Wealthy Chinese use insurance for legacy-planning

Majority said that designating beneficiaries through insurance may prevent inheritance disputes

About 7 in 10 high net worth individuals (HNWIs) in Greater China have integrated insurance into their asset portfolios, a study by Manulife Hong Kong and Deloitte found.

The study— which surveyed HNWIs with net assets of at least HK$7.8m in the Greater China region— found that 30% of respondents allocate 11% or more of their assets to insurance products.

Notably, over half (57%) of respondents reportedly expressed a desire to leverage insurance to facilitate a smoother transfer of wealth to future generations. 

Life insurance is found to be the leading form of coverage, with close to 78% of responding HNWIs owning a life insurance policy.

Medical insurance (76%) and savings insurance (60%) follow close behind.

When asked to rank the most important outcomes they hoped to achieve in asset inheritance, 64% of those who picked “prioritizing the distribution of their assets in their desired manner to prevent inheritance disputes” identified it as their main anticipated outcome.

Amongst all respondents, nearly 7 in 10 (67%) said that designating beneficiaries through insurance can help mitigate conflicts in the eventual distribution of their wealth.  

“In today’s evolving financial environment, HNWIs are turning to insurance as a key strategic means of achieving financial stability, effectively managing risks, and preserving their legacies,” said Albert Mak, Chief Agency Officer of Manulife Hong Kong and Macau.

Deloitte’s Private Hong Kong Leader Anthony Lau noted how insurance has evolved from a risk management product to a legacy planning tool for HNWI clients.  

“It mimics some key features of will, family trust, and limited power of attorney, making insurance one of the most accessible legacy planning components,” Lau said.

In certain jurisdictions, tax authorities offer preferential tax treatment such as tax exemption, deferral and deductions for insurance products, as outlined in their tax law, he noted.

“Families are becoming more open-minded about starting legacy planning at a younger age, having recognized the benefits of facilitating the smooth transition of wealth and maintaining harmonious family relationships,” Lau said.