Insurance Companies have always been good at thinking up glamorous names for simple products. A maximum investment plan is actually an endowment plan. As endowment plans have such a bad name, no one would even think about investing in a Maximum Investment Plan if they knew it was an endowment plan in disguise.
Having said this, a maximum investment plan could be a useful savings vehicle for a higher rate taxpayer. The reason is that this client could make regular contributions for 10 years (7 years and six months insome cases) and at the end of the period the fund which built up would not be subject to tax. The higer rate taxpayer could pay £1 a year or similar to keep the scheme alive and draw off an income upon which no tax would be paid
The problemwith the schemes is high charges but there is a move by Insurance Companies to lower the charges and Nicholls Stevens are prepared to recommend these schemes after proper analysis for some higher rate taxpayers as part of an overall financial plan – remember we are giving our clients advice not selling a product. So, we would only advise such a scheme as part of a portfolio which we constructed and kept under review. As we would offer the advice on a fee basis it should be possible to keep the charges down.