Before thinking about savings and investments you should first make sure that all your protection needs are in place.

Those with dependants should look at life assurance. If already in place, does the cover still provide sufficient cash to replace the income of a bread-winner in the event of his untimely demise? It could be that a policy commenced several years ago, because of inflation, may now offer insufficient cover. As a general rule of thumb it used to be that a breadwinner needed to provide his dependants with an amount of 10 times his annual earnings. So someone earning £30,000 per annum would need life assurance cover of £300,000. When interest rates used to be 5%, this would provide replacement income of £15,000 per annum. However, with interest rates now at an historical low, this figure should be increased significantly to maintain the same standard of living for dependants.

Plans to protect income in the event of incapacitation and inability to work or earn for a long period must also be considered. Permanent health insurance (PHI) provides this protection. After a qualifying period of as little as three months, up to 75% of what a person would have earned is payable. If the inability to work is permanent, then PHI will pay out until the insured person's official retirement age. The 'Permanent' in PHI literally means this, and as long as premiums are kept up the policy can never be cancelled by the insurance company.

Finally, of course, there should also be health insurance in place, either for the individual or the family. Most people are aware of spiralling medical costs and indeed a five-day stay in the Hilton could be cheaper than a five day stay in a hospital here in Phuket. And that is only the room cost! Add on in-patient, out-patient, surgical and drug costs and you are talking about a large sum of money indeed! International health plans are just that – enabling the policy holder to have treatment anywhere in the world; most have attractive excess discounts and also discounts for families and corporate clients.

After addressing your protection needs, take a look at securing an income for retirement. There are some very good offshore savings plans around and the benefits to individuals are numerous. For starters, these plans are very tax efficient as they are normally domiciled in tax free jurisdictions like Guernsey or the Isle of Man. There is no tax on contributions and, unlike UK Personal Pensions, the full amount of accrued contributions and growth can be taken as a tax free lump sum. There is a high level of security in these jurisdictions providing policy holders with a guarantee that if any company fails here, they will get back at least 90% of the value of their funds. Another feature is that money can be withdrawn before retirement age so this could be used to help fund children’s university fees. You may have noticed the student protests in London about increased university fees, which is happening as I write.

Some people may already have UK Personal Pension Plans or Company Schemes. I have known people to have as many as eight different schemes! There is now a pension scheme called QROPS, which is approved by the UK Government for those expats who want to transfer their UK arrangements offshore. Once again, there are many benefits of doing this, tax efficiency being only one of them. They are also excellent continuation schemes and can be carried on by dependants thereby escaping the 'wrath' of inheritance tax.

Well, we have covered protection and retirement and if you have any excess cash when addressing those needs then you can look at savings and investments. Again there are some excellent products available all having the same tax efficiency and security as the other plans mentioned above.
For advice on all of the above contact George Lindsay.