Changing Priorities: A new Saving Plan helps this couple take care of the third generation 

Issue 4, August 2022 | PCS Vision

Our clients are a married couple in their 50s who jointly own a family business. Their total net worth is over US$100M. They have 2 adult children. One is studying; the other works in the family business and has a newborn. The baby is the first grandchild for our clients.

• The spouses each have existing life protection policies of US$10M sum assured that listed their children as the beneficiaries. And prior to the arrival of their grandchild, the couple was very comfortable with their coverage for legacy planning purposes. More so because their adult children were married, and they felt their priorities could shift from the next generation.
• But the arrival of their newborn grandchild changed their perspective. They saw their responsibilities expand to the third generation and wanted to support the grandchild’s eventual (top class) education costs and even marriage expenses.
  

• We recommended a savings plan in addition to their existing coverage, setting them up as the policy owners and the second generation as the insured. Our recommendations were based on the solution feature that enables the clients to change life insured and ownership to their grandchild whenever appropriate.
• Our clients chose a savings plan with a single-pay premium of US$2M. The projected growth of the savings plan will reach US$4M when the grandchild starts her tertiary education at age 18. Alternatively, the savings plan can serve as the grandchild’s family fund as the total cash value will further accumulate to around US$7M when the grandchild turns 30.

• Clients are advised to diversify risk and investment asset classes by incorporating life insurance into family portfolio.
• Key life events such as births and marriages should precipitate a coverage review in addition to annual reviews.
• Life protection products offer low-risk wealth transfer mechanisms. As such, they are key in safeguarding your family’s generational wealth.