Insurance Takes Center Stage for Baby Boomers
Financial advisors who serve Baby Boomers need to account for very different risk profiles for such clients and build plans holistically that incorporate their lifestyle choices, according to a white paper from insurance giant Chubb.
When compared to younger Americans, those between 51 and 69 years old are less concerned about accumulating wealth, according to Chubb. Instead, they are more focused on building their legacy, philanthropy, collecting, travel, helping their offspring and, for many, moving homes or buying vacation properties, the report writes.
Each of those pursuits comes with risk, including personal liability for family members, risk of loss of private collections, property damage risk from new real estate and more, according to Chubb.
Even philanthropy comes with its own risk, according to the report. A 2012 Bank of America study cited by Chubb, for example, found that 61% of high net worth individuals serve on boards of directors for non-profit organizations. These boards, however, may not offer sufficient director and officer liability insurance, Chubb writes. There are also potential “unforeseen gaps in protection” in setting up more complicated wealth transfer strategies, such as creating trusts or limited liability corporations, according to Chubb.
Finally, Baby Boomers, particularly ones that travel frequently, sometimes lack adequate coverage for medical evacuation, which can cost $200,000 or more for remote locations, according to a 2013 study from Squaremouth cited by Chubb.
The insurer’s report claims that financial planners therefore need to work with insurance advisors to properly protect their pre-retiree clients from potentially “catastrophic” financial losses that could wipe out their wealth.