What Is the Role of Life Insurance in Estate Planning?

The so-called insurance trust means that the policyholder signs an insurance contract with the insurance company, and the policyholder (that is, the client) signs the trust contract with the trust institution. When the claim condition occurs, the insurance company delivers the settlement money to the trust institution and is established as a beneficiary. The special trust account is managed and used by the trust institution in accordance with the trust contract, and the trust benefits are delivered to the beneficiary upon the expiration of the trust period.

Insurance trust

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So-called

The so-called insurance trust is a financial service product that combines insurance and trust. The insurance payment is used as the trust property. The insurance insurer and the trust institution sign an insurance trust contract. When the insured person dies, a claim or maturity insurance payment occurs. When the payment is made, the insurance company will deliver the insurance money to the trustee (that is, the trust institution). The trustee will manage and use the trust contract in accordance with the terms of the trust contract. The trust property will be distributed to the beneficiary in the manner agreed in the trust contract. At maturity, deliver the remaining assets to the beneficiary of the trust.

Although the family is wealthy, and the individual is also responsible for purchasing life insurance to avoid family economic risks, which can leave a good living expenses for the family after the insured has an accident, we still cannot rule out some artificial factors. The situation where the insured's intention cannot be realized, and the insurance beneficiary cannot really enjoy the insurance benefits.

When the beneficiaries of insurance are: minors, people with mental retardation, and elderly people, because this group of people has weak labor capacity, their own life is more difficult, and the ability to use funds is weak, so it is easy to be used by some people with ulterior motives, so This group of people is particularly suitable for insurance trusts.

When there are multiple beneficiaries, or the insured has special funds (such as public welfare), the insured can also use the insurance trust. For example, when an insured person purchases life insurance, he should already be able to estimate the economic security that the beneficiary may need, and through the trust, it is already possible to determine the trust benefits that the beneficiary of the insurance trust can receive in the future. Designated for use in public trusts.

(A) can realize the financial management wish before being insured

Combining life insurance and trust is not a financial service imagined out of thin air. There is a strong and objective market demand. As mentioned earlier, one of the main functions of an insurance trust is the ability to fulfill the client's wishes.

The principle of the original trust was to help the client manage and use the relevant assets in accordance with the client's requirements. As an insurance trust that combines personal insurance and trust, it has a special function. After the client died, the most worrying things should be whether his family can live a good life, whether the family can make good use of the assets left by them, whether the prodigal offspring will immediately squander the wealth of the family, and so on. Worry is exactly what insurance trusts can do.

If the insured adopts the trust method, the management of insurance benefits is handed over to a professional team, and a trust contract is signed, stipulating that the trustee manages the funds according to the client's own arrangements, and regularly allocates the survival funds of the trust beneficiary or agrees to receive the benefits. Relevant level conditions, etc., so that the wishes of the client can be realized.

(2) Combining life insurance and trust has the dual effects of savings and investment and financial management

If the beneficiary is simply allowed to receive insurance money, the other issue is the preservation and appreciation of funds. Investment and financial management is a job that requires professional knowledge. For most people, their investment channel is mainly to deposit with banks or buy high-risk stocks. Such an investment strategy is undoubtedly rough and it is easy to cause assets. Depreciation. And if it is handed over to a highly professional trust institution, the dual effects of savings and investment financing can be achieved. Trust institutions have more professional channels than individuals, have strong investment capabilities, and are more able to achieve asset preservation and appreciation than individuals.

(3) Tax-free function in estate planning

In some countries and regions that levy gift and estate taxes, insurance trusts have become an important tool for estate planning. Assets are left to beneficiaries in the form of insurance trusts. The general operating procedure in China is: the insured purchases life insurance, signs an insurance trust contract with a trust institution, and separately agrees with the insurance company: after the occurrence of the insurance accident, the insurance money will be paid directly to the trust account opened by the bank for the children. The beneficiary of an insurance contract is still a child, and the insurer still has ownership of the insurance contract. This type of insurance trust is called a "self-interest trust". In this way, it is possible to reduce the inheritance tax in a legal situation, and to reasonably arrange the payment of insurance funds, which has the effect of killing two birds with one stone.

Because the scope of customers of insurance trust services is special, and the product characteristics are different from general financial products, many people have misunderstood the insurance trust. This misunderstanding is mainly caused by the following three misunderstandings.

(I) Misunderstanding of the nature of insurance trust

What is an insurance trust and what are its specific functions? Many people still have misunderstandings, which will undoubtedly cause insurance trusts to experience setbacks in the promotion process of sales.

We should clearly define the nature of an insurance trust, which is a financial service product, not a financial investment product. The biggest selling point of an insurance trust is the operation of funds at the request of the client, which is to help the client execute financial arrangements and is a service product.

(B) Misunderstanding of the Function of Insurance Trust

Regarding the function of insurance trust, many people confuse it with investment-linked insurance in the current insurance market. This is a big mistake, mainly because investors lack a rational understanding of investment-linked insurance products and insurance trusts.

Investment-linked insurance is an insurance product that includes protection functions and investment functions. Its main function is protection and investment. The value-added function is relatively large. Compared with other investment insurance products, the risks of investment-linked insurance are completely determined by The policy holder (often the insured) assumes that the policy holder is at greater risk. The insurance trust is a trust product, and its main wealth management function is to maintain value, not to increase investment value and obtain investment income. It is necessary to properly guide investors to rationally view the risks and returns of insurance trust products, and avoid treating them as low-risk high-return financial products or vice versa.

(3) Misunderstandings in the use of insurance trusts

When using insurance trusts in estate planning, we must pay attention to what functions the insurance trusts we choose belong to. If you want to obtain tax benefits, you must choose a "self-interest insurance trust". As mentioned earlier, China's insurance trusts operate as self-interest trusts. Do not think that any kind of insurance trust can work. The role of tax relief. We say that the key to a good financial planner is to be able to choose the right product for your goals. ,

Deepening the comprehensive understanding of the product will not only provide convenience for residents to invest and manage wealth, but also help promote financial innovation. This can make the product develop healthily and avoid misunderstandings.

, There are the following:

It varies with the type of trust. But in terms of its basic content, it should include the following:

1.About

1. Exempt

Insurance trust

The contents of the insurance trust contract vary with the type of trust. But in terms of its basic content, it should include the following:

1. Be clear about insurance policies.

The trust contract should first state the insurance policy

Insurance trust

The contents of the insurance trust deed vary with the type of trust. But in terms of its basic content, it should include the following:

A note about insurance policies. In the trust contract, the number of the insurance policy, the name of the insurance company, and the amount of insurance shall be stated first. If the principal is the insured itself and has been insured by multiple insurance companies, there will be multiple insurance policies; if the principal has insured life for two or more other insured persons, there will also be multiple insurance policies. These circumstances should be stated in the trust deed.

Designation and description of trust property.

Designation of beneficiaries. The beneficiary here refers to the beneficiary in the trust relationship. The "specific person" here, that is, the beneficiary in the trust relationship, is mostly the family of the client. This cannot be specified in the trust contract, otherwise the purpose of the trust will not be achieved.

The authority of the principal. When setting up a trust, the client should declare in the trust contract that it has the right to change the beneficiary and the trustee at any time, and can recover part or all of the insurance policy at any time, or change the management and distribution of compensation. The right to designate or assign a trust relationship is also a right to receive compensation in the future.

The fiduciary's responsibility to pay the premium. The trustee is either responsible for paying premiums or not, and this should be specified in the trust deed.

Method of distribution of compensation. In the case of a passive life insurance trust, the trust company allocates it to each beneficiary after receiving the compensation. In the case of the other three types of trusts, the trust company must first administer the compensation to use the proceeds of the compensation to distribute to the beneficiaries. After a period of time (the expiration of the trust), the principal of the compensation will be returned to the beneficiary. Because the number of beneficiaries is more or less, the method of distribution may also be different, and the time for distributing benefits will also vary according to the needs of the beneficiaries. These issues are best specified in the trust deed so that the trust company can have a basis in implementing the distribution.

Methods of managing compensation. A trust institution's management of compensation, or investment in movable property, or investment in real property, or long-term investment, or short-term use, shall be stipulated in a trust contract.

Dismissal of trustee. Whether the trustee can be dismissed at any time depends on whether the trustee can remove the trustee or terminate the trust at any time.