Where the Story Begins — Asset Management 2.0.
As the Asset Management 2.0 policy is rolled out in 2025, the government aims to transform Taiwan into a regional wealth management hub by attracting high-net-worth (HNW) individuals by way of expanding its financial services capabilities.
Leveraging on its global expertise with a diverse product suite, Standard Chartered Bank continues to be a leading player in HNW wealth management space. Following the commencement of its operations in the Kaohsiung Asset Management Centre in July, Standard Chartered Bank, in collaboration with its strategic partner PCA Life Insurance, led the industry as the first foreign bank to launch its unique on-shore “Premium Financing Solution” on Aug. 7.
Photo courtesy of Standard Chartered Bank
Premium Financing is relatively a new concept to the HNW clients in Taiwan though this product solution is widely subscribed to in other wealth management centers like Singapore and Hong Kong.
Samrat Khosla, Head of Wealth Management at Standard Chartered Taiwan, stated, “For High-Net-Worth clients, wealth accumulation, protection enhancement, and legacy planning are never a single-choice questions. In response to these needs, Standard Chartered Taiwan has leveraged upon its successful expertise in other markets to bring the same offering to its clients in Taiwan. This Premium Financing solution can effectively meet these needs of our clients in a balanced way.”
What is Premium Financing?
Premium Financing: Balancing Protection, Wealth Legacy, and Succession planning.
Premium Financing allows clients to purchase a large life insurance policy for the purposes of legacy planning without tying up their own capital.
It thereby lets clients allocate their own funds to a broader range of investment portfolios to pursue higher returns.
As an illustration, assume a 50-year-old client as part of their wealth transfer wants to create a policy worth US$3.5 million in 30 years’ time when the client is 80 years old. To do so, the client needs to create a policy worth US$1 million in premium value paid one time. This policy is signed between the client and the insurance company. The client pays part of this premium value, mostly around 30 percent of the premium (US$0.3 million) to the insurance company on their own, while the bank pays the remaining 70 percent of the premium (US$0.7 million) to the insurance company on behalf of the client. At the same time, the client is obliged to pay back the loan to the bank at a nominal interest rate. This means that the client can enjoy the liquidity of US$0.7 million which can be deployed in their business or invested otherwise for better opportunities while they wait for the capital gains from the insurance product to roll in.
Why Institutions Encourage Premium Financing
Financial institutions, particularly banks and insurance companies, encourage premium financing for three main reasons:
1. To build long-term relationships: Premium financing goes beyond a simple loan, it becomes a strategic relationship tool to offer personalized, long-term financial planning.
2. To provide higher liquidity solution: Clients can retain their capital for other investments while managing longer term wealth transfer goals.
3. To enable high-premium thereby higher protection: Financing enables clients to afford larger policy premiums to cover for keyman risk in case of death or accident.
There are two factors that make this proposition successful – the underlying product and the rate of funding the premium.
With its global expertise and comprehensive product capabilities, Standard Chartered remains committed to delivering best-in-class wealth management solutions for clients, further cementing its position as a market leader.
The launch of the Premium Financing reinforces the series of Wealth Lending solutions, offering pledge and lending across all types of financial assets.
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