As your career grows, your compensation, assets and lifestyle often follow suit – and so has your risk exposure. Have your insurance relationships and policies kept pace?
It’s not unusual for individuals to gather policies and professionals as they progress through life’s stages. As a young single, you may not have given a thought to life, disability or even renters insurance. Your marriage may have prompted the purchase of life insurance and buying your first home introduced you to property coverage. If you hadn’t bought life insurance already, the birth of a child can make that a priority along with disability coverage. And those purchases may or may not have been from the same insurance professional or even the same insurance company.
As an executive, your compensation may have changed your lifestyle. Have you accumulated grown-up toys like expensive cars, personal aircraft, boats, motorcycles or even horses? Do you have pricey collections like fine art, jewelry or a wine cellar? Have you documented all those items with paperwork or photos, had it recently appraised and added the appropriate riders or – in the case of any vehicles others may use – liability coverage?
As your income goes up, so does your need for disability coverage, especially if your spouse does not work. If you purchased disability coverage many years ago, have you checked lately to make sure it still provides adequate replacement for your improved income?
Has your position placed you in the public eye, particularly on controversial moral issues that could place you or your family members in danger? You can purchase kidnap and ransom insurance to ensure resources are available if needed. It may seem extreme, but top corporate executives can become targets because of their perceived wealth.
Many corporations provide directors and officers personal liability insurance to protect executives from personal loss in a lawsuit. If you volunteer for the board of a nonprofit organization, you should ask if the organization carries directors and officers coverage. If so, is it adequate? If not, do you need to protect against that risk?
Domestic employees can become more common as demands on your time increase. Depending on the state, you may be required to provide insurance for your nanny, housekeeper, groundskeeper, driver or personal assistant.
Standard homeowners insurance may not provide enough coverage for custom-built new homes or historic homes. While replacement cost coverage sounds great, many insurers cap rebuilding costs. Guaranteed replacement has no cap, and some companies have specialized policies designed to replace unique and expensive details of historic homes or to cover the cost of rebuilding historic homes in compliance with current building codes.
The patchwork of insurance relationships and policies you may have accumulated over the years may no longer be enough. A comprehensive risk management plan looks at every angle of potential loss, determines which would have the most devastating effect on your financial well being and finds solutions to mitigate those risks. Talk to your financial advisor or insurance professional to make sure your solutions still fit.