Life Insurance and Annuities

For more than a hundred years, insurance structures have provided unique opportunities for successful companies and individuals to reduce taxes, in some circumstances, through tax-free investment growth, tax-free policy loans and income tax-free death benefits. As an international insurance company, Fidelity is able to offer lower costs and greater investment flexibility than many U.S. domestic carriers.

Since U.S. taxpayers have the unique responsibility of reporting and paying taxes on worldwide income, they can benefit substantially from the advantages offered through international insurance strategies. While many international insurance companies are willing to offer their products to U.S. taxpayers, not all are willing to comply with the Internal Revenue Code and U.S. Treasury Department requirements, thereby putting the U.S. taxpayer at risk

For that reason, Fidelity Insurance Company, Ltd. (Fidelity) was formed to cater to the needs of successful U.S. taxpayers, offering tax reduction, asset protection, and flexible investments, through U.S. Treasury Department and Internal Revenue Code compliant international insurance strategies.

Life Insurance

Fidelity uses only the strongest and highest rated reinsurance companies in the world to back its life insurance policies. This provides the strength, stability and peace of mind sophisticated investors demand when considering the preservation and growth of their wealth.

Fidelity offers both Variable Universal Life and Universal Life Policies. Our Universal Life policy provides a guaranteed rate of return and a crediting rate based upon current market returns.

Fidelity offers both Modified Endowment Contracts (MEC) and Non-Modified Endowment Contracts (Non-MEC) for U.S. taxpayers. In a Non-Modified Endowment Contract, the owner limits the investment in the policy to a level that the Internal Revenue Code allows for tax-free distributions through loans or return of basis. Modified Endowment contracts are policies in which the owner invests more than the limit that the Internal Revenue Code allows for tax-free distributions. In a MEC, the owner still enjoys tax-free accumulation. If distributions are taken during the life of the insured, penalties may apply and distributions are treated as ordinary income for tax purposes.

Fidelity offers three unique investment strategies, making its policies so flexible they rival any U.S. Treasury Department and Internal Revenue Code compliant life policy offered by other companies around the world.

Our Premium Flex Variable Life Insurance Policy offers three ways to invest and manage the assets in the policy.

Preferred
Policy owners may select from several Preferred accounts with various maturities. Preferred allows the policy owner to select a low cost investment option where funds are secured by a diversified portfolio of U.S. Treasury notes and bonds, public and private stocks, corporate bonds and money market instruments.

Select
Through its mutual fund administrators, Fidelity offers some of the finest international investment products available anywhere. Fidelity provides a group of funds and fund managers with their own specific investment objective and investment policy.

Choice
Through the Choice option, policy owners may recommend any experienced money manager in the world provided that the manager meets Fidelity's high standards. The insured may submit the name of the preferred money manager. Fidelity will then conduct extensive due diligence. If warranted, Fidelity will approve the money manager and make the manager available to fidelity policy owners.

As an additional option under the Choice selection, policy owners may make a portion of their premium payments with "in-kind" or non-cash assets including existing stock and bond portfolios as well as other non-liquid assets.

Tax Benefits

For as long as there have been income tax laws in the U.S., insurance products have enjoyed favorable treatment. If properly structured and managed, the assets inside a life insurance policy, for U.S. taxpayers, enjoy tax-free accumulation of investment gains over the life of the policy.  The policy owner may take tax free distributions of basis and earnings in the form of a tax-free loan over the life of the policy.   At the time of death, the death benefit receives a stepped-up basis, for tax purposes, allowing the death benefit to be passed on to the insured’s estate income tax-free.

Annuities also enjoy the tremendous advantage of tax-free accumulation. An annuity is appropriate for many clients who need tax-free accumulation but do not qualify for or do not need, life insurance. It is important to know, however, that distributions from an annuity are taxed as ordinary income, and distributions at the time of death of the insured are taxable to the beneficiary of the annuity.

Asset Protection

In many states, life policies and annuities are protected assets, which cannot be included in bankruptcy judgments and cannot be seized by U.S. courts.

Death Benefit

Life insurance is often used to provide security for the family and estate of the insured. Upon the death of the insured, proceeds are used for such things as income replacement, debt retirement, buy-sell agreements, and for the payment of estate taxes.

Segregated Accounts

As an international insurance company, under the laws of Anguilla, British West Indies, Fidelity life policies and annuities enjoy the benefit of segregated account legislation. This means, by law, the investment portion of the life policies and annuities are held separately from the assets of the insurance and all other policy owners.  Since the assets in Fidelity's policies are segregated, they are not at risk should a creditor attempt to attach the funds of another policy owner or the insurance company.

U.S. Treasury Department and Internal Revenue Compliant

Fidelity policies are reviewed regularly by an international law firm to ensure that all policies strictly adhere to all applicable Internal Revenue Code requirements. Fidelity clients can rest easily knowing that they can enjoy the benefits of international planning while investing in U.S. compliant products.

Greater Number of Investment Options

Unlike U.S. carriers who mass market a small group of investment options, Fidelity offers a virtually unlimited number of investment options in a U.S. compliant policy.

A client may recommend an investment manager that has already established a relationship with Fidelity, or Fidelity allows the insured to recommend a money manager from virtually any money manager in the world as long as that manager meets Fidelity’s high standards. Fidelity will perform its due diligence, and if warranted, will approve the manager.

In-kind Payments

Policy owners may choose to make a portion of their premium payments with “in-kind” assets which are defined as non-liquid assets, where non-liquid assets means assets that can not be turned into cash within 60 days. This advantage opens the door for payments to be made with a wide variety of assets including fixed assets and private stock.

Reduced Premium Taxes

There are no state premium taxes on foreign issued life insurance policies. In some states, premium taxes can be as high as five percent(5%) on domestic life policies. However, foreign life insurance policies issued to U.S. taxpayers are subject to only a one percent (1%) federal excise tax. Fidelity also enjoys reduced regulatory costs. U.S. carriers must bear the expense of meeting compliance requirements or as many as fifty state insurance commissions. Fidelity is only required to meet IRC and the national insurance regulator requirements. These savings are passed directly on to the policy owner.

Immediate Low-cost Loans

With a Fidelity life policy, distributions in the form of a loan or return of basis may be taken tax-free from the first day forward. Domestic carriers typically restrict loans for the first few years and/or offer loans at a higher interest cost.

Other Savings

There are several ways that Fidelity operates in a more cost effective manner than domestic carriers. By choosing to not to do business in the U.S. Fidelity is not subject to the high cost of corporate income tax or the regulatory burden imposed by each 50 different sets of state laws and regulations. Fidelity runs an efficient, cost effective operation that is dedicated, not to marble towers and exorbitant salaries, but to serving its clients.

Audited Financials

Fidelity is audited by an international accounting firm.

Anti-Money Laundering

Fidelity strives to be a leader in complying with all "Anti-Money Laundering" laws, "Know Your Customer" requirements, USA PATRIOT Act, and Caribbean Financial Task Force initiatives.

Other Features

In addition to the investment component, the life policy provides a death benefit based on current mortality charges that are guaranteed not to exceed maximum rates.

Fidelity provides its policy owners with quarterly reports, showing the current market value of the assets in the Investment Account, premiums paid, and all charges to the Investment Account since the last report.

Fees charged for the processing, administration and maintenance of Fidelity policies are based on the fee schedule in force with Fidelity at the time the policy is issued.

Annuities

Annuities also enjoy the tremendous advantage of tax-free accumulation. An annuity investment is appropriate for many clients who need tax-free accumulation, but do not qualify for or need life insurance. It is important to know, however, that distributions from an annuity are taxed as ordinary income.  Distributions at the time of death of the insured are taxable to the beneficiary of the annuity.

The annuity policy provides for an annual benefit payable during the life of the annuitant and calculated in accordance with the mortality tables used by the company at the annuity start date. At the time of maturity, the policy owner may transfer the proceeds into a new annuity policy.

Fidelity offers policy owners an immediate annuity, which allows the annuitant to begin taking immediate distributions, and a deferred annuity that offers distributions at a later time.

With Fidelity insurance policies there are different ways to invest and manage your assets. Assets can be invested by an investment manager who already has an established relationship with Fidelity, or you may recommend virtually any fund manager in the world as long as that manager meets Fidelity’s high standards. Fidelity will perform its due diligence and if it is justified, will approve the investment manager.

In addition, policy owners may choose to make a portion of their premium payments with “in-kind” assets which are defined as non-liquid assets, where non-liquid assets means assets that can not be turned into cash within 60 days. This advantage opens the door for payments to be made with a wide variety of assets including fixed assets and private stock.

Annuity Payments

Fidelity Insurance currently offers six flexible annuity payment options under the terms and conditions of the Flexible Premium Variable Annuity Policy.

Plan A – Income for a period of years certain
Income payments will be made monthly for a period of years not exceeding thirty.

Plan B – Life income with no minimum period
Life income payments will be made monthly so long as the annuitant shall survive, but will cease on the death of the annuitant.

Plan C – Life income with ten year minimum guarantee
Life income payments will be made monthly as long as the annuitant shall survive, but if the annuitant dies before 120 such monthly payments have been made, the company will continue to make payments to the annuitants heirs or estate until a total of 120 payments have been made.

Plan D – Life income with twenty year minimum guarantee
Life income payments will be made monthly as long as the annuitant shall survive, but if the annuitant dies before 240 monthly payments have been made, the Company will continue to make payments to the annuitant's heirs or estate until 240 payments have been made.

Plan E – Joint and Survivor annuity
Annuity payments will be made monthly as long as either one of the annuitants shall survive, but will cease on the death of the Survivor.

Plan F – Joint and two-thirds Survivor annuity
Annuity payments will be made monthly as long as both of the annuitants shall survive, and on the death of either of them, all subsequent annuity payments will be reduced to two-thirds of the previous amount and will be continued at this reduced amount during the lifetime of the Survivor.

The amount of each payment under Plans B, C, and D shall be based on the sex and age at the nearest birthday of the annuitant when the first payment becomes due. The amount of each payment under Plans E and F shall be based on the sex and ages of both annuitants when the first payment becomes due. Before any payment is made under Plans B, C, D, E, or F, Fidelity must be provided with satisfactory proof of age of the annuitants.

To find out more please contact us:

Email: clientserv@fidinsco.com

The Law Building
PO Box 14, The Valley
Anguilla, British West Indies