Global Life Insurance for High-Net-Worth Individuals
By Daniel Baumgartner & Petra Peters
As investment advisors, we view global life insurance for high-net-worth individuals as a critical foundation for cross-border wealth management.
Having the proper life insurance extends beyond simple risk replacement. It’s a highly reliable mechanism for assured, streamlined wealth transfer, providing essential financial control and liquidity across international boundaries.
Global Liquidity: Certainty in an Uncertain World
One of the greatest challenges for an international estate is immediate liquidity. Even well-funded estates face significant delays in accessing capital when assets are frozen in complex international probate or succession processes.
For example, death in a foreign country can trigger a cascade of administrative expenses, legal fees, and short-term debt obligations that require immediate cash.
Global life insurance solves this by creating a predetermined pool of U.S. dollars in cash:
- Bypassing delays: The policy’s proceeds are paid directly to the designated beneficiary by contract, circumventing the lengthy, costly, and unpredictable probate procedures of various countries.
- Currency stabilization: For clients whose assets are primarily denominated in non-USD currencies (like euros or pounds) but who maintain U.S.-based debt, investments, or financial obligations, the USD payout acts as essential currency hedging. It confirms that necessary expenses can be settled immediately with the required currency, insulating the estate from unfavorable exchange rate fluctuations at the moment of death.
Strategic Uses for Cross-Border Families
Sophisticated international clients leverage global life insurance to fulfill core legacy planning goals, prioritizing control and fairness:
Contractual Estate Equalization
It’s common for cross-border wealth to include illiquid assets. Passing these specific assets to one heir can create an unfair distribution of wealth relative to other siblings. Global life insurance provides the leverage to solve this issue with pure cash.
A policy can be structured to provide a promised cash benefit equal to the value of the illiquid asset, allowing the heir who doesn’t receive the business or the property to receive an equivalent, reliable distribution.
This confirms fairness and mitigates potential family disputes, making the transfer of illiquid assets much smoother.
Enhancing International Philanthropy
For philanthropic clients, global life insurance for high-net-worth individuals offers an effective way to optimize their charitable impact with great certainty. By naming a charity as the policy owner or beneficiary, the client creates a substantial, leveraged future gift that is funded over time with manageable premium payments.
This strategy allows the client to commit to a major contribution to a global or domestic foundation without liquidating current investment portfolios.
Preserving Investment Integrity
By confirming a certain amount of cash for settling final debts and obligations, the global life insurance policy safeguards the client’s carefully constructed core investment portfolio.
Heirs are not forced to liquidate stocks, bonds, or other appreciating assets during a market downturn or at an inopportune time, verifying that the intended long-term growth strategy of the estate remains intact.
Critical Administrative Steps
For cross-border policies to function as intended, careful administrative governance is non-negotiable.
Ownership and Beneficiary Control
In a global context, the most important administrative consideration is verifying that the policy’s ownership and beneficiary designations are perfectly clear.
Unlike wills, which must be validated through probate and are often subject to the conflicting inheritance laws of multiple countries, a life insurance policy is a private contract. Its payout is dictated directly by the policy’s terms.
Specialized international advice is necessary to structure the ownership entity and name beneficiaries with clarity, confirming that the benefit flows to the right person or entity without legal ambiguity or delays caused by multiple international jurisdictions.
Solvency and Performance Review
Life insurance is a long-term asset, sometimes spanning many decades. The original financial projections are based on assumptions about interest rates and investment performance that may prove inaccurate over time.
We advocate for a rigorous, annual performance review of the policy’s “in-force illustration.” This review confirms that the policy is adequately funded and on track to remain in force until the intended maturity age.
Given the changing financial environments global clients experience, this vigilance is key to verifying that the policy does not unintentionally lapse, thus destroying the entire purpose of the wealth preservation strategy.
Smart implementation of life insurance for high-net-worth individuals in a cross-border environment requires seamless collaboration between your investment advisor and specialized international legal counsel.
Partner With a Professional to Optimize Global Life Insurance
Ultimately, global life insurance for high-net-worth individuals is the one financial instrument that can confirm a specific amount of USD liquidity, bypass complex international probate, and honor wealth distribution wishes, independent of shifting tax treaties or foreign inheritance laws.
Partner with professionals who understand global wealth. Reach out to Terra Nova Asset Management for a strategic consultation on integrating your life insurance as a powerful component in your comprehensive asset portfolio.
Reach out to us directly at 212-355-1234 or ppeters@terranovausa.com for the New York office (Petra) or 855-248-6630 or baumgartner@terranovausa.com for the New Jersey office (Daniel).
You may also contact us here to schedule a meeting and we’ll get in touch with you soon!
About Daniel
Daniel Baumgartner is a founding partner of Terra Nova Asset Management LLC, a partner-owned investment advisory firm that manages individual portfolios for clients. Daniel has extensive experience in marketing, development of special U.S.-investment products, as well as customer acquisition and relationship management. His ultimate goal is to make a difference in his clients’ financial lives through honest investment advice. He strives to provide high-touch, personalized service and enjoys getting to know a client’s personality as it relates to their financial circumstances before crafting the right solutions. As money is a very personal subject, Daniel takes his responsibility as an advisor very seriously, forming long-term relationships with clients based on trust.
Daniel received his degree in finance and international business from New York University. Outside of the office, he is a hobby landscape, street photographer, and has a great interest in U.S. and European history (16th-19th centuries), believing it helps him answer the question “Why is something the way it is?”
About Petra
Petra Peters is a founding partner and the Chief Executive Officer of Terra Nova Asset Management LLC, a partner-owned investment advisory firm that manages individual portfolios for clients. Petra has decades of experience in the banking industry, asset management, overseeing the administration of individual accounts, and designing and advising specialized funds tailored to the requirements of international private and institutional clients. With extensive knowledge of both Europe and the U.S., she’s able to provide advice and services beyond the typical investment advisor. Petra desires for her clients to live a financially care-free life so they can pursue their passions, and she values their trust and gratitude. Creating invaluable friendships formed over years of partnership, some clients even consider her part of their family.
Petra’s interests outside of work include classical music, history, travel, charities, motorcycling, and golf. She is also on the board of a German charity.