State, federal, and international tax laws are constantly being adjusted these days. As someone whose assets can be heavily impacted by even small alterations in the tax code, it is imperative to keep abreast of these changes.
State, federal, and international tax laws are constantly being adjusted these days. As someone whose assets can be heavily impacted by even small alterations in the tax code, it is imperative to keep abreast of these changes. But beyond this, you as a high-net-worth individual should also integrate a comprehensive insurance plan into your financial planning process. After all, you want to protect your hard-earned assets!
Of course, this needs assessment tends to be a bit more complicated for the high-net-worth individual than for an average family shopping for a car or homeowner’s insurance. HNWIs have a lot more to consider as there are more ‘gaps’ to fill and more policies to choose from. A robust system of multilayered policies is often the best way to effect this critical risk management. A seasoned wealth manager can help you assess which combination of plans is right for your needs.
The Standard Types of Insurance for the High-Net-Worth Individual
As a high-net-worth individual, you should consider combining a variety of insurance policies to build a truly robust plan. Life insurance, asset insurance, and employee insurance are just a few of the many options that might make sense for your unique financial situation.
Life Insurance
First and foremost, you should secure your loved ones’ financial futures in the event of your passing, and choosing the right life insurance policy is vital. From medical bills and funeral costs to outstanding debts and general expenses, there are several scenarios to account for. The right life insurance policy will ensure those left behind won’t have to liquidate assets in order to meet their ongoing financial obligations.
POLARIS PRO TIP: When trying to decide between term or whole life insurance, remember that insurance is about risk management, and using insurance as an investment vehicle is unlikely to deliver the same kind of returns as other investment strategies. Instead, the focus should be on replacing your income. At Polaris Wealth Advisory Group, we can help you determine what kind of life insurance policy will best serve your financial situation.
You also bear the responsibility of adequately prepping for estate taxes. This brings a certain peace of mind, knowing that your wealth can pass on without the heavy burden of a high estate tax bill or inheritance taxes. A more comprehensive life insurance plan can soften the financial impact of taxes and fees for your inheritors. Sit down with your wealth manager to review all the options and ensure you select an appropriate policy.
Umbrella Insurance
Umbrella insurance, sometimes known as excess liability insurance, is also imperative for the high-net-worth individual. While basic home, auto, or watercraft insurance might suffice for the average person, the HNWI must consider additional financial risks. This includes lawsuits for property damages or accidental injuries to others, libel, vandalism, slander, and invasion of privacy. A wide-ranging umbrella insurance policy adds an extra layer of security to protect your assets.
Indemnification and Professional Liability Insurance (PLI)
PLI plans for certified professionals of high net worth should be an active consideration; whether as the chief decision-maker for your nonprofit organization or as a founding partner in your firm. Bear in mind that while an employer’s or organization’s umbrella policy coverage will protect board members, executives, and trustees, it may only protect them against financial issues faced while working as an agent of the organization. As such, this coverage has its gaps. The prudent high-net-worth individual will familiarize themselves with the limitations of this coverage and consult their wealth advisor to find a suitable solution.
Domestic Employee Insurance
HNWIs who employ cooks, nannies, gardeners, or others to work in their homes may face responsibility for domestic accidents. Any injury that occurs as a result of working for you on your grounds can leave you liable for a lawsuit, which is why it’s smart to purchase a domestic employee insurance policy.
You might also consider taking the extra step of establishing a workers’ compensation plan. This will replace an employee’s lost income while they recover if they are injured on the job. Your financial advisor can assist you with the proper planning for potential employee mishaps.
Additional Types of Insurance for the Ultra High-Net-Worth Individual
Of course, certain high-net-worth individuals may need additional safeguards, beyond the standard protections.
Wine & Antiquity Insurance
Fine art, antiquities, and wine collections carry both sentimental and financial value. They are also not traditionally covered by a standard homeowner’s insurance plan. Adding these items to an individual rider is generally excessively expensive as well. Purchasing a dedicated insurance policy for these assets may be the best move.
POLARIS PRO TIP: On an annual or semi annual basis, make a point of videotaping or photographing your fine art, antiquity and wine collections. In the event of a natural disaster, robbery or other form of loss, you’ll be able to provide the insurance company with concrete proof of your ownership.
POLARIS PRO TIP: It’s important to note that individually insuring antiques and other high-ticket items—such a valuable painting or rare coin collections—creates a record of ownership so the item in question can’t be gifted or passed on without being taxed. You need an experienced wealth advisor, like Polaris Wealth Advisory Group, who can help you assess the pros and cons of insuring high-ticket items versus choosing a blanket insurance policy.
K&R (Kidnap & Ransom Insurance)
Your company may offer a K&R plan to cover expenses in case of an incident. But the main benefit of an individual K&R plan is the assurance that your personal fortune will not be decimated by the rare (but possible) instance of kidnapping for ransom. You may want to supplement a company plan with a personal plan for added safety.
Secure Your Future With High-Net-Worth Individual Insurance Policies
HNWIs face many financial risks, and it’s important to plan for them accordingly. Choose a wealth management advisory group well-versed in the high-net-worth individual’s specific insurance needs to ensure your assets are adequately protected and your loved ones are provided for.
Polaris Wealth Advisory Group offers personalized financial advice for HNWIs. Polaris advisors will consider your unique financial risks and circumstances, and determine what combination of insurance policies best suits your needs. Get in touch with a Polaris advisor to book a consultation, discuss your insurance requirements, and protect your future today.
This website is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Polaris Wealth Advisory Group unless an investment management agreement is in place.
