less than one year to an annual (yearly) basis. This helps income earners to set out an effective tax plan and manage any tax implications.

A person who receives the benefits of an annuity or pension (= recipient).

The person upon whom a life-insurance contract is based; in other words, the annuitant is the beneficiary of an annuity or pension.

An annuitant can be the policy holder or someone else to whom the title was designated. Proceeds of the contract are given to the beneficiary upon the annuitant's death in order to protect the beneficiary from a loss of income.

The process of converting an annuity investment into a series of periodic income payments.

After an annuity has been through the process of annuitization, the investment is said to have been annuitized. Annuitized investments are not necessarily paid out completely to the beneficiaries.

A financial product sold by financial institutions (mainly insurance companies) that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. Annuities are primarily used as a means of securing a steady cash flow for an individual during their retirement years.

Annuities can be structured according to a wide array of details and factors, such as the duration of time that payments from the annuity can be guaranteed to continue. Annuities can be created so that, upon annuitization, payments will continue so long as either the annuitant or their spouse is alive. Alternatively, annuities can be structured to pay out funds for a fixed amount of time, such as 20 years, regardless of how long the annuitant lives.

The different ways in which annuities can be structured provide individuals seeking annuities the flexibility to construct an annuity contract that will best meet their needs.

The application is the expression of intention by which the applicant expresses his/her will to conclude a contract in binding fashion, such that a positive counter-declaration (acceptance) by the recipient is all that is required for the establishment of the contract. The application for concluding an insurance contract is normally initiated by the person interested in obtaining insurance (the potential policy holder). It must contain all objectively significant contractual points (insured perils, insured objects, insured benefits, premiums, inception and duration of the insurance) and any other points that either party considers to be significant. Normally an application form is used to make an application. The General Conditions of Insurance (GCI) are either included in this or are referred to therein. In the latter case, the GCI must be issued to the applicant before submission of the application, as otherwise the application is not binding.

see Secrecy

A proceeding in a court in which an insolvent debtor's assets are liquidated and the debtor is relieved of further liability.

The beneficiary, who may be either a natural person or a legal entity, has an expected entitlement to the insured benefits. The beneficiary is specified by the policy holder and may be named as the beneficiary of the entire sum insured or of a proportion thereof.

An individual or firm which acts as an intermediary between a buyer and seller. Insurance brokers are usually remunerated by commissions from the insurance companies. By arranging an insurance through a broker, the clients pay no more in premiums than going directly to the insurance company. Rather, the clients save time and money because they benefit from the broker’s comprehensive advisory and support services.

This form of insurance implies the payment of the insured benefit in the form of a capital sum (a single payment) the amount of which is stipulated in the insurance contract.

Insurance brokers are remunerated by commissions from the insurance companies. Such commissions as well as other administrative costs/fees are included in the calculations of the insurance company. There are no extra fees and, in case of Swiss annuity and life insurance, there are no penalties for cancellation of the policy.

Establishment of the insurance contract subsequent to acceptance of the application by the insurer.

The person or persons designated to receive the death benefit if the primary beneficiary dies prior to the death of the insured.

A binding agreement between two or more parties for performing, or refraining from performing, some specified act(s) in exchange for lawful consideration.

The date of issue of the contract.

The legal safeguards that prohibit any person or governmental authority from seizing a life insurance or annuity policy that is governed by insurance laws.

The risk that a business' operations or an investment's value will be affected by changes in currency exchange rates. For example, if money must be converted into a different currency to make a certain investment, changes in the value of the currency relative to the home currency will affect the total loss or gain on the investment when the money is converted back. This risk usually affects businesses, but it can also affect individual investors who make international investments.

The amount on a life insurance policy or pension that is payable to the beneficiary when the annuitant passes away.

The period of time from conclusion of the contract until expiry of the contract.

see Currency Risk

Property that a debtor is allowed to retain, free from the claims of creditors who do not have liens on the property. All the property of a debtor which is not attachable under Bankruptcy Law.

1. The economic costs that a business incurs through its operations to earn revenue. In order to maximize profits, businesses must attempt to reduce expenses without also cutting into revenues. Since expenses are such an important indicator of a business' operations, there are specific accounting rules on expense recognition. Expenses are the opposite of revenues. Examples of expense include payments to suppliers, employee wages, factory leases and depreciation.

2. Money spent or costs incurred that are tax-deductible and reduce your taxable income.

see International Financial Centre

A fraudulent conveyance is a civil cause of action. It arises in debtor/creditor relations, particularly with reference to insolvent debtors. The cause of action is typically brought by creditors or by bankruptcy trustees. The usual fact situation involves a debtor who donates his assets, normally to an "insider", and leaves himself nothing to pay his creditors as part of an asset protection scheme. However, it is not uncommon to see fraudulent conveyance applications in relation to bona fides transfers, where the bankrupt has simply been more generous than they should have or, in business transactions, the business should have ceased trading earlier to avoid giving certain business creditors an unfair preference (see generally, wrongful trading). If prosecuted successfully, the plaintiff is entitled to recover the property transferred or its value from the transferee who has received a gift of the debtor's assets.

see Fraudulent Conveyance

Professionals in high-liability professions (such as lawyers, medical doctors, etc.) who go without malpractice insurance are sometimes described as “going naked”.

The minimum interest rate under Swiss insurance law that an insurance company can pay on an annuity contract.

see Insurer

see Secrecy

The person whose life is covered by an insurance policy.

A financial institution that is in the business of selling contracts to indemnify losses for a premium.

In the mainstream economics, the word “inflation” refers to a general rise in prices measured against a standard level of purchasing power. Previously the term was used to refer to an increase in the money supply, which is now referred to as expansionary monetary policy or monetary inflation. Inflation is measured by comparing two sets of goods at two points in time, and computing the increase in cost not reflected by an increase in quality.

An international financial centre (IFC) is a term used to refer to a jurisdiction or particular city where major providers of cross-border fiduciary services, banking and insurance as well as securities exchanges are located. Besides the large IFCs such as for example New York, London, Switzerland, Hong Kong or Tokyo, many smaller jurisdictions or "offshore" jurisdictions are often also referred to as IFCs.

Investment or investing  is a term with several closely-related meanings in business management, finance and economics, related to saving or deferring consumption. An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it. Literally, the word means the "action of putting something in to somewhere else" (perhaps originally related to a person's garment or 'vestment').

see Portfolio

A legal arrangement used by people in high-liability professions to thwart malpractice claims.

The U. S. tax form used to report the purchase of any foreign annuity to the IRS. A 1% excise tax is due on the initial purchase price of the annuity. However, Swiss annuities are exempt from the 1% U.S. excise tax.

Annuity payments are made as long as the insured person is alive. Annuity payments are made for a guaranteed minimum number of years, determined by the owner. If the insured person dies during this period, payments continue to the beneficiary for the rest of the period. If the insured person survives this period, payments continue for life.

The time span of how long a particular person is expected to live. Life expectancy is the average number of years a human has before death, conventionally calculated from the time of birth, but also can be calculated from any specified age.

Life insurance is a contract you sign with an insurance company, obligating it to pay a benefit of a certain value in case of death or disability. Life insurance can also be used just for saving reasons.

You may select either term or permanent (whole life) insurance. With a term policy, you are insured for a specific period of time. When the term ends, you must renew the policy for another term or change your coverage. Otherwise, you are no longer insured. With a permanent or whole life policy, you can buy coverage for your lifetime.

You pay an annual premium, typically billed monthly or quarterly, for the coverage. The insurer sets the cost, based on your age, health, lifestyle, and other factors. With a permanent policy, your premium is fixed, but with a term policy it typically increases when you renew your coverage to reflect the fact that you are older.

An annuitization option that provides fixed monthly payments guaranteed to last for the life of the annuitant.

Swiss annuities offer instant liquidity. All capital, plus all accumulated interest and dividends, is freely accessible. So if funds are needed quickly, they are available and not tied down for a fixed period of time. Furthermore, all Swiss banks will accept Swiss life insurance policies as collateral.

A provision in Swiss insurance and annuity contracts that allows the owner to borrow up to 90 percent of the cash surrender value of the policy.

A sum of money settled in a single payment.

Date at which a insurance policy is due for payment.

An actuarial table indicating life expectancy and probability of death.

The term offshore generally means a jurisdiction/country other than one's home jurisdiction. Offshore is however often used to refer to jurisdictions which specialize in certain international financial services, in particular fiduciary services, administration of investment funds, banking and insurance.

Benefit paid out periodically. Payment may be limited in time as in a temporary pension. Alternatively, it may be payable up to the death of the insured person as in the case of old-age pensions.

The policy is a private document setting out the rights and obligations of the parties, issued by the insurer to the policy holder. The policy serves as proof that an insurance contract has been concluded and of its contents.

The contractual partner (individual or group) of the insurer.

A portfolio is a collection of investments held by an institution or a private individual. In building up an investment portfolio a financial institution will typically conduct its own investment analysis, whilst a private individual may make use of the services of a financial advisor or a financial institution which offers portfolio management services. Holding a portfolio is part of an investment and risk-limiting strategy called diversification. By owning several assets, certain types of risk (in particular specific risk) can be reduced. The assets in the portfolio could include stocks, bonds, options, warrants, annuity certificates, gold certificates, real estate, futures contracts, production facilities, or any other item that is expected to retain its value.

Pursuant to the Swiss federal law on insurance contracts, beneficiary entitlements shall cease if the insurance benefits are pledged or if bankruptcy proceedings are instigated against the policy holder. The entitlements shall be reinstated if the pledge lapses or bankruptcy is revoked. An important exception to this rule is the case of a preferred claim under bankruptcy. In this situation, the life insurance policy is not considered part of the estate during bankruptcy proceedings if the primary beneficiaries are the spouse or the children. Thus insurance cover may be maintained for the family.

The premium is the price that the policy holder pays to the insurer in return for which the agreed benefits are provided in the event of a claim. The premium is generally calculated for a period of insurance, a year unless otherwise specified, even if other payment methods are agreed, e.g. monthly installments, single premium.

The premium payer is any individual or business which pays premiums to the insurer.

The individual first designated to receive the proceeds of an insurance policy. There can be more than one primary beneficiary.

A Private Letter Ruling is a written statement issued to a taxpayer by the U.S. Internal Revenue Service that interprets and applies the tax laws to a specific set of facts described in the letter ruling request.  Under U.S. Internal Revenue Code § 6110(k)(3), Private Letter Rulings may not be used as precedent.

Risk is the uncertainty of future rates of return, which includes the possibility of loss. This variability or uncertainty causes “rational” investors to expect higher returns on investments where the actual timing or amount of payoffs is not guaranteed.

Banking secrecy refers to the professional discretion of the banks, their representatives and employees in the business matters of their clients, or third parties, of whom they have gained knowledge in the performance of their duties. The same criminal and civil penalties for violation of a clients privacy imposed on all Swiss bank employees also apply to insurance company employees and brokers for life.

Whole life insurance requiring one initial lump sum payment.

The early termination of an insurance product by the policyholder.