Case study: Keeping it in the family: Long-term wealth segregation and protection for a high-net-worth family  

Issue 4, November 2023 I PCS Vision

PCS by Mercer help this family in the People’s Republic of China (PRC) segregate their onshore and offshore assets while achieving protection and creating an intergenerational wealth transfer solution. Read on to find out more. 

Our client is a senior executive in the PRC. He runs the family business across Hong Kong and China. The business is ultimately held by the family patriarch – the client’s father. 

The PCS by Mercer client is middle-aged, and the patriarch is in his seventies. 

The client is married, travels frequently, and was holding a USD10M offshore life insurance policy when we met him.

The family is undergoing strategic planning for business succession and therefore urgently needs to consider their wealth management and transfer options. They also need to mitigate the intrinsic risks in a period of change and transition as well as plan for inheritance and potential future tax obligations. 

The client wants to segregate the family’s onshore and offshore assets; using their PRC onshore assets to fund their wealth transfer solution(s) without impacting their offshore assets and liquidity.

They also want to plan for future marital asset segregation.

Taking into consideration the patriarch’s age and potential age-related health conditions, PCS by Mercer proposed a Whole of Life policy. Premiums was automatically deducted from a client’s bank account by the insurer and processed within one working day. The solution enables the patriarch to be the “insured” without a medical application process, while providing sufficient life protection policy transfer and payout options to achieve the family’s goals of wealth transfer and risk mitigation.

The solution has the added potential benefit of providing comparatively stable growth in cash value in instances of downward trending interest rates (as seen in recent times). And it does not impact the client’s offshore asset and liquidity.

Premium: 30 million RMB

1. PCS by Mercer is able to help clients structure a total insurance solution using only RMB funds to meet a family's onshore inheritance and risk protection needs. The solutions need not impact offshore liquidity and assets. 
2. Family wealth can be transferred to future generations through changing the policy holder.
3. At the time of writing, onshore Whole of Life policies in the PRC are tax exempt.