When it comes to managing wealth, ultra-high-net-worth (UHNW) families face challenges and risks that demand a level of foresight and sophistication far beyond what standard insurance policies offer.

I’ve seen firsthand how the right insurance strategies can safeguard wealth, protect assets, and ensure a smooth transfer to the next generation. But I’ve also seen how gaps in coverage—or the wrong type of coverage—can leave even the wealthiest families vulnerable to significant risks.

Insurance for UHNW families isn’t about cookie-cutter solutions. It’s about crafting a customized plan that addresses complex needs and unique risks. Here’s how I approach insurance strategies for my clients, what I’ve seen go wrong, and how to avoid common pitfalls.

Why Insurance Matters for UHNW Families

For UHNW families, insurance is more than a safety net—it’s a financial strategy.

For example, the most common insurance structures include large life insurance policies with high death benefits, often held within an irrevocable life insurance trust (ILIT). These policies provide liquidity to cover estate taxes, ensuring your heirs don’t have to sell off businesses, properties, or other valuable assets to meet tax obligations.

But that’s just the start. High-value assets like homes, art collections, luxury cars, and yachts require coverage that goes beyond what standard carriers can offer. This is where top-tier insurance carriers come in, providing customized, specialist policies that can protect your assets, no matter how significant.

And then there’s liability. UHNW families are frequent targets of lawsuits—sometimes frivolous, sometimes substantial. A robust umbrella liability policy can mean the difference between peace of mind and financial turmoil.

Where Standard Insurance Solutions Fall Short

Off-the-shelf insurance policies simply aren’t built for families with substantial wealth and complex asset portfolios. Here’s where they often fail:

• Coverage for high-value assets: A mass-market insurer won’t know how to insure a $20 million home or a $5 million car collection. Top-tier carriers specialize in high-value assets and are the right choice for UHNW families.
• Global coverage: For families with properties and businesses around the world, seamless international coverage is crucial. Standard policies rarely address this level of complexity.
• Exclusions in niche areas: Ransom, cybersecurity, and private aviation are often excluded in traditional policies. These are potential risks that UHNW families can’t afford to ignore.

The risks for UHNW families go beyond what most people experience. Cybersecurity threats are a big one—wealth attracts attention, including from cyber criminals. Specialist cyber insurance policies can protect against losses caused by ransomware, data breaches, and even identity theft.

Another unique exposure is kidnapping and ransom risks, especially for families with high profiles or those traveling to certain regions. These policies provide financial and logistical support in case of an emergency, something many families never think about until it’s too late.

How to Stay Ahead

One thing I emphasize with my clients is the importance of annual reviews. Policies need to evolve as your assets and exposures change. This means:

• Updating asset valuations: Properties, art collections, and other assets can appreciate significantly. Failing to update these values leaves families underinsured.
• Adjusting for new risks: A new business venture, an international property, or even a change in travel habits can introduce new exposures.
• Monitoring policy changes: Insurers often adjust terms, exclusions, and premiums. If you’re not keeping an eye on these changes, you could be left with inadequate coverage.

Why a Holistic Approach Matters

Insurance isn’t just about protection; it’s about strategy. It should integrate with your overall financial and estate planning goals. For example, large life insurance policies can double as estate planning tools, ensuring liquidity to pay estate taxes and preserve family wealth without needing to sell valuable assets.

Your advisory team can help make sure you coordinate policies with trusts and LLCs, ensuring there are no gaps in coverage. This holistic approach helps protect what you’ve built and ensures a smoother transition to the next generation.

Protecting wealth is about more than just having the right insurance—it’s about having the right strategy. By addressing unique risks, avoiding common pitfalls, and working with top-tier carriers, UHNW families can ensure their assets are protected and their legacies are secure.

If you’re an UHNW family looking to review your insurance strategy and protect your generational wealth strategy, don’t wait. Let’s talk about how we can build a tailored plan that meets your needs and safeguards your future.

 

^{This material is distributed for informational purposes only. Investment Advisory services offered through Journey Strategic Wealth, a registered investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). The views expressed are for informational purposes only and do not take into account any individual’s personal, financial, or tax considerations. Opinions expressed are subject to change without notice and are not intended as investment advice. Past performance is no guarantee of future results. Please see Journey Strategic Wealth’s Form ADV Part 2A and Form CRS for additional information.}

^{Securities offered through Purshe Kaplan Sterling Investments, Member FINRA/SIPC, Headquartered at 80 State Street, Albany NY 12207. Purshe Kaplan Sterling Investments and Journey Strategic Wealth are not affiliated companies. Not FDIC Insured. Not Bank Guaranteed. May lose value including loss of principal. Not insured by any state or federal agency.}