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Currently, approximately 80c out of every Rand we spend has an offshore component. Whether we are buying food, white goods, clothing, motor vehicles or any other commodity, in all likelihood the item was made partially or in full overseas.

So, setting up an offshore plan or policy, in a fiat-based currency is not such an alien concept for South Africans.

Given the declining purchasing power of the South African Rand it makes sense to take out a Dollar Life Plan, which is positioned in US Dollars. By investing in such a plan, you are building up an offshore asset in a strong international currency.

If you are looking for life cover that will benefit your family after your death, it is important to consider the circumstances and geography of family members when choosing a policy. With a domicilium in Guernsey, the proceeds of a Dollar Life Plan are paid offshore, which is illegal for local insurers to do. And because the Dollar Life Plan is an offshore policy, it doesn’t have to adhere to the same requirements of a local policy when it comes when paying out a beneficiary who is living overseas.

The Dollar Life Plan is especially advantageous for anyone who has children studying overseas who they are supporting in Rands - paying for their education, travel, accommodation, flights etc. Not only is this very expensive given the current Rand/Dollar exchange rate, but if this child is a beneficiary of a local life policy, when the policy holder dies, they would be compelled to return to South Africa, have a local bank account and go through FICA approvals before they can receive the life cover funds.

With Discovery’s US dollar-based policy life insurance, with the passing of the insured parent’s death, the offshore plan will pay directly, ensuring that funds are at the child’s disposal immediately. The pay out provides an uninterrupted cashflow, which is critical at this difficult time, and most important, it is in US Dollars, and not Rands.

Without a Discovery Dollar Life Plan, South Africans place their beneficiaries in a compromised and potentially expensive situation. In addition to the trauma of bereavement, the costs of returning to the country to claim the life cover benefit can be beyond a beneficiary’s means.

It is also worth noting that local life policies are included in a deceased estate and are taxed accordingly, including estate duty, executor’s fees and master’s fees, further diminishing the actual amount intended for the beneficiary. The Discovery Dollar Life Plan, because it is authentically, completely offshore is not subject to the conditions of a South African domestic policy, and can pay out tax free, with no deductions, anywhere in the world.

In addition, the Discovery Dollar Life Plan carries capital disability and severe illness benefits as a tax free pay out, in US Dollars, from age 65, which further builds offshore wealth in a stable, predictable foreign currency.

In short, the Dollar Life plan is a critical component of holistic financial planning for every South African who places value on risk diversification as a building block of their portfolios.

Consult your financial advisor to set up your Discovery Dollar Life Plan and ensure that your beneficiaries are paid directly in a foreign, tax efficient domicile.

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