The Legitimacy of Foreign Life Insurance Companies
It has been brought to our attention that there are some advisors who believe the words “foreign” and “fraud” are synonymous.
This is a surprise to us. Fraud knows no boundaries. Just look at Madoff, Petters and others based in the U.S. who engaged in fraudulent schemes within the U.S. boundaries. A Google search will turn up name upon name of other U.S. persons who engaged in ponzi schemes and other fraudulent activities inside the boundaries of the United States.
Integrity is always important. It is also important to understand the tax issues. Do cash value life insurance contracts provided by a life insurance company located outside the United States enjoy the same tax benefits of cash value life insurance policies issued by a life insurance company located in the United States? The answer is yes and can be confirmed in the attached Private Letter Rulings.
Castle Re Insurance Company, Ltd is located in Bermuda and is not afraid to make that point very clear. But it also voluntarily chose to be treated as a United States company for U.S. income tax purposes. It files a U.S. income tax return each year and, for tax purposes, is treated as domestic life insurance company.
Why the Bermuda location? The answer is simple: Castle wants to give its clients the best of both locations. Its clients get the same beneficial U.S. income tax treatment and they get the ability to have a life insurance contract that can be custom designed and drafted based on advice of their professional advisors. It is a tough combination to beat.