Legacy or loss? Insurance and the great wealth transfer
Because families are dynamic, insurance solutions must be able to accommodate shifts across borders, regulations and roles over decades
ASIA stands on the cusp of possibly the largest intergenerational transfer of wealth in history. Trillions of dollars will change hands as the first generation of wealth creators in the region pass on their assets to the next generations.
Singapore, already established as a hub for wealth management and family offices, sits at the heart of this shift.
The sheer scale of this transfer has made succession planning a top priority for these wealthy families as well as financial institutions, insurers and advisory firms that support this priority. Yet, the risks that can derail family legacies too often remain overlooked.
Families prepare for investment performance and governance frameworks, but they are less prepared for the disruption caused by grief, leadership voids, family disputes, and the sudden liquidity crunch that can accompany the passing of a patriarch or matriarch.
Without careful planning, even the most robust fortunes can erode quickly. And while financial instruments abound, life insurance – properly structured – is one of the few tools that can deliver liquidity at precisely the moment it is most needed.
Insurance as a strategic tool for wealthy families
For high-net-worth families, life insurance has had to evolve from its traditional role as a simple safety net. It has become a strategic tool for creating liquidity on demand, resolving estate disputes, and ensuring continuity in times of stress.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Consider the problem of estate equalisation. Many families rely on wills that divide assets equally, but when those assets include operating businesses or illiquid properties, “equal” can prove unworkable. One heir may wish to sell, another may want to hold, and a third may insist on occupying the property or running the business.
With no liquidity to break the deadlock, disputes can drag on for years and the value of assets may deteriorate in the process.
Insurance proceeds can serve as the “estate equaliser”, making it possible to divide assets fairly without dismantling the enterprise that created the wealth in the first place.
SEE ALSO
Cross-border families face another layer of complexity. Heirs and assets are often spread across multiple jurisdictions, each with its own rules for inheritance, taxation and probate. Delays are common and in some countries, estate taxes can be substantial.
Insurance cannot eliminate these administrative hurdles, but it can bridge the gap, allowing families to meet obligations and sustain operations until legal processes conclude.
“While estate planning receives significant attention, another risk remains dangerously underestimated: the sudden loss of a family principal.”
At the same time, flexibility in policy design is critical. Families need options for how benefits are paid. Some may prefer immediate lump sums, while others may find multi-stage payouts better aligned to buy-sell agreements or long-term trust structures.
And because families are dynamic – moving across borders, navigating new regulations, or adapting to the evolving roles of children and grandchildren – insurance solutions must be able to accommodate these shifts over decades.
Key-person risk: the hidden vulnerability
While estate planning receives significant attention, another risk remains dangerously underestimated: the sudden loss of a family principal. In Asia, family enterprises are not just sources of income, they are also the foundation of wealth. Yet, too many businesses fail to insure their most irreplaceable asset.
Principals often assume they are merely “running things”, overlooking the fact that their presence is the cornerstone of value. Their judgment, reputation and networks cannot be easily replicated.
When such a figure is lost, confidence among creditors, employees and even family members can evaporate overnight. Loans may be called in, suppliers demand immediate payment, and staff morale deteriorates. Revenues often falter at the exact moment obligations are most pressing.
Cultural and legal contexts across Asia can compound the problem. In some jurisdictions, inheritance laws mandate the division of assets in ways that fracture control of businesses. In others, cultural taboos delay planning discussions until it is too late. Even with wills in place, families often rely on “mirror wills” that divide assets equally without regard for operational realities.
This is where key-person insurance becomes indispensable. Properly structured, it delivers liquidity at the moment of maximum strain, enabling payrolls to be met, creditors to be satisfied, and the family to buy time for succession arrangements to take hold.
Without it, even thriving businesses can collapse – not because they were weak, but because they were unprotected against the sudden loss of their architect.
Getting the fundamentals right
The insurance industry has been innovating rapidly, offering new structures and features designed to appeal to wealthy families. Innovation is welcome when it enhances flexibility, simplifies administration, or addresses specific cross-border challenges. But insurers must not lose sight of their core purpose – to deliver funds quickly and compassionately at the moment of greatest need.
Too often, claims processes are treated as an administrative afterthought. Families reeling from the loss of a loved one are asked to produce lengthy lists of documents, navigate rigid procedures, or wait months for benefits to be paid.
In that moment, speed and empathy matter more than balance sheets or product brochures. The true measure of an insurer is not the sophistication of its marketing, but the humanity and efficiency with which it honours its promises.
Two practical considerations are worth underlining. First, principals consistently underestimate their own irreplaceability. Walking through a realistic “day-after” scenario with creditors, employees and family members all demanding clarity often brings home the scale of this oversight.
Second, many families rely on short-term cover for what is fundamentally a lifelong risk. A term policy that expires after 20 years does little good if the founder dies in year 21. Permanent solutions, aligned to the true timeline of risk, are essential.
Asia’s great wealth transfer is not a distant prospect – it is happening now. The question for ultra-high-net-worth families in Singapore and across the region is whether their legacies will survive intact.
Insurance cannot provide leadership, but it can deliver the liquidity, flexibility and compassion that make continuity possible.
The writer is chief executive officer, Sun Life Singapore
Copyright SPH Media. All rights reserved.
