As a high-net-worth individual (HNWI), you have likely made strategic decisions, put in tons of time, and often have infused capital into your future.
However, as your wealth grows, so does its complexity. With each milestone, managing your finances can become increasingly intricate.
Tencap understands the unique challenges behind wealth accumulation. We recognize that as your wealth expands, the corresponding risks also multiply. That’s why strategic insurance planning for HNW individuals is essential in shielding your hard-earned prosperity.
This article contains tried-and-tested tips from Greg Black, a Certified Financial Planner® from Tencap.
How is Insurance Planning Different for HNW Individuals?
Insurance takes on a unique dimension for HNWIs with substantial and potentially complex financial situations. For one, HNWIs typically require higher coverage levels than the average policyholder to adequately protect their sizable estates and provide for their families in the event of their passing.
Beyond personal needs, insurance can be a strategic tool for estate planning. Specifically, proceeds from policy payouts can help offset potential estate taxes.
Additionally, insurance policies can offer financial security and continuity for businesses by providing liquidity to cover business expenses, facilitating ownership transitions, or protecting them against losing key personnel.
Simply put, HNWIs may require more protection than others because of more substantial estates. Therefore, insurance is a central part of the toolkit for financial planning for HNWIs.
6 Insurance Planning Strategies for HNWIs
Explore these insurance planning strategies for HNWIs with a trusted financial advisor that understands insurance planning.
1. Conduct a comprehensive risk assessment
HNWIs face diverse risks, from market volatility to liability exposure. A thorough risk assessment is crucial to identifying potential vulnerabilities and tailoring insurance coverage accordingly. Tencap completes this for each HNW client we serve.
As an example, we met with an endodontist; in our review it was discovered that he had very poor automobile coverage limits. He had no idea that he was susceptible to big exposure in that category – it turned out to be an oversight by his insurance agent.
Another example, for someone with extensive real-estate holdings is examining liability insurance to mitigate risk against lawsuits stemming from property-related accidents. On the other hand, you might need to focus on key person insurance to reduce risks associated with losing key personnel from your business.
2. Update and review policies regularly
The finance world constantly moves and shifts, as does your insurance needs. Regularly reviewing and updating insurance policies makes aligning them with your current circumstances and objectives easier.
For instance, as your wealth grows or your family situation changes, you may need to adjust coverage levels or add new policies for the complete protection of your assets and loved ones.
One example is we had a client that had a teenage driver. However, that teen moved out of the Country for a study abroad program for 6-8 months. We invited our client to remove the driver for that time. That decision alone saved them hundreds of dollars.
In another example we had a client that had an umbrella policy for 1M. We were able to have one of our connections in this space quote him on a 2M umbrella policy. The 2M policy was almost the same cost as his 1M policy.
3. Opt for high coverage limits
Given the substantial assets at stake, you’ll likely require higher coverage limits to adequately safeguard your wealth and provide for your family in unforeseen circumstances. Maximum insurance coverage ensures you have comprehensive financial measures to weather potential setbacks.
For example, you could choose an umbrella policy with multimillion-dollar coverage limits to protect against costly lawsuits that might threaten your assets.
4. Leverage tax-efficient products
As an HNWI, you may benefit from tax-efficient insurance products to minimize tax liabilities and optimize wealth transfer strategies.Tencap examines your unique situation and carefully and intelligently craft and tailor a financial plan for each client. Your risk tolerance, goals, and timeline is likely to be different from the next client, and we are prepared to structure your financial plan, just for you.
5. Explore custom insurance solutions
Off-the-shelf insurance policies may not fully address your unique needs and circumstances. However, many providers have custom insurance solutions for HNWIs so you can have coverage for specific requirements and objectives. The point is you need someone with a deep understanding of everything in the financial planning space, so you can be coached on the pro’s and con’s of each possibility and get clear on which options are best for you.
6. Consult a financial advisor
Given the complexity of insurance planning and general wealth management for HNWIs, seeking guidance from a qualified financial advisor is among your most prudent actions.
A financial advisor with expertise working with HNWIs can help assess your insurance needs, recommend appropriate coverage options, and integrate insurance strategies into your overall wealth management goals.
Fortune Favors the Insured
Undertaking insurance planning as a high-net-worth individual requires strategic foresight and tailored solutions because of the unique complexities of accumulating substantial wealth. The tips above are critical in safeguarding your assets and securing your financial legacy.
Since not all services suit the size and diversity of your portfolio, you need a partner like Tencap Wealth Coaching. Our extensive experience working with HNWIs means we thoroughly understand your insurance planning challenges. Our partnership and leadership is an investment worth making.
Remember, Tencap’s advisors are building a comprehensive financial plan. That means we are examining insurance planning, estate planning, tax planning, etc. We are proud of the deep service offering we offer each client. It’s a huge part of the reason Tencap is growing so quickly and has earned the trust of hundreds of clients all over the country.
Each of Tencap’s advisors are stated fiduciaries on each case! That means that you can hold a high degree of confidence in our recommendations. We are committed and legally obligated to lead with your best interest! We would not have it any other way!
Call today to schedule your no-cost consultation.
Greg Black, CFP®, ChFC®
Greg Black is the owner and founder of Tencap Wealth Coaching, an independent investment advisory firm founded on academic investing principles. As a Certified Financial Planner, Greg takes an educational approach to helping his clients be settled and responsible with their financial circumstances. Greg specializes in helping his clients create a proactive plan to minimize the exposure of market conditions while still harnessing the incredible power of global financial markets.
Greg specializes in "complexity" and is skilled at turning a complicated situation into an organized strategy for the families he serves. Greg, and each advisor of Tencap, is a stated fiduciary. You never have to wonder if your best interest is being served. Greg has been transforming the investor experience since 2012.
