Experts in the market say products such as offshore bonds can help to meet the requirements of these people while providing tax advantages. But the overall advice needed by emigrating Brits is a complicated business and IFAs need to be sure to tap into specialist expertise when they need it.
Norwich Union International marketing communications manager Mike Gogan says: "A lot of people in the UK plan to retire abroad and if they do so to a jurisdiction that has a lower tax rate, when they cash their bond in, they are in a different country and they can pay whatever tax is due at a lower rate."
Gogan says it is selling a lot of offshore bonds in the UK to IFAs who are familiar "with the mechanics".
International IFA firm Blevins Franks managing director Bill Blevins says encashment tax rules in continental Europe are generally more generous than in the UK, depending on the gain in the bond and how long the bond has been in force.
Prudential is expanding its offshore unit-linked fund range for its international Prudence bond, citing the bond as a potential solution for advisers whose clients live overseas or want to retire abroad and are in need of a base currency other than sterling.
It says there are around one million retired Brits living abroad and this figure is estimated to grow to around five million by 2020.
International development manager James Tothill says offshore bonds can be held in different currencies so the client can directly match any liabilities they might have in the country they have moved to by holding investments in the currency of that country rather than running any currency risks.
He says: "A lot of people just prior to or just having retired have had enough risk in their working lives. In their retirement, they want to reduce that risk and they can do that by making sure they have a choice of lower-risk investments in the same currency as their liabilities."
But the tax treatment of offshore bonds varies not only from country to country but within countries themselves so advisers need to be sure they have a strong grasp of the tax system of the country that their client lives in or is moving to or else enlist outside help.
Scottish Life International technical manager Gerry Brown says advisers need to be aware that in some countries, offshore bonds may be of little benefit.
He says: "If you are going to Australia, for instance, there is little point in having an offshore bond because Australian tax rules charge tax on non-Australian life insurance on its increasing value every year so you are paying tax on the income arising within the bond every year and that is the situation in a number of countries."
Brown says IFAs need to point out to their clients they cannot simply assume that what works in the UK will work elsewhere.
Blevins says offshore bonds based in Luxemburg and Ireland are the ones to consider, favouring Luxemburg because of the regulatory protection afforded to bondholders if the insurance firm fails.
Taking out offshore bonds based in jurisdictions such as the Isle of Man and Jersey, for example, may not get the same beneficial tax treatment in most countries as those based in Luxemburg or Ireland, he says.
"In France and Spain, they treat these contracts as being issued from what they call a fiscal paradise and, as such, the tax treatment is not the beneficial tax treatment - they are treated as if they were ordinary non-insur- ance assets."
Brown says some countries have legal definitions of what constitutes a life insurance policy and therefore the particular policy terms or structure can result in less beneficial treatment in some nations rather than the jurisdiction of issue itself being the problem. He says the fact that the Isle of Man is technically not part of the EU can also sometimes cause a problem in meeting a national definition of a life insurance policy.
Blevins warns that tax treatment varies from country to country and having all the information to hand about a prospective country's tax regime, not only in terms of the tax treatment for bonds, but for other areas such as inheritance and income tax is vital for advisers whose clients are considering moving abroad.
He says: "We spend a lot of time unravelling incorrect structures because UK brokers, for example, often think that a bond will work in France and Spain that they have set up in the Isle of Man. We end up terminating one contract at enormous cost and setting up another one at a similar cost.
"It is in the IFA's best inter-ests to contact a specialist firm to give advice about the consequences of the expat's relocation and to take advice from that specialist on a fee basis or a shared commission basis so the advice is sound and stands the test of time."