Life insurance for the high net worth (HNW), Hong Kong and Mainland China 

The traditional view of life insurance as solely coverage for mortality risk is a bit like seeing smart phones as appliances to make phone calls – technically accurate but also missing 95% of the picture.

The ever-growing suite of life protection products are highly flexible and individual solutions have evolved over time to address the specific financial needs of HNW individuals. As such, life insurance should really be seen as both a financial instrument as well as a financial safety net for multiple generations. From that perspective, life protection is an essential element in any HNW individual’s asset portfolio.

Life insurance is a standalone item, and it can offer immediate liquidity to beneficiaries. The liquidity is stable as it is unrelated to the investment market, which can be highly volatile, giving HNW individuals better security and peace of mind.

Another advantage of HNW life insurance is its potential as a tax efficient financial instrument*, especially in wealth transfer plans and processes.

Demand for life protection products is on the rise and will likely continue to trend upwards. There is a lot of buying power that has been preserved over the last two years, and for a number of pandemic-related reasons, legacy planning will remain a key component when clients are planning their risk management solutions.

More bespoke tailoring of solutions in changing environments is one factor in the increasing popularity of a wider range of products. One size does not fit all, and PCS is committed to finding the best solutions for our clients.

Savings Plan has been popular because it is a wealth tool with many benefits, including being an effective wealth transfer solution, having multi-faceted death benefit settlement options and pre-determined breakeven, as well as tax deferral potential. Its utility as an asset means that Savings Plan will continue to be popular. Similarly, PPLI and VUL also have specific facets that have increased their popularity.

From our conversations with our clients, it’s apparent many Hong Kong clients think and strategize on generational timescales. They view their wealth both in terms of a legacy and as the source of their lifestyle. Within that now-and-forever approach, HNW Hongkongers recognize it is increasingly difficult to achieve the same magnitude of success they themselves have had in the past. As a result, they are now prioritizing strategic wealth preservation over wealth creation. They want to ensure their children are able to enjoy the fruits – not the liabilities – of their accomplishment.

In Hong Kong families, which are increasingly smaller in size, their primary driver in these uncertain pandemic times is to protect and defend their assets. The unpredictability of equities markets globally is also amplifying the risk-aversion of Hong Kong families. So, more than ever, insurance is seen as a tool to cover mortality risk as well as a safeguard of their lifestyle.

We are constantly expanding our footprint in Mainland China, it’s a very important market for us. To assist our clients, PCS by Mercer is now able to leverage our license from the China Banking Insurance Regulatory Commission. The license allows us to trade as a foreign broker and cover all available lines of insurance brokerage in that market. Accordingly, PCS has expanded our suite of risk advisory and insurance broking services to the full spectrum available.

We currently operate in three major cities – Shanghai, Beijing and Guangzhou and have plans for strong expansion into others.