Affluent individuals look to insurance professionals to provide them the security of knowing they are protected from the expense and liability of complicated and unusual risks. As the number and variety of those risks are considerably higher for high net worth families than for average households, the former face a greater potential for loss.
The complexity of business arrangements this group faces, along with their family structures, high visibility, exotic hobbies and higher-asset value, requires an insurance advisor who specializes in working with successful individuals and families. These specialists work closely with luxury carriers to design customized and unique insurance programs to protect HNW families’ assets.
WORKERS COMPENSATION AND EMPLOYMENT PRACTICES LIABILITY
There are two basic areas of employment liability: workers compensation, which pertains to work-related injuries or illnesses, and employment practices liability, which is protection for claims alleging wrongful termination, sexual harassment or discrimination.
If you employ full- or part-time domestic employees, your advisor should work with you to determine the coverage needed to protect your assets against such claims.
In today’s litigious society, multi-million dollar judgments have become inevitable, making added liability protection essential to wealth preservation.
PERSONAL EXCESS LIABILITY
When a judgment from a lawsuit exceeds the underlying coverage your homeowners and automobile insurance policies provide, a personal excess-liability policy can protect both your current and future assets from liquidation.
Additional endorsements can mitigate gaps and provide additional coverage for uninsured/underinsured motorist coverage, employment-practices liability for domestic employees, fiduciary liability and nonprofit directors and officers liability.
KIDNAP AND RANSOM INSURANCE
Kidnap for ransom is increasing in frequency and severity worldwide. Wealthy families are prime targets, and the emotional and financial impact can be devastating. When preparing to travel abroad, you should determine what type of coverage you need. Depending on the policy, coverage may include ransom payments, hostage-negotiation fees, consulting fees, loss-of-income compensation and medical and psychiatric care.
PERSONAL SECURITY CONSULTATION
Security considerations in the home go beyond alarm systems and cameras. An experienced broker will provide suggestions and resources to protect access to properties, provide visual privacy, defend against crime and offer solutions for family protection. Many activities that wealthy families pursue have potential security risks that can be mitigated. For example, vacation planning can be slightly modified so that the family’s location will not be disclosed. This has the added benefit of not revealing that the primary home is vacant, lessening the risk of burglary.
LONG-TERM CARE INSURANCE
Longer life spans have created the need to establish strategies not only to cover medical care expenses, but also to uphold lifestyle expectations. Longterm care assistance includes various services designed to help sustain day-to-day living while allowing you to remain independent. In the event that an individual becomes chronically ill, long-term care insurance ensures necessary care in the patient’s chosen environment, without depleting individual or family savings.
It is imperative that successful HNW families engage the expertise of qualified insurance advisors who specialize in their unique needs and lifestyles. These professionals can advise about emerging trends and exposures to ensure you have the most up-to-date and sophisticated program available.
Your insurance advisor should be a valuable member of your wealth-preservation and asset-protection team and complement the services of your tax, legal and financial professionals. An expert personal risk manager will do far more than facilitate your purchase of insurance products. Risk transfer to insurance contracts should be done only after a thorough risk assessment, implementation of risk-mitigation strategies and consideration of self-retention of risk.
This article was originally published in the December/January 2016 issue of Worth.