Who are the High-Net-Worth Individuals (HNWIs) in Australia?
According to the Australian Financial Review, there are around 690,000 Australians who are deemed high-net-worth individuals. Typically, these are the individuals who have in excess of $1 million of investible assets.
Having a substantial amount of assets carries with it some financial risks, which can often be more costly than the average individual. As a high-net-worth, it is crucial to consider how your wealth protection needs to evolve as your asset base grows. Because the reason and means for protecting your wealth are materially different to the average consumer.
Continue reading below for a comprehensive guide to insurance for HNWIs.
Ways Insurance Policies Can Help High-Net-Worth Individuals
Having complex financial goals and situations as HNWIs will require a well-structured risk mitigation plan. Below is a list of ways an insurance policy can help HNWIs:
Wealth Protection For High-Net-Worth Individuals
Life’s uncertainties, such as premature death or terminal illness, can undo years of wealth creation and asset accumulation. The right amount of life insurance may alleviate this stress and provide you with the capital you require to ensure your financial legacy remains. Some of the benefits of an appropriate policy are:
- Protecting your wealth in case of untimely death
- Successful transfer of wealth to your family
- Funds to continue business operations
- Funds to prevent the need to liquidate assets
- Capital to address taxes that may apply to your estate
Estate Planning For High-Net-Worth Individuals
For most HNWIs, the tax-effective transfer of wealth is a significant concern. In order to mitigate your tax liabilities, we are focusing on how insurance can structure your affairs prior to death.
A lump sum payment from a life insurance policy can cover the taxes (e.g., Capital Gains or Stamp Duty) when the HNWI passes away and assets need to be bought or sold. It provides you with peace of mind that your legacy is being distributed as you intended and not being eaten away by taxes.
Key Person Insurance For High-Net-Worth Individuals
Key person insurance (often called Keyman Insurance) can provide financial stability to the business in case a key person dies, gets disabled, or has a terminal illness.
The payout from the insurance can be used for lost revenue, operational expenses, loss of goodwill/key relationships, or funding the hiring of a key person replacement.
Buy/Sell Insurance For High-Net-Worth Individuals
Buy/Sell insurance is beneficial to HNWIs with businesses that are large enough to have multiple shareholders. Taking out buy/sell insurance will save you a headache when it comes to succession plans. Coupled with a shareholder’s agreement, buy/sell insurance ensures the equitable and efficient transfer of equity from one shareholder to another in the event of their death or permanent disability. The proceeds of the policy go to the family of the deceased partner, while the equity transfer to the surviving business partner(s).
Conflicts often arise when a shareholder within the company dies or becomes disabled. In the absence of a shareholder’s agreement, the equity will often be owned by the estate of the deceased. Other partners find it difficult to decide what to do with the other partner’s share. Lump sum benefits provided by these policies are intended to provide the funding required for equity.
Business Expense Insurance For High-Net-Worth Individuals
Start-ups and small businesses can be vulnerable to financial risks when the HNWI is faced with life uncertainties. Typically, these businesses have significant key person risk as they are often small teams with highly specialised roles with siloed expertise. Additionally, business expense insurance can cover up to 100% of the business’ fixed cost should something happen to the owner.
How Can Curo Financial Services Help High-Net-Worth Individuals?
At Curo Financial, we understand how valuable time is – so we intend not to waste it. Our team of experts has decades of experience working with HNWIs in Australia to:
- Protect the wealth that they have built
- Safeguard their family’s financial future
- Have funds for their estate tax and transfer their wealth
Here is how we can help:
Comprehensive Financial Risk Assessment
We identify your financial risks and get insight into your financial situation. The assessment will include the inventory of your assets, unpaid debts, and succession plans for your businesses.
Customised Insurance Solutions
From this assessment, we will prepare bespoke recommendations addressing the risks we have identified. We will discuss the available options with you so you can make an informed decision. Aside from the business-related insurance, the solution may include:
- Life insurance for high-net-worth individuals – pays lump sum benefit in case of diagnosis of terminal illness or untimely passing of the insured.
- Total and permanent disability insurance (TPD) for high-net-worth individuals – pays a benefit amount in case of loss of work due to an accident or injury that results in a permanent disability.
- Trauma insurance for high-net-worth individuals – will provide a lump sum payment when the insured is diagnosed with a critical illness such as cancer, stroke, or heart attack.
- Income protection insurance for high-net-worth individuals – this provides the insured with up to 70% of the monthly income in case of sickness or injury.
Regular Financial Risk Review
Part of our service is making sure that your coverage is sufficient to cover your financial needs. We conduct a regular financial risk review so you can also get an overview of your present risks.
Why Should High-Net-Worth Individuals Choose Curo?
Working with Curo Financial Services offers you customised insurance advice with decades of experience working with HNWIs. Our goal is to let you save time worrying about protecting your wealth for the next generation so you can focus on building your wealth.
At Curo, our goal is to help you protect your wealth so that you can pursue your ambitions with comfort.
Get in touch with our team regarding any insurance concerns you may have. Click here.
Our Expert Financial Advisors Are Here For You
In 2006, two financial service industry experts formed Curo Financial Services with the goal of providing expert and customised financial advice to Australians. Since then, the team has grown and expanded to cater to hundreds of clients wanting the company’s expertise.
One of the markets that Curo has expertise in is high-net-worth individuals. Our team’s approach is to treat each client as unique as possible to be able to design an insurance solution that best matches the client’s financial situation and goals.
Customised Insurance Solution for High-Net-Worth Individuals
We approach every client as uniquely as possible. We try to understand as deeply as possible their current financial situation, needs, and goals.
From there, we design our solution by utilising decades of experience and expertise in the industry and work only for the benefit of our clients.
What makes our services more customised is we highly take into consideration what our clients want and their capabilities. Our team also documents the entire process making it easier for our clients to trace the history of their policies.
Here What Our Clients Have to Say
Going over and beyond for our clients is how we show our dedication to our profession. Ead over to our website testimonials page if you want to read what our clients have to say about us.
Want Proven Insurance Advice For High-Net-Worth Individuals?
Do not let any life uncertainties and external factors harm what you have built for yourself and your family. Let us help you preserve and protect your wealth.
Frequently Asked Questions
Is insurance beneficial to high-net-worth individuals?
Yes, it is often of great benefit for a HNWI individual to have insurance in place. Whether it be to address tax liabilities, provide a more equitable estate, or prevent the need for descendants to sell down assets – there are many reasons a HNWI individual should consider insurance. It is crucial that you seek appropriate advice, as this is far more complex than when addressing the needs of a typical consumer.
What type of insurance is best for high-net-worth individuals?
An insurance policy pays a lump sum benefit to the insured or its beneficiary in case of untimely passing, accident, or illness. However, each insurance policy addresses different risks associated with the individual. Working with an expert insurance advisor can help you determine which insurance best suits your needs.
Do high-net-worth individuals need insurance?
Yes, HNWIs are also exposed to life and financial risks such as untimely passing, loss of work, or a business partner passing away. These life uncertainties can derail the financial stability of a HNWI. This is where an insurance policy comes in, it can provide a financial safety net through its lump sum benefit amount.
Why do I need an Insurance Advisor for my insurance?
While the idea behind an insurance policy can be easily understood, having an insurance advisor working by your side is highly beneficial. An expert insurance advisor will help you understand the intricacies of terms, explain the options, and help you decide on which is the best option that matches your financial needs.
What type of insurance is best for business?
Key person insurance, buy/sell insurance, and business expense insurance are business-specific types of insurance that a HNWI can get. To know more about these insurances, head over to our site.
General Advice Disclaimer
General advice warning: The advice provided is general advice only and in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.
