Eight wealth planning benefits of PRC onshore insurance
First, what defines onshore insurance?
In the context of the People's Republic of China (PRC), onshore insurance refers to insurance solutions that are provided by insurance companies licensed for, and operate, within mainland China.
The companies can be state-owned, privately-owned or foreign joint-ventures with legal entities in mainland China. They are regulated by the China Banking and Insurance Regulatory Commission, and their insurance products and services are subject to Chinese laws and regulations.
PRC onshore insurance solutions are wholly purchased with the renminbi (RMB), and the solutions are specifically designed to meet the local market’s unique needs.
PCS by Mercer is a fully licensed broker of PRC onshore insurance, and we are specialists in tailoring solutions for high net worth (HNW) individuals.
What are the wealth planning benefits of onshore solutions for PRC clients?
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Certainty in legacy planning and wealth transfer:Properly structured, insurance solutions allow HNW clients to transfer wealth to their beneficiaries in a tax-efficient manner. More importantly, you can have full control over the timing and quantity of wealth transfer, particularly as annuity products allow a steady and gradual transfer of assets rather than in lump sums.
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Asset allocation and protection:The right onshore solutions can have generational benefits; offering the stability required when planning for timescales beyond a single lifetime. There are also other asset protection utilities.
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Retirement planning beyond the finances:
Some onshore policies provide clients with guaranteed priority access to exclusive retirement villages for any generation within a family. -
Simplify family protection:Some family structures are more complex than others. To avoid future conflict and enable effortless asset distribution, onshore insurance can be used for estate equalization and provide for all members of a family.
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Tax efficiency:Onshore insurance products in China offer several tax advantages for clients and / or beneficiary(ies). A properly structured insurance policy ensures the death benefit does not form part of the deceased estate, and monies received by beneficiary(ies) are also free of income tax liabilities. The liquidity generated can well prepare the family for other potential taxes / obligations.*
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Investment diversification:Onshore insurance products can offer secure asset diversification and investment opportunities in the form of an alternative asset class with liquidity certainty that does not mark-to-market.
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Stability:Annuity products are islands of stability during volatile times. They are insulated against currency and market fluctuations, providing consistent income, steady growth, and liquidity when you most need it.
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Grow your wealth with guaranteed returns:Some onshore insurance products in China offer guaranteed returns, providing clients with a predictable income stream that can help them achieve their wealth planning goals.
PRC Onshore Solution Case Study – Legacy Planning
Profile
PCS by Mercer client is a 55 year CEO and married with a teenage child.
The CEO’s net worth around RMB 300M
Key Considerations/Challenges Specific to the Client
PCS by Mercer Solution
After considering our client’s needs against most of the onshore solutions available in mainland China. We suggested that she incepts an annuity plan:
- Savings Plan paying an annuity of RMB 2.25M
- Payments start when the client is closer to retirement age
- From the first annuity payment, the cash value of the savings plan drops to zero
- The client appoints her child as the ‘annuity beneficiary’ so only she receives the annuity payments, which is scheduled
- The premium of RMB 50M has been paid by the client in one lump sum payment.
Key takeaways
Annuities plans help to secure steady income for the next generation in a regulated manner.
By paying the entire premium, the client – the annuitant – achieves ‘zero cash value’.
Zero cash value means an annuitant has fully committed all the funds in the plan towards purchasing the annuity.
By isolating the plan funds in this way, the annuitant also effectively removes the fund from consideration when their overall debt position is assessed.
PCS by Mercer are experts in helping you safeguard and transfer your wealth exactly how you wish.
Why choose PCS by Mercer?
PCS by Mercer is part of Marsh McLennan(NYSE: MMC), the world’s largest insurance broker, and a S&P 500 company with a market cap of more than We have unparalleled infrastructure and scale. The scale is backed by financial strength, and our global framework gives you all the benefits of our international acumen in your PRC onshore experience.
Working with PCS by Mercer China means simplified inception and claims processes and the peace of mind that comes from partnering with the best.
Our scale brings you access. But beyond access, we are dedicated to redefining and delivering client-centric excellence in everything we do. You come first. From the moment we meet you right through to potential claims, we are with you.
Above all else, we value our relationships. We have built a leading team of banking, insurance and risk experts who are consistent in their expertise. Together, we are committed to providing you with the most effective and cost-efficient solutions.
Experience the PCS by Mercer difference.
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is the CEO of PCS Hong Kong. She joined in October 2021 with over 20 years of experience in the insurance and banking industry. Ms. Wong was most recently the Head of Third Party and Private Banking Distribution at HSBC Life. She was instrumental in the growth of its high-net-worth client segment. Prior to HSBC, she held similar leadership roles at Transamerica Life Bermuda, MetLife, and Zurich International Life. Christine holds a Bachelor of Arts degree from the University of British Columbia in Canada. Email: Christina.wong@mercerpcs.com