There has been a 143% week-on-week increase in the number of wills since the lockdown started, a figure that is predicted to go up to 220% soon. Before 2019, people believed that legacy planning and creating a will was only for the rich; but that trend is changing. It is now understood that anyone wanting to secure their assets and protect their family needs to have a will.
The lockdowns have resulted in heavy reliance on the internet, taking even estate planning online; something for which presence of all parties was crucial. These impacts might seem to be short-lived, or perhaps until the COVID-19 lockdowns remain, but there are chances that they might also stick around, impacting the future of the insurance industry altogether.
From financial planning to business succession and legacy planning, everything might find itself online.
Potential Future Impacts on Legacy Planning
Insurance companies that already had online systems in place faced a certain setback when they upgraded their systems, since the transition took a little while not only to get implemented but also to get used to.
However, this small setback at the time was well worth it, as those who had optimized their online infrastructure fared much better once the lockdowns began, reaping the rewards of a less-competed market. To add fuel to the fire, the market wasn’t just less-competed,but also more demanding than ever!
At the start, the market saw almost a 40% increase in demand immediately. As insurance companies took on more and more clients, the demand only increased. Financial advisors played a major role in this as well, as they asked clients with a diverse investment portfolio to create wills.
This was followed by the drops in share prices, even of shares belonging to market leaders. Case in point; Vermillion Energy Inc. (NYSE:VET).
Legacy Planning And Force Majeure – How Insurance Claims Are Being Treated During COVID-19
Force majeure means “superior force,” and is a major part of many a contract. It includes a set of events that are out of either party’s control, such as war, acts of terrorism, natural disasters, epidemics, or restraints set forth my governing authorities that may result in a claimable loss.
In the case of COVID-19, force majeure is applicable wherever government restrictions (the lockdowns) are preventing, restricting or delaying performance of any clause included within the will.
However, if the clause isn’t included in the will itself, force majeure isn’t applicable. You should advise your clients about any force majeure clauses before letting them sign a contract.
It is important to note that most insurance companies are including the clause within their contracts because of the COVID-19 situation.
The Change in Estate Planning: Helping Clients Protect Their Family & Businesses
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It is no secret that people yearn to make lives for their children and spouses easier after they’re gone. While wills are a great way of doing that, clients are shifting towards trusts as well now, seeing as how it can be the perfect way to support them financially.
A trust is like a gift from the person who passed away to those they left behind, as it takes effect immediately. It is in an intended beneficiary’s name, reducing the amount of paperwork and procedures that one needs to go through.
Furthermore, trusts can also reduce the estate tax implications and isn’t subject to challenges in probate courts as wills are, further reducing the hassle for whomever the trust is founded. Recommending a trust to your clients can go a long way towards furthering their legacy planning ventures.
However, trusts and wills are entirely different things; so make sure you have the requisite knowledge before recommending it.
As the insurance industry goes into a ‘digital’ state, there is a certain uncertainty revolving the matter of estates. Existing clients are getting antsier and new ones are also equally troubled. We recommend using online tools for now, as there are chances (because of the reduced operating costs they offer) that they are going to stick around even after the lockdown.
Legacy Armour offers a tool for insurance agents to make the most out of this online shift in the industry, offering a streamlined way of handling clients and their real estate planning. Get in touch today to learn more!