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[HOT] Use of insurance to protect individual investor's investment money permissible?


During one of EB-5 Forum session conducted in 2010, USCIS essentially said that the use of insurance to insure individual investor's investment in the new commercial enterprise was not prohibited but that they would look at such usage on a "case-by-case" basis as to its compliance with the EB-5 requirements. [As soon as I heard these words being uttered, I knew it was a matter of time some EB-5 projects would attempt to do this.] Anyway, don't take our word on what USCIS said; instead, read USCIS' own words at: http://eb-5center.com/node/499

Now, here are few of our observations:

1. Whenever USCIS says they will look at things on a "case-by-case" basis, that means they will be very strict in their review and approving such arrangement.

2. Any insurance involving EB-5 project probably would require a hefty premium payment. The decision of whether to pay a high insurance premium would obviously depend on each potential investor's preference. Some might decide that it's just not worth it and may opt for relatively strong EB-5 projects which might not need to buy insurance.

3. The strength of any insurance policy really depends on the financial strength and the track record of the insurance company.

4. Better read the insurance policy document very carefully for exclusions and limiting provisions.