�۶���Ƶ

It has been common for wealthy individuals and families to think they didn’t need life insurance. That is changing as people discover the full range of advantages life insurance can bring: from increased liquidity to asset diversification to tax-favorable wealth preservation. It’s one reason high net worth individuals paid more than five billion US dollars in premiums in 2016.

“Life insurance isn’t important for me given my situation,” the executive said some three months before purchasing a life insurance policy with a 10 million US dollar death benefit.

A 49 year-old Asia regional CEO of a Swiss pharmaceutical company, the executive was living and working in Singapore and progressing quickly through the company’s senior ranks. The dual Indonesian/Dutch national had three children: a 16 year-old son with his first wife, a US citizen, who was living in the US; and two school-age children with his second wife, a successful Taiwanese businesswoman with ownership participation in a Taiwan-based operating company.

The executive already contributed to social security, had a private pension plan and had an asset portfolio worth over five million dollars. He felt his accumulated wealth and annual 1.5 million dollar income adequately provided for his family’s future financial security and stability. But did it?

Think again

While it used to be a common sentiment among global wealthy individuals and families that they didn’t need life insurance, that is changing: high net worth individuals paid more than five billion dollars in life insurance premiums in 2015 alone. This is because, when examined more closely, most high net worth individual have important life insurance planning needs.

Consider our executive. He owned a considerable amount of restricted and unrestricted stock in his pharmaceutical company, as well as real estate investments in the US, Singapore, and Taiwan. That meant his asset profile was largely illiquid and fairly concentrated. Some of his assets were also situated in jurisdictions that impose estate or inheritance taxes.

Life insurance proceeds can generate funds families need to bridge this “liquidity gap.” They can also provide security by creating additional wealth and safeguarding against the risk of concentrating assets within a specific business, industry, or market.

A flexible alternative

While providing protection for the unexpected, permanent cash value life insurance solutions can also act as low volatility, non-correlated instruments within an asset portfolio. Properly designed, they can preserve and diversify wealth. They can also provide lifetime benefits like access to cash to supplement retirement income, and help equalize inheritance distributions, especially for global families.

Life insurance can also be used to address specific challenges, for example those faced by the executive due to his family structure. His US citizen son, for example, faces worldwide income, gift and estate taxation. A properly designed wealth transfer plan, funded with life insurance, would allow him to efficiently provide his son with financial security on a tax favorable basis. A separate plan could also be established to benefit his wife and other children.

While the executive didn’t address all his planning needs and desires at once, his ten million dollar life insurance coverage purchase provided comfort that his family would have additional flexibility to deal with unexpected events or complications.