Safeguarding Your Loved Ones with Insurance Trust

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How can we be certain that our intended beneficiaries will inherit assets and not be burdened with increasing debts once we are gone?  By Ong Pin Hean, Chief Sales Officer, Allianz Life Insurance Malaysia Bhd.

Ong Pin Hean

Ong Pin Hean

For many of us, our most productive working years are spent building up that little fortune so that our assets can be inherited by our loved ones when we are no longer around.

But how can we be certain that our intended beneficiaries will inherit assets and not be burdened with increasing debts once we are gone?  Also, do we really know the value of our assets and if our beneficiaries can manage what they have suddenly inherited?

The answer to such questions is likely to be a “No”. To be honest, many of us are unaware of what will happen after we are gone due to the lack of awareness on proper financial planning.  We spend years toiling to provide that all-important safety net for our loved ones and yet, so much remains unclear to both us and those who matter the most to us.

Contrary to popular belief, it is not only the wealthy who need to protect their assets. Just about anyone with assets to protect needs sound financial planning.

As an insurer, we are in the business of providing new products and services to our customers. But insurance is also about protection, about helping policyholders plan their finances to be prepared for the unexpected.

We decided to look beyond products and services and to see how we could help people manage and preserve their estates. Thus we ventured into the business of insurance trust.

To put it simply, insurance trust is a financial arrangement in writing in which the insurance payout is managed by a trustee who handles and distributes your assets as instructed by you in a trust deed.

Why is Insurance Trust Important?

insurance trust 2Not many people realise that the assets you own are not automatically transferred to your loved ones upon your death.

In fact, when a person passes away, his or her assets are actually frozen.  The process of transferring the assets can take a long time. Assets can “shrink” in the process of transferring and our next of kin may not enjoy the benefits if the fund is not properly managed.

The transfer can only be fulfilled once family members pay off all debts, i.e., tax, legal fees, business debts, and personal debts.  The leftover monies will then be distributed to the beneficiaries according to your will, assuming there is a will.  When there is no will in place, even more complications can and will arise.

Having an insurance trust can go a long way in sparing your next-of-kin this added agony.

The benefit of having an insurance trust is that your funds will not be frozen upon your demise and can be immediately accessed by your Trustee Company which can then provide your loved ones with immediate cash to pay off debts and living expenses according to your last wishes.

Your loved ones will not have to deal with a “shrinking” fund. With a trustee to manage your fund, your assets are managed by a professional and this helps your beneficiaries when they need it the most in the fastest and most economical way.

You can also rest in peace knowing that your wealth has been distributed exactly as you wished to anyone or any organisation and in the manner you prefer, be it a lump sum or in periodical payments.

How Does One Go About an Insurance Trust?

The first step is to purchase a life insurance plan which will be assigned to a Trustee company. The Trustee company will then prepare a trust deed. In the event of death, the insurer will pay the Trustee company which then distributes the money to your beneficiaries.

The best is to engage the services of an expert in financial planning so that you get accurate information and reliable advice on what steps or measures to take.

You need to know that trust insurance is a viable option for anyone and something we all should consider to take care of not just ourselves but our loved ones.

With expert advice, you will get the necessary information and knowledge on the trust market in Malaysia, the mechanics of wills and testaments, as well as the various forms of trust – be it wills, testamentary trust, living trust, statutory trust or insurance trust.

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