The upper class in the United States has been growing over the last several years, but only about 8% of the population are currently High Net Worth Individuals (HNI).
But who counts as an HNI? And how does this high net worth affect insurance needs? Read on for everything you need to know about who counts as one of these wealthy people and the special considerations they need for their insurance and protection.
Who Counts as High Net Worth Individuals?
Unfortunately, there is no single definition for who counts as High Net Worth. However, right now the rule of thumb is that anyone with more than $1 million in assets is considered an HNWI. Basically, these are the country's millionaires.
But what counts as a person's assets? Your assets are essentially everything you own, minus everything you owe. These assets include your home, bank accounts, investments, vehicles, and even your furniture and collectibles. If you have any outstanding debts, such as student loans or a mortgage, these are subtracted from your total assets. If the difference is still greater than $1 million, you're generally considered to have a high net worth.
What Are Some Insurance Needs of HNI?
Although the plethora of assets can be a blessing, there are challenges associated with a high net worth as well. One of the biggest challenges is making sure everything stays protected and secured. With wealth often comes expensive belongings, which can be trickier to keep safe.
This is why personal insurance is so important for HNIs but can also be a lot trickier. You have more assets and more valuable assets than the typical American. That means you have more things you need to consider when buying high-net-worth insurance. So what are some of those extra considerations you'll need while navigating the world of insurance? Below is a rundown of several of the most important things you may not yet have considered:
A home is typically the biggest investment a person will buy in their life. And one of the most important things any homeowner can have is homeowners insurance. But this changes a bit when your net worth is much higher than normal. If your home is expensive enough (typically more than $750,000), an insurance company might classify it as a high-value home. This is a better level of insurance coverage and covers quite a bit more than a basic homeowners policy will.
This level of homeowners insurance will give you much higher rates of coverage for property, liability, personal property, and loss of use. These are all potential dangers of owning any home, so getting adequate coverage all with one policy is a huge bonus. You can also insure multiple homes together through the same insurer, which helps make your life easier. It might even be a bit cheaper.
Don't be afraid to ask questions and see if they can give you a better deal or expand your coverage. Insurance companies really want to retain your loyalty as an HNI, and they might be willing to cut a deal to keep you with them. But you should also consider switching to an insurance carrier that is made to help HNIs. Many successful families find great comfort in knowing their coverage is designed for people with their level of assets.
Wealthy individuals have a lot more to lose financially, so they need to be better protected. An umbrella policy helps protect a lot of these assets, typically by going above and beyond the regular insurance. This type of insurance can help protect you against liability claims. Whether warranted or not, many people light up at the prospect of winning a lawsuit against a wealthy individual. Umbrella insurance can help protect your assets in situations like this.
While your regular home or auto insurance should have some level of liability coverage, this insurance goes above and beyond. That way, if you incur costs more than your regular coverage, the umbrella insurance can still cover the rest and leave your assets secure.
While everyone needs auto insurance to drive, have you considered how much insurance you have on your car? Many high-income people own multiple cars and often have much more expensive models. You'll want to bundle your auto insurance together for all your vehicles. This will save you money, as well as let you see how much coverage you have. If you're like many people and have older or more valuable cars, it might be a good idea to look into better coverage to take care of potential damage or theft.
Collectibles, Antiques, and Other Valuables
People don't think about insuring the things inside their home as much as their home itself. However, you doubtless have plenty of assets and items you really don't want to lose. Some high-end homeowners policies will cover your personal belongings, but other times you'll need a specific insurance policy for them. It's important to take a good look at what you actually have so that you can determine what might need coverage.
Many people make the mistake of thinking that because they have a high net worth, they don't need life insurance. That's not always the case! Even for high net worth families, life insurance can be critical.
Although you have a high net worth, you probably also have high living expenses. If you're the family's primary breadwinner, your unexpected death can drain the family resources in a surprisingly short amount of time. It isn't pleasant to think about, but that's the purpose of life insurance.
Even if your family is set up well enough to handle potential funeral, hospital, and healthcare costs, have you considered how you'll pay your estate taxes or debts? Many HNIs actually get life insurance to help the family pay off these taxes and debts after they and their income are gone. Besides that, it's also helpful to have extra guaranteed income to replace some of the income you were bringing in. You don't want your family to suffer more than they have to.
Learn More About HNI Insurance!
For high-net-worth individuals, navigating the world of insurance is a complicated but important aspect of financial life. Without good insurance and plans, things can quickly go awry, and you want to avoid this if at all possible. If you'd like to learn more about your insurance options, or you're interested in buying insurance to help keep you protected, contact us.
We'd be happy to talk through your options with you and find a solution that works well to protect you and your assets against anything that might come your way.