A lot of people think of insurance as a grudge purchase – a waste of money, but the truth is you need it to protect your assets against all types of risks. It is there to help you protect your wealth. If you are a business owner or a high-net-worth individual, insurance can be invested in to augment your estate, act as collateral, and help you be more tax-efficient. If you choose your insurance products carefully, you can preserve your wealth and give yourself peace of mind. Careful high-net-worth insurance planning must form an important part of your overall plan for taking care of your wealth.

Protecting Wealth with Life Insurance

There are three different types of insurance you will want to look at: life insurance, health insurance and insured investments. Each of these products plays a role in keeping your wealth safe and creating a tax-efficient estate. There are four different types of permanent life insurance: permanent insurance, universal life insurance, and participating life insurance.

Permanent insurance covers you throughout your life. It provides a death benefit and can also be used as part of your tax planning. Universal insurance offers you the benefits of permanent insurance as well as the ability to build your savings for tax-preferred growth. Participating insurance also provides the protection offered by permanent insurance, and adds the ability to receive regular dividend payments, which you can use to buy more coverage, reduce your premium, earn interest, or cash out.

Protect Your Wealth with Health Insurance

Your health insurance can also help you guard your assets. Health care can be a major expense, especially as you get older or develop any serious illnesses. Instead of drawing from your personal wealth, you can use health insurance to cover those costs, leaving the bulk of your assets intact. The living benefits that come from health insurance usually take three forms:

  • Disability insurance, which covers you if you are unable to work and generate an income.
  • Critical illness insurance, designed to cover a range of serious illnesses, such as cancer, heart attacks or strokes. These policies will either pay out a lump sum or a monthly payment to cover any loss of income.
  • Long-term care insurance. This product provides regular benefit payments to pay for in-home care or a care facility of your choice.

Improving Wealth with Insured Investments

Investing involves a certain level of risk, but you can offset this with insurance. You can’t necessarily insure your stocks and bonds against market-related loss, but you can buy specific insured investments that can allow you to bypass probate on specific beneficiaries, protect yourself against creditors, and get Assuris protection (which provides cover for you if your insurance provider becomes insolvent) if you are covered by a participating insurance company. There are three primary investment products you should consider:

  • Insurance GICs, or Accumulation annuities: These have a guaranteed rate of return, immune to shifts in the market, and offer flexible terms that can be aligned with various needs and life stages.
  • Payout annuities offer various benefits, such as increasing payouts to offset inflation, preferential tax treatment, and guaranteed income.
  • Segregated fund products: These include the potential for growth with exposure to different asset classes. They provide all the benefits of an insurance contract, but also additional advantages for growth, wealth protection, flexibility and guaranteed income.

To know which insurance products are right for you, and in what combination, you should always work with a qualified and experienced high-net-worth wealth management consultant.

Contact Momentum Financial today to start working with one of our insurance advisors, who can help you with effective insurance planning as part of your overarching wealth protection strategy.