Are you considered High Net Worth? Let’s find out.
Defining “High Net Worth” and “Private Clients”
Did you know that there’s a debate happening out there? Well, it’s 2022 in a time of lots of debates. This is the debate of what it means to be considered high-net-worth. First, ask anyone in any insurance, finance, real estate, or legal community. Now, ask family, friends, colleagues, and even the person standing next to you at the grocery checkout line*. (*Ok, ok, maybe not the last one). You’ll quickly find that everyone has a different number, range, visualization, or dream about what it means to be considered high-net-worth, and it seems personal. From the perspective of insurance, it’s a great conversation to have. In this blog post, I’ll share my (insurance) perspective on what it means to be considered “high-net-worth” when it comes to the personal lines insurance space. Spoiler alert: The threshold is a lot lower than you might think.
A term with many definitions
“High-Net-Worth" according to the experts:
“The term high-net-worth individual (HWNI) refers to a financial industry classification denoting an individual with, liquid assets above a certain figure. People who fall into this category generally have at least $1 million in liquid financial assets. The assets held by these individuals must be easily liquidated and cannot include things like property or fine art. “- Investopedia.com
“High-net-worth individuals (HNWs): People or households who own liquid assets valued between $1 million and $5 million. Very-high-net worth individuals (VHNWIs): People or households who hold liquid assets valued between $5 million and $30 million. Ultra-high-net-worth individuals (UHNWIs): People of households who own more than $30M in liquid assets.” - Forbes.com
It appears the idea of becoming a millionaire, or working towards this goal over a lifetime, is achievable and can be accomplished by anyone in any profession. Millionaires are all around us:
According to the 2021 Global Wealth Report by Credit Suisse, there are 21,951,000 millionaires in the U.S.
In 2018, Ramsey Solutions conducted the largest study of millionaires ever, with over 10,000 millionaires interviewed and found that the careers that rounded out the top five were engineers, accountants, teachers, executives, and lawyers. The majority of the interviews in the study were not the beneficiaries of an estate inheritance.
The insurance mindset
When we examine the high-net-worth space through the lens of both the insurance and financial communities and compare the two, there will be a disconnect. In fact, a wide valley or mountain range separates us. Most financial conversations around the definition of high-net-worth allude to liquid assets and don’t include the value of your property, fine art or valuables. Wait a second, hold up, and pause to regain consciousness (if we lost you, come back to us). This is a big deal! For us in the insurance world, that is precisely what we are insuring, and we are including your home(s) and valuables in your asset valuation. Not only are we insuring the actual property, your actual home or homes, rental properties, vehicles etc., but we’re also insuring the value of current and future assets. It's even more proof of why an insurance Umbrella or Excess policy is so important. Insurance agents operate in the mindset of protection and worst-case scenarios. It’s our job to think this glass-half-empty way, but I promise we’re not all doom and gloom.
Instead, we’re thinking:
What can be taken away from you, deemed by the courts?
If you receive a demand letter from an “incident,” what’s on the line?
What is being threatened and can be used against you?
Who is or needs to be protected?
Everything is considered, even future income that you don’t even have today. Within the insurance mindset, you must consider current and future assets, goals, and aspirations. With over 21 million millionaires amongst us, the case for having an Umbrella or Excess policy is clear.
Insurance high-net-worth space: Coverage + desire minimums
When you think about a high-net-worth or private client, you have an idea who fits this mold, but it may not be quite right. Depending on the carrier, the minimum thresholds are not as extreme as you might think. For example, if you have a property that is currently insured around the $750K mark, you may qualify. If you are a renter or live in a condo, the threshold is much lower. If you have a desire to be insured by a high-net-worth insurance carrier, great news. there is a chance you can be. Read more about benefits of being insured by a high-net-worth insurance carrier here.
Maintenance + Disclaimer
All insurance carriers have their unique limits, coverages, underwriting requirements, and limitations. They are continuously updating their coverage offerings and creating new solutions. It’s critical to work with a reputable insurance agency and licensed insurance agent that you trust.
The insurance marketplace is complex, tricky to navigate, and you need a qualified professional that knows this space inside and out. Whether you have a lot to protect (or lose) depending on your risk management approach, take the time to choose your carrier and policies that best protects your life. As an immediate next step, talk to your financial planner and insurance agent to understand the type of Umbrella you have, ensure it’s enough, and review limits each year as part of your care and maintenance plan.
Need help determining your worth and finding the right partner?
NaVella was created out of equal parts love and frustration with the insurance industry, its complexities, and the ever-evolving market space.
With more than 15 years of experience in multiple facets of this industry, 1000+ insurance policies analyzed and reviewed, and hundreds of customized insurance portfolios crafted, we are dedicated to giving you control over what and how you protect what you care about most.
We are a woman-owned, progressive, independent insurance agency and consulting firm. We offer personal lines insurance solutions. Our product solutions include insurance for your: Home(s), Auto(s), collection(s), Excess + Umbrella, Watercraft, and Life. Our consulting and coaching services serve both personal and corporate clients. Headquartered in Massachusetts, and primarily focused on the Massachusetts and the greater New England markets.
If you’re ready to protect yourself now and in the years to come, please visit us at www.navellains.com, or email us at hello@navellains.com.
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