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Health Insurance for High Net Worth Individuals

As ultra-high net worth or high net worth individuals or families, you’re probably in a position where you feel more comfortable about being able to afford health insurance than most families or individuals.

There are things you need to know about planning for health insurance in retirement. However, if your investable liquid assets are between $5 million and $500 million, then you may qualify for a much more in-depth and valuable book about financial serenity and peace of mind here.

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Founder & Managing Member Pillar Wealth Management
Founder & Managing Member Pillar Wealth Management
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Though most people cannot indefinitely avoid the need for health insurance, high net worth individuals or families generally can handle the financial hit from anything not covered by insurance companies or insurance products, at least in the short term.

Knowing this, it’s easy to take false comfort in the belief that you’re prepared for your future needs, even the unknown parts. The challenge arises when you face the details and try to accomplish real financial planning that involves unknowns.

In this article, you have the opportunity to explore the information of high net worth insurance and future needs and how they can affect the financial security of high net worth individuals or families.

Planning for Unexpected Medical Costs - for High Net Worth

Understanding Health Insurance for High Net Worth People

High net worth insurance is known as insurance products designed to cover individuals with high-value homes and belongings – such as antiques, jewelry, overseas property, and collectibles, as well as people that regularly travel, whether for business or other reasons.

Individuals with high net worth assets are often unable to be covered by standard insurance policies because their insured amounts exceed that standard insurers would cover. Therefore, high net worth insurance planning is suitable for them.

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4 Main Things that You Should Understand

1) Medical Unknowns– types and varieties

2) How life can amplify the impact of unplanned medical costs and risk management solutions

3) How medical unknowns can force you to make replacement cost in your lifestyle and needs

4) A financial planning approach help individuals to cover the anxiety and risks of unpredictable health insurance

Medical Unknowns for High Net Worth Individuals and Families – What Can Go Wrong

Your potential costly medical unknowns can be sorted into three primary categories; all of them can interrupt the lives of individuals, your spouse, your children, or your extended family. Therefore, it is essential to be prepared when it comes to covering any unfortunate events. Following the death of an insured, life insurance offers financial protection to remaining dependents or other beneficiaries. Before you plan for life insurance, you have to understand these categories.

One-time Medical Events

This category could cover conditions like a cancer diagnosis that is treatable and beatable in a short time frame, up to a few years. Also belonging here are injuries from a car accident, a stroke that doesn’t produce major lifelong consequences, and surgery. For these events, you would need high-net-worth insurance like disability insurance for you and your family.

Medicare will often cover these items, but there are exceptions and related payments that may not be. And, if the person suffering any of these medical events is outside your immediate family (such as relatives or parents), they may not have as many coverage options as you, especially for health insurance. This might motivate you to prepare for high net worth insurance and help cover their needs.

Chronic Medical Events and Conditions

Here you would place ailments like Parkinson’s, Alzheimer’s, and multiple sclerosis, which tend to increase in severity over time, thus incurring greater and more frequent financial risks. Any condition that results in the need for long-term care insurance would also go here. Unless you paid for long-term care insurance (or have exhausted your coverage), those annual payments get pretty steep. This category would also include genetic diseases, such as hepatitis and diabetes, and mental health conditions requiring years of ongoing treatment.

This category has more potential risks for people than the first one, even for high net worth individuals or families, because the payment can persist for decades. Also, insurance like this can drain your time and assets as well, forcing you to revise and restrict your schedule and adjust some of your best-laid plans. Those changes can lead to reduced income and reduced quality of life.

Even when health insurance or care insurance covers a particular procedure or drug treatment, many medical conditions also require ongoing full-time care. For instance, suppose a stroke removes the liability coverage of someone in your family. Not only does that person cease to make the income that may have been funding your current lifestyle, but you’ll have to cover their full-time care and rent out your vacation homes.

Depending on how old a person is when events like these occur, the financial toll may extend 20, 30, or even 40 years into the future. Even for ultra-high net worth individuals or families, that can put quite a dent in your portfolio and force you to re-think your investment planning.

How Financial Payment of Life Insurance for Medical Unknowns Get Compounded

The critical question here is – When do the medical events happen in your families? This question doesn’t just refer to age. What has far more impact on your life is when it happens in conjunction with other key events and financial decisions.

For instance, what if someone in your family suffers a one-time or chronic medical event?

• During a time of prosperity vs. a period of decline – for the world or your family.

• Before or after you retire from your career.

• Around the same time, an uninsured person in your family needs their own health insurance.

• After you’ve just locked up millions of assets in new expertise, like a business or products investment

• Right before you planned to sell your business

• Right after you get divorced (learn how to protect your high net worth assets in a divorce)

The compounding effect on all these scenarios caused by unexpected medical payments will force you to reconsider major decisions, some of which you count on for years, such as  the sale of your business. Or, if the medical event happens after you’ve already made a major decision about something else, it might greatly increase your stress and anxiety because you no longer have the same financial cushion you had previously.

Think about the impact of finding out one of your parents will require indefinite, full-time, in-home long-term care right before you retire. Should you keep working? What if this happens right after you retire? How will this affect your portfolio in the next ten years? Can you still pursue the retirement lifestyle you’d been planning on for years, or will you have to downsize?

In other words, this is the ‘perfect storm’ effect.

In the perfect storm, everything that could go wrong happens at the worst possible time. Tough decisions that are hard to make even in blissful 70-degree weather become nearly impossible to navigate when a medical crisis hits your family. It upends everything.

How can you plan for situations like this? Is it even possible?

As you’ll see in a bit, the answer is yes. But it can’t be done using conventional investment planning approaches, the kind you’ll find at over 90% of financial advisory and wealth planning firms.

Liability Insurance

According to Investopedia, liability insurance is one of the insurance products that protect an insured individual against allegations arising from injury or harm to other people or assets. Liability insurance plans cover any medical fees that an insured is responsible for if they are fully compatibility responsible. There are several types of liability insurances, such as:

• Workers’ compensation insurance is required coverage for businesses to protect them from damages due to employee injury or death.

• Product liability insurance is for businesses or companies that make and sell products to the general public. It covers businesses or companies from litigation arising from deaths or injuries caused by their products.

• Indemnity insurance protects a business against allegations of liability resulting in financial loss resulting from errors or failure to perform.

• Director and officer liability insurance provides coverage so that if the corporation is liable, the board of trustees or officers are protected from liability.

• Umbrella insurance policy is a type of personal liability insurance that protects against major damages. When the risk limits of other insurers are reached, coverage of umbrella insurance policy usually kicks in.

• Commercial liability insurance (comprehensive general liability insurance) provides coverage for lawsuits arising from injuries to workers and the public, as well as property harm incurred by an employee and injuries caused by the incompetent actions of employees.

Liability Limits

The liability limit is the maximum amount your insurance will pay for anything bad that happens to you, your belongings, even your property or assets.

Liability Car Insurance Coverage Limits

Liability car insurance has dollar limits on each of its components, depending on the level of coverage you choose when you buy the policy. Those include:

• Liability Limit for Property Damage

This limit is the maximum amount of coverage for damage done to the property. Any costs that exceed the limit become the responsibility of the at-fault driver.

• Liability Limit for Bodily Injury per Person

The per-person limit is the maximum amount that the insurance company will payout for each individual who has been injured in an accident. 

• Liability Limit for Bodily Injury per Accident

The liability limit per accident is a financial cap for the total amount that the insurance company will pay for all of the individuals involved in an accident. In other words, the policy will cover medical expenses for those injured in an accident by the at-fault driver, but only up to a predetermined total. The at-fault driver would then be liable for any medical expenses above that limit.

How Unplanned Medical Payments Can Box You Into a Corner

Should you buy a new business or sell your business?

Suppose you find out you’re going to have to spend over $100k per year on drug treatment and in-home care for a member of your family and that this could go on for decades.

Whereas before, selling your business may have been a no-brainer, you may now be wondering if you should hold on to it a bit longer so you can keep earning the income. Or, does that increase the risk that you might be missing out on the optimal time to sell for a higher price? Learn how to develop a business exit strategy

Should I Buy New Real Estate? Sell Some of My Existing Properties?

What if you’re just a couple of months away from finalizing a major purchase when someone in your family suffers a major medical event? Will you still go through with it?

You may decide that selling some properties early makes more sense now because you can use the profits to fund the first few years of medical payments and thus preserve the rest of your lifestyle as is. You also have to think about the estate taxes.

But how do you really know which choice is best for your long-term financial security?

Should I Give Less to Charity? Reduce My Estate Plan Amounts?

Reducing future giving, whether to charity or your heirs, is an easy way to preserve your current lifestyle in the face of unexpected medical payments. But if you like this option, how much should you reduce it by?

Do I Need to Downsize or Limit My Lifestyle?

This is the hardest question to face, but sometimes it seems like the only viable option. You’ve worked hard to achieve the high net worth individuals’ financial status you’re now enjoying, and it brings great pain when someone in your position comes face to face with the possibility of having to return to how life used to be.

This is why you need someone to talk to who knows how to sort through all these conflicting priorities and questions. And the best time to have that conversation is before your family gets blindsided by unexpected medical payments.

Staunching the Anxiety Caused by Unexpected Medical Payments

Swirling around in all this uncertainty, it is still possible to maintain the same level of long-term financial security you’re enjoying now. Unexpected medical payments fall into what Pillar calls a ‘What If’ scenario. What if this happens? How will it affect my portfolio and long-term planning for high net worth insurance?

Our entire investment planning process is built around being able to definitively and confidently answer questions such as these. Without getting into the details yet, ask yourself this question:

What If I Could Remain Financially Secure No Matter What Medical Events Might Impact My Family?

How valuable would that peace of mind be for you? Our financial planning process goes far deeper than just allocating money into various investment buckets and tracking the returns, hoping it’s enough for when you need it.

Our system goes much further than that. It allows you to:

• Project your long term high net worth insurance based on hard historical data

• Rate the ‘comfort’ level of your portfolio, even 30 or 40 years out

• Make immediate adjustments to your plan when life changes unexpectedly

• Modify your goals in response to new information

• Preserve long term success and financial security at all times

• Eliminate anxiety and financial uncertainty – even against unexpected medical payments

Our system is customized to your exact financial and life situation. What does ‘customized’ mean? It means everything about you factors into your plan, including your health. So if someone in your family experiences an unexpected change for the worse in their health status, you can contact us, tell us what happened, and immediately find out how this affects your portfolio, even 30 or 40 years out.

You will see numbers. You will see data.

Most importantly, you will be able to see if your plan remains secure or if you need to make any adjustments to restore it to a healthy status. If you do need to make adjustments, you’ll be able to do so in five areas:

1. How much you spend

2. How much you save

3. How much you leave to your heirs

4. The timing of planned major expenses

5. Risk tolerance

These are like five levers.

You pull one; your long-term projections get re-calculated. Pull another one, they re-calculate again. If unexpected medical payments impact your family, we will begin by plugging those costs into your high net worth insurance plan.

If your high net worth insurance plan remains secure, you may not need to make any changes at all. If your high net worth insurance plan falls out of your calculated boundaries of long-term security, we will work with you to make adjustments in some combination of those five areas.

Once the plan for high net worth insurance has been adjusted and your security restored, you can relax! You can focus on caring for whoever in your family is suffering from a medical event and not worry about your money. That’s what our investment planning approach delivers for all our clients.

Want to know more?

At Pillar Wealth Management, you can find out if your portfolio is secure for the rest of your life. Email us or get the phone number. And  Get a free and customized Wealth Management Analysis report.

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