By Genevieve Cua
Almost half of Asia's wealthy and ultra-wealthy individuals do not have a retirement plan in place, a survey by Transamerica Life (Bermuda) and Asian Private Banker has found.
Among those who have planned for retirement, 73 per cent are not confident or are only somewhat confident about their plans.
The study polled 456 advisers, including relationship managers, wealth managers, independent asset managers as well as brokers and clients in Singapore and Hong Kong between April and July this year.
High net worth (HNW) individuals are defined as those with at least US$1 million (S$1.36 million) in investable assets, excluding their primary residence, collectables, consumables and consumer durables. Ultra high net worth (UHNW) individuals have assets of at least US$30 million.
About 65 per cent of clients cite savings as one of their main sources of retirement funds, followed by investments (47 per cent) and provident funds (17 per cent).
Life insurance is also seen as a potential tool to help them achieve financial security and maintain their lifestyle while maximising efficiency in legacy planning. Three out of five HNW individuals and UHNW individuals said they were keen to buy life insurance for retirement. A high coverage amount is seen as a priority (73 per cent), followed by a regular income payout (64 per cent) and death benefit (45 per cent).
While Asia's wealthy individuals believe that retirement planning should be high on the agenda, they do not see it as an immediate priority. Most wake up to the need when there is a key trigger event such as a family death or serious medical issues. The birth of a child, succession planning and significant business challenges are other key trigger events.
Life insurance is seen as an area of potential growth. Nearly 68 per cent of relationship managers surveyed referred retirement-focused life-insurance solutions to less than 10 per cent of their clients.
More than 70 per cent of relationship managers and clients expect the popularity of life-insurance products to increase or remain the same over the next 24 to 36 months. These products include whole of life, term life and universal life plans. The last category remains the most popular, accounting for 77 per cent of all client policies.
Transamerica Life Bermuda president and chief executive Marc Lieberman said: "Over the last few years, HNW and UHNW individuals have grown to appreciate the value of life insurance as a low to moderate risk wealth tool that can deliver protection and potential returns.
"This is closely linked to the benefits that life insurance policies can offer, such as asset diversification, potential for additional leverage and long-term cash value that is accessible when needed."