From greater liquidity to flexibility: How insurance can be a good entry point to legacy planning

THE conversation around legacy is shifting. Previously regarded as a matter for later stages of life, legacy planning is now being considered by individuals much earlier. It is no longer just about preserving wealth, but also about protecting loved ones and passing on values that support their future well-being.

According to the HSBC Quality of Life Report 2024 that surveyed over 11,000 affluent individuals worldwide, eight in 10 respondents across generations agree on the importance of early legacy planning – but only two per cent have planned for their legacy needs in a holistic manner. This gap between intention and action highlights an unmet demand for more accessible, straightforward solutions to support individuals in taking the first step.

Harpreet Bindra, CEO of HSBC Life Singapore, notes that many first-generation wealth builders are turning to life insurance as a simple and effective way to kick-start the process. He shares why there is growing interest in legacy planning and how life insurance can contribute to a smoother wealth transfer across generations.

Q: Legacy planning seems to be on more people’s radar today. What is driving this shift?

Those focused on building their careers or businesses often did not give much thought to legacy planning until they were close to retirement, mainly due to time constraints.

This mindset has changed because of a few factors. First, people today are better educated as financial literacy levels are much higher and information is more readily available online. Financial tools that were once limited to ultra-high-net-worth (UHNW) families are now more accessible.

Second, demographic trends are also influencing this shift. By 2030, around one in four Singaporeans will be aged 65 or older – a sign of an ageing population that is prompting more individuals to plan ahead.

At the same time, growing affluence in Singapore and across the region is bringing legacy planning to the forefront. According to McKinsey Global Wealth Pools 2024 analysis, UHNW and high-net-worth families in the Asia-Pacific region are expected to pass on an estimated US$5.8 trillion (S$7.4 trillion) in assets to the next generation between 2023 and 2030. With this significant wealth transfer underway, the need for legacy planning becomes increasingly important.

Third, planning for the future is also evolving beyond just the financial aspect. Many individuals now see it as a way to pass on values, not just assets. Younger generations are also more likely to include charitable giving in their long-term plans, as shown in HSBC Quality of Life Report 2024.

Meanwhile, family-owned businesses – many of which are central to the region’s economies – are undergoing generational transitions. Unlike in the past, successors today may choose to pursue their own paths instead of continuing the family business. This means that founders will have to think about external successors while ensuring that the ownership structures remain within the family, and think about how best to support their children in whatever paths they choose.

All of this is happening against the backdrop of an uncertain global environment – marked by geopolitical tensions, trade disruptions and rapid technological changes – which is prompting more business owners and professionals to prioritise legacy planning earlier.

Q: Despite growing awareness about the importance of legacy planning, many still delay taking action. What is holding people back?

The prevailing perception is that legacy planning is complicated – setting up legal structures can be perceived as costly, time-consuming and emotionally challenging, especially when family dynamics are involved.

There is also a common misconception that legacy planning is only for the wealthy. In reality, it is relevant to anyone who wants to ensure their loved ones are cared for, minimise potential family conflicts over inheritance, and preserve their values for future generations.

As such, it is understandable that people put off planning. The HSBC Quality of Life Report 2024 shows that most begin legacy planning at an average age of 44 so I would encourage individuals who are already thinking of planning their legacy to start early. It is always the first step that’s the hardest – and insurance can be a practical, accessible way to begin the journey.

Q: What role can insurance play in a well-rounded legacy plan?

Insurance can be one of the most straightforward entry points to legacy planning.

Firstly, it is often less complex than any other legacy planning solutions, and can work alongside them as part of a broader legacy planning strategy.

Secondly, it provides liquidity. Some plans offer a unique combination of certainty, protection and cash value, or even a guaranteed payout that can be distributed immediately after one’s passing, unlike executing a will, which involves compiling a list of assets, applying for a grant of probate and so on.

Lastly, insurance can help streamline wealth distribution. Policyholders can have the flexibility to vary the death benefit for each beneficiary and these can be amended if circumstances change. For example, if you intend to leave a business to one child and property to another, you could leverage insurance to help balance the difference in value.

Legacy planning comprises many components and insurance can serve as one of its foundational pillars.

Q: What are some key features to consider when selecting an insurance plan for legacy planning?

Coverage amount, flexibility and expertise of the insurer are important considerations.

For affluent individuals, plans such as the HSBC Life Emerald Legacy Life III offer high protection coverage for death and terminal illness up to the age of 120. The policy can potentially span three generations – ownership can be transferred to a grown-up child, who may then name their own children as beneficiaries.

The plan also provides guaranteed cash value of up to 100 per cent of the regular premiums paid, in addition to the non-guaranteed bonus payouts that will be declared periodically, subject to terms and conditions.

Flexibility is another key consideration. Policyholders can choose between single or regular premium payments over five, 10 or 15 years. This makes it easier to begin legacy planning earlier – for instance, the premium can be as low as approximately US$2,750* (S$3,500) annually.

The plan also offers the option to spread out the death benefit over multiple instalments. This is particularly helpful if dependents are not yet ready to manage a lump sum. These features of the HSBC Life Emerald Legacy Life III provide a level of adaptability to meet evolving and differing needs for different individuals.

As the insurance arm of the HSBC Group, HSBC Life brings deep expertise and trusted capabilities to support high-net-worth clients in meeting their financial planning goals. We are proud to be recognised as the number one insurer by HNWI in the Affluential WealthLens Brand Affinity 2024 rankings, a testament to the trust that our customers have placed in us.

Q: On a personal note, how does insurance play a part in your own legacy planning?

Having worked in the insurance industry for two decades, I recognise the importance of ensuring my family’s long-term well-being. That is why I have made insurance and health coverage a core part of my financial planning.

I have also taken steps to plan for retirement and put in place strategies to build a legacy that empowers my children’s aspirations. By starting with insurance years ago, I have been able to make adjustments along the way as my career progressed – from enhancing coverage and updating beneficiaries to customising how benefits are distributed.

Ultimately, my goal has always been to ensure that my loved ones are comprehensively protected, even in my absence.

Find out more about HSBC Life Emerald Legacy Life III here, or speak to any HSBC Life authorised distributors for more information.

*Based on a 17-year-old male, non-smoker, who purchased a 15-year premium term plan, with US$500,000 minimum protection cover, up to age 85.

Terms and conditions apply. This advertisement has not been reviewed by the Monetary Authority of Singapore.