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Life insurance can be designed with two different objectives:

  • With the intention to provide for a substantial death benefit. This would be a mortality driven product. The accumulation of assets within the policy would be a secondary consideration. (The insurance laws of the United States and Canada require policies to be mortality driven).
  • The focus is on the accumulation of the assets. The mortality element (death benefit) is not as important. Many countries only require a very minimal amount of mortality to be classified as “life insurance”. (U.K. recognizes 1% of mortality as true “life insurance”.) This presentation referrers to policies with 1% of mortality.


  • Estate Planning – For clients who live in countries that have forced heirship rules a life policy can provide a solution. The policy owner can designate beneficiaries and percentage of benefit. Beneficiaries do not have any rights and can be replaced by the owner at any time.
  • Tax Deferral– Assets (eg: real estate, securities, art, cash, etc.) within a policy can grow tax-free.
  • Asset Protection– Life insurance policies are recognized around the world for their strong asset protection characteristics. In many jurisdictions, life insurance policies are non-attachable to creditors claims.
  • Privacy– Banking and brokerage accounts opened under an insurance policy, are opened in the name of the insurance company rather than in the name of the individual client. Therefore keeping the client’s privacy intact.
  • Death Benefit– Upon death of the insured, the beneficiaries will receive the proceeds tax-free in most jurisdictions including the United States.
  • Flexibility– Policy owners can choose their own custody bank and wealth manager


Unlike having your funds in a bank, the insurance company simply holds the funds on your behalf in a segregated account. The funds are not used or commingled by the insurance company.

There are 3 levels of security:

Insurance company: The insurance company is licensed and supervised by the insurance regulator.
Assets of the policyholder are deposited with an independent custody bank. Policyholder assets are always held separately from insurance company assets. Policyholder’s assets are protected in the unlikely event of insurance company failure.

Custody bank: The client can choose their custodial bank and wealth manager. The bank is independent of the insurance carrier. All securities are held in segregated accounts off the bank’s balance sheet. In the event of bank failure the securities remain in the clients’ segregated account. Policyholders have preferential rights over the segregated account assets.

Insurance regulator: The jurisdiction has robust insurance laws and a designated regulator for the insurance industry. Responsible for insurance company licensing, ongoing supervision, and enforcement. Monitors insurance companies’ solvency. Regulates in accordance with the International Association of Insurance Supervisors (IAIS).