Insurance Planning for High-Net-Worth Individuals

For high-net-worth individuals, as wealth grows, the scale and complexity of risk often expand alongside it. If you purchased your original insurance policies years ago when you were starting out, before you accumulated significant assets or were at the early stages of building your business, your coverage may no longer reflect your current circumstances. Significant career moves, expanding businesses, the acquisition of additional assets such as multiple real estate properties, increased reputational exposure, and shifting legacy goals can introduce new or additional risks that your current insurance policies may not adequately cover. 

When insurance coverage does not keep pace with a family’s evolving circumstances, the impact is often felt most clearly by spouses, heirs, and business partners who may find themselves left with inadequate financial resources to sustain their now larger and more complex needs. 

As wealth grows, insurance planning becomes less about basic protection and more about keeping coverage aligned with life changes or business needs. Periodically taking time to revisit insurance coverage in the context of your broader financial picture and long-term goals can help ensure potential personal and business risks are addressed thoughtfully, rather than reactively during a period of stress or transition. For many high-net-worth individuals, this review often begins by evaluating foundational coverage areas, such as life insurance, long-term care insurance, and umbrella coverage. 

Reevaluating the intended use for your life insurance proceeds 

Life insurance can serve several important purposes for high-net-worth individuals. Life insurance is typically purchased so the death benefit or proceeds can replace lost income and help a surviving spouse and children pay for necessary living expenses and sustain their lifestyle, including housing, education, medical, and other personal expenses. Some policies may also include riders, extra features you can add to a policy, that allow the policy owner to access a portion of the policy benefits to fund potential long-term care expenses. Or the payout at death may provide liquidity to cover estate taxes that may be owed, potentially preserving more wealth for beneficiaries.

If you find that your current policies no longer fit your financial and estate planning objectives, you may want to explore adjusting your level of coverage or repurposing an existing policy to better support your needs. Increasing your coverage can also create additional liquidity to pay off debts, balance inheritances among heirs, or support charitable bequests. As such, it may be helpful to periodically review your life insurance coverage in the context of your full balance sheet, cash flow, estate plan, and long-term objectives. 

Life insurance proceeds can help pay for estate taxes

Beyond providing liquidity for familial obligations or expenses, life insurance has long been a cornerstone of estate tax planning. Proceeds from a life insurance policy can provide funds needed to pay estate taxes, helping to preserve investments or illiquid assets for inheritance, such as a family business or real estate that might otherwise need to be sold to satisfy tax obligations. Married couples may also consider a survivorship life insurance policy, which pays out after the last living spouse passes away, timing the benefit to coincide with potential estate tax obligations.

If properly structured by an experienced estate planning attorney, an irrevocable life insurance trust (ILIT) can help remove policy proceeds from your taxable estate while supporting efficient use of the federal lifetime estate and gift tax exemption. In addition, an ILIT typically allows you to structure distributions of the proceeds from the trust to provide beneficiaries with a steady stream of income over time rather than a one-time payout.  

Using life insurance to support business succession and continuity for surviving owners

For some business owners, life insurance can play a vital role in succession planning for a closely held business by providing the capital needed to enter a buy-sell agreement. In the case of a buy-sell agreement, either the co-owners may hold life insurance policies on one another, often referred to as a cross-purchase agreement, or the business itself may own the policies.

When one of the business owners dies, the life insurance proceeds can be used to buy out the deceased owner’s share, allowing the remaining owners to retain control through the transition. When the business owns the policy, the company typically uses the proceeds to redeem the deceased owner’s shares, reducing the total shares outstanding and increasing the ownership percentage of the remaining owners.

Business owners may also use key person insurance to help protect the business from the financial impact of losing a key executive or founder. In these arrangements, the business usually owns the policy and pays the premiums. If the insured individual dies, the policy pays a benefit to the business, providing financial support during a period of transition and funds that can help stabilize operations or offset potential revenue loss. 

Long-term care insurance can help preserve assets for legacy goals

Long-term care insurance is designed to help cover the cost of extended care when age, illness, or injury makes it difficult to live independently. Care may be provided in your home, an assisted living facility, or a skilled nursing setting. Benefits are typically triggered when an individual is unable to perform a certain number of activities of daily living, such as bathing, dressing, moving around safely and independently, or when cognitive impairment is present.

Some high-net-worth individuals may not consider obtaining long-term care insurance because they have sufficient assets to pay for future care. However, for families with substantial assets where affordability is not an issue, using long-term care insurance to pay for extended care expenses could potentially be a more efficient way to manage liquidity.

Doing so may help avoid liquidating assets from your investment portfolio, selling other assets at inopportune times, or redirecting funds to pay for long-term care that were intended for your next generation family members’ inheritance or your philanthropic beneficiaries. Long-term care insurance can help preserve assets you intended for estate planning purposes, rather than being used as a financial necessity before you pass away.

Life insurance with a long-term care rider, also known as a hybrid or linked-benefit policy, may help cover long-term expenses while also offering a death benefit to beneficiaries. When linked with life insurance or an annuity, unused benefits may pass to beneficiaries if long-term care is not needed, which could address concerns about paying premiums for coverage that may go unused. If long-term care benefits are used, the policy’s cash value or annuity contract value is typically accessed first, reducing the available death benefit or remaining annuity contract value dollar for dollar. If care needs extend beyond the policy’s cash value or the value of the annuity, the long-term care rider may provide additional benefits up to the policy’s limits. If long-term care is never needed or only partially used, any remaining death benefit or annuity contract value may pass to beneficiaries.

Evaluating long-term care coverage and life insurance is most effective when done in the context of your full balance sheet and goals for your wealth. Taking a broader view can help determine how much coverage makes sense, what type of policy best fits your objectives, and how to balance premium costs with the amount of protection you want in place. 

Aligning property insurance with the scale and complexity of your real estate holdings

For high-net-worth individuals, property insurance can help safeguard high-value residences, investment properties, and income-producing properties against major property damage, natural disasters, or other catastrophic events. Underinsuring a property can create significant financial exposure if a major loss occurs.

As your primary residence increases in value and if your real estate holdings expand to include vacation homes, rental properties, or residences in higher-risk geographic areas, the structure and adequacy of property coverage becomes more important. It is important to ensure your property insurance reflects the scale of your holdings and fully accounts for the reconstruction costs of a custom-built home, extensive property improvements, or valuable collections, or a potential loss of rental income if an income-producing property becomes uninhabitable after a covered event.

In recent years, the property insurance market has become more selective, with carriers adjusting underwriting standards and increasing premiums. In some cases, carriers have even stopped offering property insurance in certain high-risk areas due to natural disasters, regulatory requirements, and rising construction costs. Because property insurance forms the foundation of broader liability protection, ensuring that coverage limits and policy structures are appropriate, or that you are positioned to self-insure your property, is an important part of proactive financial planning.

Umbrella insurance can help address growing personal liability exposure

Umbrella insurance provides an additional layer of liability protection beyond the limits of underlying policies, such as homeowners, auto, or recreational vehicle insurance, helping protect you from paying high out-of-pocket costs if your primary insurance policy limits are exhausted. For high-net-worth individuals, umbrella coverage often plays an increasingly important role as wealth increases and personal, professional, and asset-related risks expand beyond standard policy limits.

When determining the appropriate amount of umbrella liability coverage, be aware that as net worth increases, higher levels of coverage may not be offered through standard insurance carriers and may require working with specialized insurance carriers for the level of coverage you need. When considering how much umbrella coverage to carry, it is common, but not always applicable, to carry umbrella liability coverage equal to your net worth, with higher limits often appropriate as assets and liability exposure grow.

Umbrella coverage can help protect against a wide range of liability risks, including personal injury claims that exceed existing homeowners or auto policy limits, injuries occurring on owned rental properties, and accidents involving boats, recreational vehicles, or other assets that may not be fully covered elsewhere. For some individuals, umbrella policies may also provide protection against claims related to libel, slander, or defamation, which may become more relevant for those with a public-facing role, leadership position, or online presence. These risks are not always obvious and are less predictable. For example, a guest injured while attending a gathering at your home, a tenant injured during a renovation at your rental property, or a dispute arising from a social media post perceived as reputation-damaging can all result in claims that exceed standard liability limits.

If you are a business owner, liability exposure may be reduced by structuring your business as a liability-limiting entity, such as a limited liability company (LLC), S corporation, or C corporation, rather than operating the business as a sole proprietorship or general partnership. Structuring business ownership through these entities may not necessarily eliminate liability in all circumstances, including cases of negligence or other wrongful conduct.

Evaluating umbrella coverage encourages a broader view of personal liability, helping ensure that accumulated wealth is not unnecessarily exposed to claims that could exceed standard coverage limits. Just as with your standard policies, regularly checking liability limits and the scope of your coverage with your private wealth management team can help confirm that liability protection reflects the scale, complexity, and risk profile associated with your current assets and activities. 

Work with a private wealth team that takes a holistic approach to risk management and insurance planning 

Insurance planning can play a meaningful role in protecting your family and your broader wealth plan. Effective insurance planning can help provide for loved ones, support coverage decisions that preserve cash flow and liquidity, and limit the likelihood that unplanned expenses reduce the value of the estate and legacy you intend to pass to the next generation and your philanthropic beneficiaries. For high-net-worth individuals with significant and complex assets, particularly if you are a business owner or own a significant share in a closely held business, aligning insurance decisions with your broader objectives often requires a coordinated wealth team that understands your full financial picture and can reevaluate coverage as your circumstances, priorities, and risks evolve over time.

At Commerce Trust, our private wealth management teams are comprised of specialists in financial and estate planning, tax management, and investment strategy, who work together to help you manage risk thoughtfully. Whether your focus is preserving family wealth, supporting a business transition, or maintaining flexibility and liquidity as plans change, our team can help you understand how different insurance strategies may fit within your overall plan.

Contact Commerce Trust today to learn more about how our comprehensive approach to wealth can help align insurance planning with your broader financial and legacy goals.¹

¹ Commerce Trust does not sell insurance products and does not receive commissions from insurance carriers.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP^® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.

The opinions and other information in the commentary are provided as of March 24, 2026. This summary is intended to provide general information only and may be of value to the reader and audience.

This material is not a recommendation of any particular investment or insurance strategy, is not based on any particular financial situation or need, and is not intended to replace the advice of a qualified tax advisor or investment professional. While Commerce may provide information or express opinions from time to time, such information or opinions are subject to change, are not offered as professional tax, insurance or legal advice, and may not be relied on as such. Consult a tax specialist regarding tax implications related to any product and specific financial situation. Consult an attorney for legal advice, including drafting and execution of estate planning documents. 

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Commerce Trust is a division of Commerce Bank.

The Private Bank at Commerce Trust is a business unit of Commerce Trust, a division of Commerce Bank, Member FDIC

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