Safeguarding a charmed life 

Issue 1, February 2024 I PCS Vision
When a family experiences the shock reality of mortality for the first time, they reflect deeply about their future needs, and PCS by Mercer help them create more security that is also cost-effective.


PCS by Mercer clients are a happily married couple. The wife is her 60s and the husband is in his 70s. They have two daughters who live overseas. 

The family had largely led a charmed life, so the two Universal Life (UL) policies – one held by each spouse for over 10 years – were more like footnotes. However, in early 2023, the couple’s parents passed away after contracting COVID-19, and they faced mortality for what was really the first time. The experience made them think about their own lives and children. The husband in particular, being 10 years older than his wife, felt very compelled to create more coverage for his wife and daughters.  

Key considerations

When they incepted their original UL policies, the spouses’ ten-year age difference meant there was a significant discrepancy in the premiums payable. The wife’s younger age meant she was able to secure a lower premium than what the husband would have been charged for the same insured amount. 

So, in that context and to maximize the impact of their initial cash outlay, they purchased a policy with an insured amount of US$2 million for the husband, and a policy with an insured amount of US$12 million for the wife. 

During a recent policy review however, PCS by Mercer found that the couple’s existing policies alone will not be sufficient for their envisaged future needs. 

Motivated by their recent experiences, and to really safeguard their family against an unpredictable future, our clients were open to different solutions as well as the need to undertake new medical exams.

PCS by Mercer Solution

The couple provided their past medical history, and after a review of different solutions as well as undergoing the requisite medical exams, the following PCS by Mercer solution was selected in addition to their existing policies:

An Indexed Universal Life (IUL) policy for the husband, with a total sum assured of US$10 million. 

Premium: US$550,000/year x 10 year

A Savings Plan in the wife’s name.

Premium: US$2 million

Key Takeaways:

  1. Regular policy reviews are crucial as families and their needs change. Policy reviews ensure that there is adequate protection whatever the circumstances. 
  2. IUL policies are very cost-effective as the insurer pays a minimum fixed interest rate as well as a non-guaranteed variable return tied to a choice of benchmark equity indexes. The fixed interest rate is paid even when the (selected) benchmark index underperforms, and when the index performs well, IUL policies may offer notable upside potential. 
  3. Insurance solutions are most effective when they are needs-led rather than driven by cost concerns.  While cost is an important factor to consider, prioritizing the alignment of insurance solutions with actual needs leads to more effective and valuable coverage.

Key takeaways

  • Each client and his/her needs are unique, and PCS by Mercer works to find the best solution in each circumstance. 
  • High net worth lifestyles can be complex and across jurisdictions, so the solutions offered need to be efficient across the geographies concerned.
*This case study is based on a real-life family. Some details have been changed to preserve privacy.

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