Thomas Vonrueti of Swiss Life explains the growing role and relevance of life insurance for high net worth individuals as part of their wealth planning.
Date: Jun 2011
This addresses estate planning and succession planning needs, as well as tax optimisation in a broader context, he explained.
Separating company and personal assets
According to Vonrueti, given the large number of entrepreneurs in Asia, and therefore private companies, there is a risk that negative scenarios for these companies can affect the private lives of the business owners.
As a result, it is critical to do proper structuring to segregate company assets and personal assets – for which he said there is a role for life insurance in combination with other instruments such as trusts and foundations.
Innovations in life insurance
This concept has been successful in the US and Europe previously, and over recent years has gained traction in this region as a result of the transparency and flexibility of the product, enabling it to be tailored to the needs of HNW individuals.
Another innovation, added Vonrueti, has been the way in which solutions can be adjusted in a way to deliver local tax benefits, helping clients used such products for estate planning or pre-immigration planning, for example.
First, he said, it has more flexibility in terms of investments, allowing clients to select the private bank and asset manager they want to work with, to create a personalised portfolio within the insurance plan.
The second aspect, he said, is the ability to choose death coverage in terms of the level and also the currency.
This currency advantage is important given that the majority of HNW clients use the US dollar as their main reference currency for life insurance coverage.
Yet for clients in Asia, and especially in Singapore, whose liabilities are largely in a local currency, they might prefer to choose a Singapore-dollar coverage to avoid creating an FX exposure which might not be necessary.