Swiss regulators are investigating to see if investors are buying life insurance to hide undeclared assets from the tax authorities.

Swiss regulators are investigating to see if investors are buying life insurance to hide undeclared assets from the tax authorities, according to Bloomberg.

"We are checking selectively if there is a need for regulator action," Alain Bichsel, a spokesperson for the Swiss Financial Market Supervisory Authority, was quoted as saying. "We are warning of the risk."

The concern is that wrapper products, sold by insurers through units in Luxembourg, Liechtenstein and Singapore, are being used to conceal untaxed money, the publication said.

Offshore bonds, for example, which are sold by life insurance firms, among others, enable an investor to defer tax bills for several years, are a staple item of the UK financial planning sector and have been regarded as an entirely legitimate tax avoidance product. However, tax authorities around the world, increasingly hungry for revenues, are tightening their definition of “avoidance”.

Swiss regulators are increasingly under pressure to tighten their rules because the Alpine state has been accused of helping foreigners to evade tax, putting it at odds with countries such as the US, Germany, France and UK.

Swiss Life Holding doubled premiums from life policies that mask underlying bank deposits and client identities to about SFr5 billion ($6.5 billion) last year. Baloise Holding in Basel reported a similar increase in sales at its Liechtenstein unit, the news agency said.

When a client buys a wrapper, the beneficial ownership of the assets is transferred to the insurer while the funds often remain on the balance sheet of private banks. Insurers invest the premiums through advisors and clients receive benefits tied to the performance of the underlying investment.