Who are High-Net Worth Individuals, and Why do they Need Wealth Protection?
How is Net Worth Calculated?
An individual’s net worth is calculated by adding up what is owned and subtracting what is owed; in other words, assets minus liabilities. Assets generally include homes and properties, motor vehicles, investments, cash, and luxury items such as jewelry, fine art, and collectibles. Liabilities generally include bank loans, mortgages, liens, and credit card debt.
How do you Define High Net Worth Individuals (HNWI)?
Although definitions somewhat vary, according to Charles Schwab Financial Services Corporation, a high-net-worth individual (HNWI) is someone with liquid assets of at least $1 million.
What are Liquid Assets?
Liquid assets are defined as cash on hand, cash on deposit in a bank or other financial institution, and assets that can be quickly be converted to cash, like stocks and shares, mutual and money market funds, short-term bonds, and certificates of deposits. Before reaching the age of 59-1/2, retirement investments such as IRAs and 401(k)s are not considered liquid because of the penalties associated with accessing the money. Property and other tangible assets are not considered liquid because of the time it takes to convert their value into cash.
What are the Risks to HNWI?
High net worth individuals usually seek the assistance of financial professionals like planners and accountants to manage and grow their money and investments, and their high net worth opens doors to benefits and investing opportunities that are closed to most people. Yet although HNWI have more to lose, they often lack the proper insurance coverage to protect their assets. Because HNWI often have more public profiles, they are vulnerable to lawsuits, home break-ins, disgruntled employees, harassment, market fluctuations, data breeches, and more threats than are faced by non HNWIs.
How do HNWI Protect their Wealth?
In addition to the proper personal liability, property, and auto policies, HNWI often purchase umbrella coverage to provide extra protection over standard policies, personal excess liability coverage, high-value life insurance policies to protect their dependents, and worker’s comp policies to cover domestic staff.
The agents at Esposito Insurance Group specialize in providing wealth protection for HNWI. Contact us so we can set up a time to review your unique assets and draw up with a comprehensive plan to protect them. To begin the process, call or text us at 973-284-1083.
By Colleen Woods-Esposito
