Advisors are finding success with middle class estate planning. They’re getting help from insurers who recognize the opportunity.
Most people think estate planning is the domain of the rich but the middle class is recognizing the importance of looking to the future as well.
“There’s a bit of a misconception out there that estate plans are only for the wealthy,” said Mike Stocks, vice president of insurance marketing at Empire Life. “The reality is everyone needs an estate plan even if it’s as simple as planning for a funeral in case the unexpected occurs.”
Indeed, the middle class is an emerging market for advisors.
“I definitely think it plays a role in the mid-market for similar reasons [to wealthy clients],” said Steve Santoro, certified financial planner & investment representative of Santoro Financial Group. “It just doesn’t seem as obvious – if you are a mid-market person you still going to look for estate planning.”
At the moment only 30 per cent of Canadians have an estate plan, but the number could be on the rise. “I would say you’re seeing a growth in the desire to see the unique value proposition that life insurance plays both in the high net worth and in the middle class,” said Chris Karram, Co-CEO and financial advisor at SafeBridge Financial Group.
Over the last five or 10 years the middle class has taken more of an interest in using life insurance as a part of wealth transfer as boomers age.
“The concept of estate planning has really migrated from not just being high net worth individual need or an older individual’s need but also a Gen X need as well,” said Karram. “We’re seeing some of the struggles our parents are dealing with and some of the thoughts they’re having to work through in terms of estate planning and we’re trying to avoid that. I think we’re seeing a much larger acceptance of estate planning.”
Empire Life has noticed this too and is hoping to capture a larger share of the market with Estate Max, a new permanent participating life insurance plan designed to meet a variety of estate planning needs by providing affordable lifetime insurance protection combined with long-term cash values.
“The largest segment of the baby boom population has now entered their 50s and for some reason when folks hit the age of 50 they tend to reflect on life and future and death, their mortality. We’re finding many more Canadians are starting to look for more simple estate planning solutions so that’s really why we wanted to create estate max, to simply the process so folks weren’t intimidated by it.”
Estate Max offers three levels of estate planning: one covers final expenses; the second is for preserving wealth or protecting assets; the third is designed to leave a legacy.
“What’s really unique about Estate Max – it combines permanent life insurance coverage with the opportunity to participate annually in the profits of the pool of assets specifically held by all policy holders so we pay dividends,” said Stocks. “We think there is a big opportunity for advisors. We hope this is a simple solution that advisors can use to help a greater number of Canadians.”
And there will be plenty of opportunity.
Over the next 30 or 40 years Karram estimates somewhere in the region of $30 trillion is going to pass to the next generation, making tax planning a massive part of the process.
“Life insurance is one of the most unique vehicles in the world that allows you to transfer wealth to the next generation and to avoid taxes altogether and while you own the insurance and while you’re still alive shelter that money from taxes as well,” said Karram. “It’s an incredibly useful vehicle but that doesn’t mean it’s right for every situation either.”
“There’s a bit of a misconception out there that estate plans are only for the wealthy,” said Mike Stocks, vice president of insurance marketing at Empire Life. “The reality is everyone needs an estate plan even if it’s as simple as planning for a funeral in case the unexpected occurs.”
Indeed, the middle class is an emerging market for advisors.
“I definitely think it plays a role in the mid-market for similar reasons [to wealthy clients],” said Steve Santoro, certified financial planner & investment representative of Santoro Financial Group. “It just doesn’t seem as obvious – if you are a mid-market person you still going to look for estate planning.”
At the moment only 30 per cent of Canadians have an estate plan, but the number could be on the rise. “I would say you’re seeing a growth in the desire to see the unique value proposition that life insurance plays both in the high net worth and in the middle class,” said Chris Karram, Co-CEO and financial advisor at SafeBridge Financial Group.
Over the last five or 10 years the middle class has taken more of an interest in using life insurance as a part of wealth transfer as boomers age.
“The concept of estate planning has really migrated from not just being high net worth individual need or an older individual’s need but also a Gen X need as well,” said Karram. “We’re seeing some of the struggles our parents are dealing with and some of the thoughts they’re having to work through in terms of estate planning and we’re trying to avoid that. I think we’re seeing a much larger acceptance of estate planning.”
Empire Life has noticed this too and is hoping to capture a larger share of the market with Estate Max, a new permanent participating life insurance plan designed to meet a variety of estate planning needs by providing affordable lifetime insurance protection combined with long-term cash values.
“The largest segment of the baby boom population has now entered their 50s and for some reason when folks hit the age of 50 they tend to reflect on life and future and death, their mortality. We’re finding many more Canadians are starting to look for more simple estate planning solutions so that’s really why we wanted to create estate max, to simply the process so folks weren’t intimidated by it.”
Estate Max offers three levels of estate planning: one covers final expenses; the second is for preserving wealth or protecting assets; the third is designed to leave a legacy.
“What’s really unique about Estate Max – it combines permanent life insurance coverage with the opportunity to participate annually in the profits of the pool of assets specifically held by all policy holders so we pay dividends,” said Stocks. “We think there is a big opportunity for advisors. We hope this is a simple solution that advisors can use to help a greater number of Canadians.”
And there will be plenty of opportunity.
Over the next 30 or 40 years Karram estimates somewhere in the region of $30 trillion is going to pass to the next generation, making tax planning a massive part of the process.
“Life insurance is one of the most unique vehicles in the world that allows you to transfer wealth to the next generation and to avoid taxes altogether and while you own the insurance and while you’re still alive shelter that money from taxes as well,” said Karram. “It’s an incredibly useful vehicle but that doesn’t mean it’s right for every situation either.”
