Stephen spoke about Legacy and Business Insurance Planning for High Net Worth Individuals & Business Owners at the recent annual AFA conference.
Gathering financial advisers from representative firms, the Annual AFA Conference 2016 was held at the Grand Copthorne Waterfront Hotel on 14 and 15 July 2016. Our Principal Consultant Mr Stephen Chew was cordially invited to speak on both days, sharing his views on two hot topics that had everyone in attendance all ears; the subject topic of “Legacy and Business Insurance Planning for High Net Worth Individual & Business Owners” piquing the interests of many.
Like many developed countries, Singapore is facing an aging population that is at the same time becoming increasingly affluent. This poses a potential and contentious problem in the near future – legacy planning – especially when solid plans have not been set in place beforehand. Stephen lists a few famous case studies where legal disputes have arisen due to the lack of estate and legacy planning. He also listed the late Hong Kong star Anita Mui’s case as a good example of estate planning. In her will, she had arranged for a regular monthly income of $7,000 for her mother – an example of a testamentary trust which is getting more popular in legacy planning.
First of all, what exactly is legacy planning? It entails the identifying, defining, preserving and passing down of your assets to the next generation and to multi-generations, acts of charitable giving and most importantly, the legacy you choose to leave behind.
Stephen sums it up in an equation like this:
(Wealth Creation + Wealth Accumulation + Wealth Protection) – (Retirement + Liabilities) = Legacy
Now that you are ready to plan your legacy, what tools do you need?
- Will Writing
- Lasting Power of Attorney
- Life Insurance
Most importantly, you should speak with a financial adviser who can help you evaluate your portfolio, assess your liabilities and draw up a more concrete, detailed plan.
Next he moved on to the topic of “Business Insurance for Business Owners”, especially relevant in Singapore’s context where almost 70% of the labour workforce is found in small and medium enterprises.
Many business owners tend to overlook the importance of having business insurance – they often find it too complicated, or feel that things will fall into place and “take care of themselves.” With this mentality, businesses are setting themselves up for a hard fall when/if anything untoward happens. In reality, there are many unforeseen situations that can threaten and endanger SMEs.
The benefits of business insurance are many; including continued operation and repayment of loans. It will also help to reduce turnover of key employees and allow for smooth transfer of shares.
To answer the question of how business insurance can help your business, we look at the main types available:
- Continued operation
- Provide cash to cushion the financial impact
- Reduce turnover of staff
- Compensation for loss of profit
Credit Protection Insurance
- Cash to pay bank facilities
- Avoid termination of bank facilities
- Ensure funds for continued operation
- Discharge the responsibilities of the Guarantor
Business Succession Planning
- Procedure in place for transfer of shares
- Avoid arguments
- Fair value to deceased’s family
- Business continuation
Business insurance safeguards the interests of a small/medium business owner and ensures the continued operation of the business in the event of unexpected circumstances. It can provide security for creditors and is also instrumental in attracting and retaining excellent employees. Quite simply put, the conclusion is that business insurance and legacy planning are two sides of the same coin – both should go hand in hand!Share on Facebook Share