Although I have never sold any ‘3G’ insurance policy before, I encountered many occasions in which my clients bought it from the banks and other advisers. Last week, one financial adviser came to me to say that he is now worried after selling the 3G policy as he realised there are many estate planning issues he did not consider. But in the first place, what is a 3G policy? The idea of 3G policy is to benefit three generations. This is how a 3G policy works:

1. A father (let’s call him 1G) buys a whole life policy on the life of his son/daughter (let’s call him/her 2G). The assumption is 2G is still a minor.
2. After paying premiums limited to just X years, the policy will pay annual coupons (consisting of guaranteed and non-guaranteed) based on a percentage of the sum assured. The coupons will be paid to the policyholder. ...

...