Three key questions to ask your HNW insurance broker 

Whether it’s with a human, or a chatbot, the best way to maximize the productivity of any conversation is to ask the right questions. And whilst PCS by Mercer consultants undertake rigorous training to pose the questions specifically designed to help clients undercover the full extent of their needs, standards across the wider industry vary. So, we’ve produced a list of key questions that our HNW clients need to ask to get the most out of their life insurance conversations. The questions will help you incept the most appropriate, beneficial, and competitively priced solutions. 

What are the key questions all prospective HNW clients need to ask their insurance broker? PCS by Mercer Director, Jasmine Lai, offers three expert suggestions. 

While the question “What category of life insurance solution do I need?” might seem so obvious as to make it redundant, we've found that HNW clients often come to us with a specific insurance product in mind, and that product might – or might not – be the one that best suit their circumstances. Our expertise lies in identifying the gaps between their expectations and their actual needs, and the most pertinent solutions are found when our clients are open to exploring different products.

To determine what our clients need, we begin at the heart of life protection: cash flow. Because future cash flow is essentially what you are purchasing. So, the crucial considerations include: For whom are you making the purchase for? Yourself, or someone else? During or after your lifetime? Why do you want that extra stream of liquidity? And what type of funding best suits you? These factors together determine the category of life insurance solution needed. For example, if the client is looking to create an income stream that begins during their lifetime with maximum returns in the shortest possible time, then the answer is likely to be a solution in the Savings Plan category. But if a client is looking for liquidity for their family whilst their estate is in probate, and also wants to manage their lifetime cash flow, then the right solution might be a Whole of Life policy with a multi-pay premium. 

A) Death benefit settlement options (subject to specific terms of respective products)

1. Lump sum payment: The entire death benefit is paid out in a single lump sum. The is the most traditional way death benefits are paid out to the beneficiaries.
   
   
2. Regular instalments: The death benefit is paid out as a monthly or annual instalment over a long period of time, for example 20 to 30 years, ensuring a steady income stream for the beneficiaries.
   
   
3. A mixture of both lump sum and regular instalments. The instalments may even be increased by a certain percentage every year to counteract inflation. 
   
   
4. Continuation option: Beneficiary to take up the policy upon death of the insured, allowing the policy cash value to continue to grow for the benefit of the next generation.

B) Change of insured? 

For Savings Plan solutions, clients might want the policy to carry on beyond one generation, and the life insured under this life insurance category may be changed when the second or even third generation is ready to assume the responsibility. This option enhances wealth preservation and wealth transfer for HNW families. 

Some insurance companies even offer the option of prenominating an “contingent policyowner” if the successive owner is yet to come of age. 

C) Policy split?

Clients might have more than one heir. For example, if a client has three children, they have the option to split the policy in equal thirds for each of the three children. 

1. Financial strength: PCS by Mercer routinely broker large insurance policies, including jumbo insurance policies for our HNW clients. When a death benefit can be USD 100 million plus, the financial strength of an insurance carrier matters absolutely. We undertake prudent due diligence on our insurance partners during the onboarding process, clients are advised to do so at the time of policy inception.
   
   
2. Track record of the insurer: Speaking from a Hong Kong perspective, the Hong Kong Insurance Authority require all insurer websites to show their “fulfilment ratio” for participating policies. Clients are able to see which insurers have been more able to meet the client’s expectations in the past. Insurance Authority - Fulfillment Ratio.
   
   
3. Jurisdiction of the insurer: PCS by Mercer Hong Kong are licensed to offer Hong Kong and Singapore policies.
   
   
4. Customer service: Clients are advised to evaluate an insurer’s customer service reputation before making any decisions.