Private Client Services by Mercer
Despite geopolitical volatility, sometimes-turbulent debt and equity markets, the insurance sector continues to demonstrate resilience^. In times of market volatility and uncertainty inherent in global markets, life insurance can play a pivotal role in providing flexibility and growth for your high-net-worth clients’ personal as well as business needs.
Life insurance solutions provide clients and their businesses with peace of mind and ensure business continuity through sum assured death benefits payable on demise of the life insured. Liquidity from insurance proceeds can be used to pay off outstanding obligations and sustain the business liquidity pool, and retention of key employees ensures continuity of the business during critical periods while providing protection for the future.
It is even more timely now for your clients to consider life insurance as an emerging and alternative asset class that provides opportunities and protects against financial hurdles.
Source:
^ https://www.spglobal.com/ratings/en/sector/insurance/insurance-sector (best viewed on Chrome) (best viewed on Chrome)
Buy-Sell Agreement
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Senior Executives Retention Plan
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Key-Person Protection
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Why is it important to plan ahead to ensure a smooth transfer of business to preferred successors, with certainty and stability? As a case-in-point, Universal Life (UL) insurance has helped one of our clients, three brothers in their forties, with Key-Person protection for business continuity as well as for personal needs in such unprecedented and challenging times. The three brothers:
Clients’ Initial Concerns and Needs
Each brother plays a key role in the business. One of their priorities is to ensure business continuity by ensuring some liquidity will be ploughed back into their business should an unfortunate event arise. On the personal front, each of them is at slightly different stages of their lives and would like to ensure their own family nucleus will be provided for while spending their time and financial resources on their family business.
PCS by Mercer Solutions
Approximately 9 months later, the three brothers faced potential margin calls on their leveraged investments during the recent market volatility in the first quarter of 2020.
They required additional stand-by liquidity for their business but did not wish to compromise their protection coverage.
A total of 3 UL insurance policies - one policy per sibling with Sum Assured of US$20 Million each with different insurers – was proposed, which resulted in:
Key Success Factors and Takeaways
With the UL policies they had bought earlier: