Life insurance is a critical component of wealth planning. It creates predictability, flexibility and more importantly, liquidity, allowing individuals and families to structure their wealth to suit their own unique needs. But amid a constantly evolving landscape, it can be difficult to understand how much insurance cover clients need and what solutions are best for them.
To ease this burden, intermediaries should partner with sophisticated and reliable advisors: they will discover the enormous benefits life insurance brings to legacy and succession planning.
Bespoke advisory
The expertise of insurance brokers extends beyond traditional policies. An experienced advisor can help you and your clients understand the increasingly intricate wealth terrain and guide you through the complex maze of regulatory compliance, tax law and risk. He or she can provide an invaluable perspective on an individual’s unique circumstances and identify optimum solutions to satisfy current and future needs.
The products and services offered by both intermediaries and insurance brokers often work hand in glove. The type of life insurance policy recommended to a client – such as universal life insurance or private placement life insurance – can be complementary and will depend on how you’ve structured the investment portfolio. A collaborative approach allows all parties to make the most informed decisions, maximising the value of the life cover.
Advisors can also tailor solutions to create certainty for clients during times of distress and sudden shocks. There may come a time when your client, his family or business requires significant cash to cover outgoings. But if wealth is tied up in illiquid assets such as property, it can be difficult to sell them, and even lead to major losses if the value of those assets is depressed due to a market downturn. An expert advisor can structure a policy that provides a versatile source of funds, helping to buffer against economic headwinds, create cash flow continuity and avoid fire sale asset disposals.
When it comes to the future of a family business, advisors are similarly able to assist with transitions of power to safeguard its future and the livelihood of its employees. A well-structured policy allows control to be shifted to family members who are active in the family business while equalising the estate for those who wish to forge their own path.
Global capabilities
Today’s HNW and UHNW individuals have increasingly global needs. They own property and other assets all over the world, exposing them to significant unexpected losses if they do not have the right safeguards in place. It has, therefore, never been more important for brokers to have deep global expertise to match clients’ requirements.
Furthermore, over the last few years, a new highly competitive wealth planning ecosystem has emerged. Covid-19 has accelerated the pace of this change as the entire world was brought to a standstill, with borders closing and travel restricted. The uncertainty has highlighted the value of working with trustworthy advisors that are nimble, agile and able to adapt to the fast-moving environment. Experienced advisors, not just with a global footprint, but with boots on the ground in multiple jurisdictions, are most equipped to do this.
Wealth transfer is a constant, ongoing phenomenon. Patterns and directional flows will continue to emerge in reaction to evolving geopolitical conditions, country-specific public policy measures and changes in population demographics. This is why the life insurance industry is so dynamic, and why trusted advisors are critical.
There will always be uncertainty in life, but tapping into global expertise and tailor-made solutions can help to elude unnecessary complications for both you and your clients.