Why so many UHNW families are ready to talk about insurance

A lot of clients are curious about insurance right now.

The insurance industry doesn’t really have a seasonal ebb and flow, but the end of this year in particular has marked a flurry of conversations about planning.

Why now? First, many wealthy investors have newfound money from a year of market gains driven by strong business earnings and artificial intelligence-infused tech giants. Client risk exposures look very different than they did in January. Second, inflation has raised the cost of living. Larger benefits are needed to preserve a family’s lifestyle.

And finally, our profession has simply gotten better at surfacing these needs and reaching out to clients. Merrill Lynch, Morgan Stanley and other heavy hitters have learned to connect life insurance, disability and long-term care coverage to a client’s overall financial goals. They’re good at speaking to what is on a client’s mind.

And right now, a lot of high net worth families are interested in taking some chips off the table.

What drives insurance conversations

Families buy life insurance for three reasons. They owe someone, they love someone or they have tax exposure. Inflation touches all three. Higher debt levels and higher annual spending lift the capital required to support survivors. If a family once needed $100,000 a year and now needs $200,000, the amount needed doubles at the same assumed rate of return. That is why reviews are not optional in an inflationary period.

The most effective audits uncover real dollars hiding in coverage that no longer fits. For example, homeowners’ insurance and contents coverage can quietly drift upward as inflation adds to the rebuild cost. Most carriers peg coverage for the contents of those dwellings at around 70% of the building coverage. In markets where costs have surged, the formula can balloon the contents limit far beyond reality.

As a result, I have seen families with upwards of $10 million of personal property coverage for belongings worth a fraction of that amount. Adjusting the ratio to a realistic level frees up thousands of dollars in annual premiums without sacrificing meaningful protection.

Term policies are another area that deserves proactive review. The end of a guaranteed period can trigger premium spikes that catch clients off guard. Healthy clients can shop for new coverage, while those with changed health can often convert within the window.

Better choices and stronger client connections

Behavioral finance is as important here as math. After strong years, families often feel flush but uneasy. Redirecting a portion of those gains into permanent coverage through an appropriate structure, often inside an irrevocable life insurance trust, creates stability and calm. That coverage is noncorrelated, predictable, tax efficient and emotionally grounding.

That last part matters. I have seen families paralyzed with fear that is not proportionate to their financial reality. They are safe, but their market exposure and the size of their wealth make them feel imperiled. Clients who know their legacy is secure have the emotional breathing room to make more rational investment decisions through volatile periods.

This surge of fourth-quarter interest in life insurance and planning is also a great chance to bring the whole household, and potential heirs, into the conversation. Heirs often replace advisors who failed to prepare parents or families for estate taxes or care costs. The opposite is also true: when families receive a clear plan and the life insurance proceeds that cover the tax at death, loyalty extends across generations.

The advisor’s year-end playbook

Make a life insurance audit a standard part of every fourth quarter. It only takes 30 minutes to catch most issues.

1. Inventory: Gather every policy and confirm owners, payors, beneficiaries, riders and conversion features.
2. Re-underwrite the client: Note health updates, spending changes, liabilities and location-based risks.
3. Re-price and right-size: Adjust dwelling ratios, reappraise valuables and act on expiring term policies.
4. Redeploy savings: Use freed-up premium to address long-term care or permanent coverage gaps.
5. Document and communicate: Summarize findings and involve the next generation in the review.

Use plain language when presenting. Walk your clients through the changes to their lifestyle costs, how risk has shifted and opportunities to make modest reallocations to save money or build peace of mind tomorrow. Be insistent! Many clients need a nudge to act in their own long-term interest.

Financial advisors must have these conversations. If you don’t speak with your clients about their insurance, you can safely assume that another professional will. And odds are increasingly good that person also sells investment services. As always, you strengthen your client relationships by addressing the needs that are on your clients’ minds.

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Howard Sharfman is senior managing director, NFP Insurance Solutions. He may be contacted at [email protected].