Ryan Perkins MLIBF CeMAP DipFA of Utmost International explains
When you talk to clients about their wealth, you emphasise that often it is not what is held that is important but how it is held. The importance of how wealth is held extends beyond the type of investments or contracts that are used but how they are structured from the outset.
Here are some key points to help you structure your client’s wealth.
Why having multiple, younger lives assured can be helpful
Many of our contracts allow for multiple and importantly, younger, additional lives assured. But what advantage does ‘being a life assured’ on our contracts offer the individual, as lives assured have no legal rights in most jurisdictions? It provides additional flexibility over the timing of death benefit payments. In the absence of having additional lives, on death of the policyholder or sole life assured, the life assurance contract must end, regardless of the market position at the time.
Imagine if a policyholder died and Utmost International had to end a contract in March 2020, at a time when the markets were at the lowest. By having additional lives assured, the contract could continue until such a time as the policyholder’s legal representatives were able to, and wanted to, distribute the wealth.
Having additional lives provides the mechanism by which the contract can continue, this is where the flexibility is created. In some instances, once a contract is established, additional lives assured cannot be added and therefore it is important to get it right at inception.
Nominate a beneficiary
You could consider going one step further though. In order to allow the wealth to pass on, it can be advantageous to nominate a beneficiary or beneficiaries. In certain jurisdictions, on the policyholder’s death, the beneficiaries can become entitled to the rights under the policy in the share specified. This is how the beneficiaries gain rights over the assets (just being a life assured is not enough as lives assured do not have any rights over the contract). When there has been a loss in the family, you want to ensure your client’s wealth is passed on quickly and easily.
By using a nomination, the assets can pass to the policyholder’s beneficiaries, avoiding probate hurdles, a costly and time-consuming process. The average time for probate varies by jurisdiction and depends on the complexity of an estate, but can take up to 12 months in certain circumstances. With careful planning, wealth can be passed on in a matter of weeks to those your client has nominated.
Talk to your clients about structuring their contracts the right way
The Global Pandemic means that morbidity may be closer to mind for some. Contact your existing clients to help provide peace of mind by checking their contracts are structured in the right way. These conversations may also lead to new business and referrals and help you develop relationships with your client’s family, essential for the growth and longevity of your business.
To find out more about the expatriate solutions available from Utmost Wealth Solutions please contact:
Ryan Perkins – ryan.perkins@utmostinternational.com or tel: +44 (0)7834 499 727
James Clark – james.clark@utmostwealth.com or tel: +44 (0)7977 917 396