Below is a brief outline describing some of the advantages and disadvantages of United States compliant offshore variable life insurance policies and offshore variable annuity contracts.

Offshore variable life insurance policy:

• Owner and beneficiary of the policy is typically a trust
• United States tax-free accumulation of income during the lifetime of the insured
• Distributions and/or loans from the policy may be United States income tax-free, depending upon the structure of the policy and the amount of its cash value
• The policy may own a diversified portfolio of publicly and non-publicly traded assets
• Like most variable life insurance policies, the value of the death benefit is fixed in the early years and then fluctuates in accordance with the performance of the investments of the policy
• The assets owned by the policy are set aside in a separate account (pursuant to the laws of the country in which the life insurance company is incorporated) to protect them from any creditors of the life insurance company
• If structured properly, the death benefit can pass free of United States estate tax and income tax
• The assets of the policy may be held by a bank or brokerage firm designated by the owner of the policy
• The investment portfolio must be managed by someone other than owner or insured, although in certain circumstances the money manager may consult with the owner or insured

Offshore variable annuity contract:

• Annuities may be classified according to how and when the premiums are paid (i.e., single or flexible premium), according to their investment type (i.e., fixed or variable) or according to when the benefits are paid out (i.e., immediate or deferred annuities)
• The type of annuity with which we have worked is a single premium variable tax-deferred annuity, meaning that only one premium payment is made, the annuity payments are deferred, and the value of the annuity fluctuates in accordance with the performance of its investments
• Owner and beneficiary of the contract is typically a trust
• United States tax-free accumulation of income during the lifetime of the annuitant
• Distributions from the annuity are subject to United States income tax and may be subject to an early withdrawal penalty
• The annuity may own a diversified portfolio of publicly and non-publicly traded assets
• The assets owned by the annuity are set aside as a separate account (pursuant to the laws of the country in which the life insurance company is incorporated) to protect them from any creditors of the life insurance company
• The assets of the annuity may be held by a bank or brokerage firm designated by the owner of the annuity
• The investment portfolio must be managed by someone other than owner
• Neither the annuitant nor the owner may consult with the money manager