Life Insurance for Asian Families. Swiss Life Singapore Robin Amacher

Size: px

Start display at page:

Download "Life Insurance for Asian Families. Swiss Life Singapore Robin Amacher"

Hilary Cain
8 years ago
Views:

1 Life Insurance for Asian Families Swiss Life Singapore Robin Amacher

2 Agenda Drivers of demand for high net worth life insurance Complementarity of Universal Life and Variable Universal Life policies The combination of Life Insurance with asset management services - an emerging trend in Asia?

Variable Universal Life policies The combination of

3 Drivers of Demand for HNW life insurance policies 1. HNWI market size and growth Asia-Pacific leads in global HNWI population and wealth expansion Superior economic and demographic fundamentals in Emerging Asia 2. Asian entrepreneurs Driving wealth creation with concentration risk, leverage Legacy planning and the need for liquidity provision Strong demand for large policies creating liquidity when needed Asset Protection Estate Equalization Philanthropic Legacy Potential Estate Tax

demographic fundamentals in Emerging Asia 2.

4 What is a HNW Life Insurance Policy? Jumbo Insurance = High Death Cover Single Premium, Whole Life Universal Life (UL) 1. Guaranteed minimum investment return 2. No investment control 3. Premium financing Variable Universal Life (VUL) 1. Rate of return from self selected investment 2. Investment flexibility 3. Portfolio financing

1. Guaranteed minimum investment return 2. No investment control 3.

5 Steps to qualifying a client Universal Life How much Life Live Cover do do you you need? Variable Universal Life Would you like to use your How much Live Cover can you get investment portfolio for Life from dormant investments? Cover? Focus on Cover Conventional Approach 1 st Identify client with the need for high insurance coverage 2 nd Decide on mode of payment, either by premium financing or by cash Focus on investment returns and cover Emerging Approach 1 st Identify client with eligible assets 2 nd Calculate sum assured based on client s return projections

6 Computation of Premium Sum Assured Age Gender Smoking Status Age Gender Smoking Status Residency Endow to 100 Sum Assured Residency Endow to 100 Premium Crediting Rate, e.g. 4% Assumed rate of return (%) of client s investment portfolio

Sum Assured Residency Endow to 100 Premium Crediting Rate,

7 Albert Einstein You have to learn the rules of the game. And then you have to play better than anyone else.

8 Focus on long term investment returns for VUL Universal Life 2% Guarantee 4% Crediting Variable Universal Life long term investments returns $10M Sum Assured Risk Risk Coverage Coverage Risk Coverage Premium Value of Insurance Premium Value of Insurance Value of Insurance is derived from the investment performance of the Policy Fund, net of any charges. 8

Coverage Risk Coverage Premium Value of Insurance Premium Value of Insurance Value of

9 Historical Long Term Returns for US Equity Market Taking into account dividends and inflation, we can admire the remarkable stationarity of S and P 500 s real returns around a long term trend (6.5% per year). Even the 1929 crash and the 1970s stagflation represent small deviations from the overall trend. A long term trend of around 6.5% essentially means that an equity investor s purchasing power doubles every 11 years.

Even the 1929 crash and the 1970s stagflation represent small deviations from the overall trend.

10 FORBES - Thirty-Year Estimates of Bonds, Stocks and REITs (Assuming a 2.0% Inflation Rate) Asset Classes Real Return With 2.0% Inflation Government-Backed Fixed Income U.S. Treasury bills (1-month maturity) year U.S. Treasury notes year U.S. Treasury bonds year inflation protected Treasury (TIPS) GNMA mortgages year tax-free municipal (A rated) Risk* Estimate Corporate and Emerging Market Fixed Income 10-year investment-grade corporate (AAA-BBB) year investment-grade corporate (AAA-BBB) year high-yield corporate (BB-B) Foreign government bonds (unhedged) U.S. Common Equity and REITs U.S. large-cap stocks U.S. small-cap stocks U.S. small-value stocks REITs (real estate investment trusts) International Equity (unhedged) Developed countries Developed countries small company Developed countries small value companies All emerging markets including frontier countries Source: Rick Ferri

0 10-year tax-free municipal (A rated) 2.0 4.0 7.0 Risk* Estimate Corporate and Emerging Market Fixed Income 10-year investment-grade corporate (AAA-BBB) 2.6 4.6 9.

11 In a nutshell, how does VUL work? Client s investment portfolio Now forms the underlying asset of the Variable Universal Life Policy $10M Sum Assured Risk Coverage Premium Payment Value of Insurance derived from the investment performance of the Policy Fund, net of any charges. 11

Variable Universal Life Policy $10M Sum Assured Risk Coverage Premium

12 Complimentary UL and VUL The Combination? UL for $10m VUL for $10m Focus on guarantee 1. Premium US$ 3 million 2. US$ 10 million coverage 3. 2% minimum guarantee 4. 4% crediting rate Focus on long-term returns 1. Premium US$ 2 million 2. US$ 10 million coverage 3. 6% projected investment return

US$ 10 million coverage 3. 2% minimum guarantee 4.

13 Scenario: Wealth Protection with VUL Without Planning Value at outset Value at passing, after market downturn Investment Portfolio S$20 million in equities S$10 million in bonds S$5 million in cash Value of Portfolio S$35 million S$10 million Planning with VUL Distribution of portfolio Value after Bear market Investment Portfolio S$5 million in VUL with S$25 million of death cover $15 million in equities $10 million in bonds S$5 million in cash Value of Portfolio S$35 million S$10 million Insurance proceeds Portfolio and benefits S$25 million S$35 million

portfolio Value after Bear market Investment Portfolio S$5 million in VUL with S$25 million of death cover $15 million in equities $10

14 Asset Management and Life Insurance - an emerging trend? Perspective of Client Flexibility to use dormant assets to increase coverage Opportunity to benefit from changing capital market returns in future Example of dormant assets as premium 1. Existing portfolio 2. Best in class investment funds 3. Index certificate with capital guarantees

Opportunity to benefit from changing capital market returns in future Example of

15 Asset Management and Life Insurance - an emerging trend? Perspective of Private Banker Helping clients to maximize value of dormant assets Protecting client s net worth Create sticky assets Potentially increase long term AUM Improve client retention Increase recurring revenues

dormant assets Protecting client s net worth Create sticky assets

16 Contact Us For further information about Swiss Life PPLI solutions, please contact us. Swiss Life (Singapore) Pte. Ltd. 250 North Bridge Road #37-03/04 Raffles City Tower Singapore Phone: Fax:

250 North Bridge Road #37-03/04 Raffles City Tower Singapore 179101

17 Disclaimer This material has been prepared by Swiss Life (Singapore) Pte. Ltd. ("Swiss Life"). Swiss Life specifically prohibits the redistribution or reproduction of this material in whole or in part without the prior consent of Swiss Life and Swiss Life accepts no liability whatsoever for the actions of third parties in this respect. This material is for distribution only under circumstances as may be permitted by applicable law. It is published solely for general information purposes, it is not to be construed as a solicitation or an offer to buy or sell any investment product and does not constitute any legal or tax advice. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. Any opinions expressed in this material are subject to change without notice and may differ or be contrary as a result of using different assumptions and criteria. Any information and statistics quoted from any external source can not be interpreted as having been adopted or endorsed by Swiss Life as being accurate. Swiss Life is under no obligation to update or keep current the information contained herein. Neither Swiss Life nor any of its directors, officers, employees or advisors accepts any liability or any loss or damage arising out of the use of all or any part of this material. Insurance products referred to in this material are only available to "Accredited Investor" as defined in the Securities and Futures Act (Chapter 289) of Singapore and underwritten by Swiss Life. Insurance eligibility is subject to underwriting. A Key Features document and a General Policy Conditions document in relation to the insurance products referred to in this material are available and clients may contact their client advisor or Swiss Life for more information. A potential client should read both documents before deciding whether to take up the product(s). Buying a life insurance policy is a long-term commitment. An early termination of the policy usually involves high costs and the surrender value may be less than the total premiums paid. All risks (including, but not limited to, investment risks and currency risks) are solely borne by the policyholder. The value of the underlying investments in the policy and any income accruing to the underlying investments, if any, may fall or rise. Past performance is not necessarily indicative of future results. Currency exchange rates may adversely affect the value, price or returns of any investment or related instrument mentioned in this material. Swiss Life does not provide legal or tax advice. Prior to entering into a transaction clients should read the General Policy Conditions and consult their legal, regulatory, tax, financial and accounting advisers to the extent they deem necessary to make their investment decisions. This material does not form part of any contract of insurance. For the avoidance of doubt, only the terms and conditions as stated in the policy will bind the parties. All insurance applications are subject to Swiss Life's underwriting and acceptance. Swiss Life is a member of the Policy Owners Protection Scheme. The products referred to in this material are protected under the Policy Owners Protection Scheme which is administered by the Singapore Deposit Insurance Corporation ("SDIC"). For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Swiss Life or the Life Insurance Association ("LIA") or SDIC websites ( or Information is correct as of 17 January 2014

the actions of third parties in this respect. This material is for distribution only under circumstances as may be permitted by applicable law.

18 The future starts here.

Disclosure of Important Information to Life Insurance Customers

Disclosure of Important Information to Life Insurance Customers (Applicable to Bank of Communications Co., Ltd. Hong Kong Branch) (The Disclosures are written in Chinese and English. In case of discrepancy, the English version shall prevail.) Disclosure of Important