Posted on 14 December 2012
By Mark Miller
Laura Scharr-Bykowsky lives near an earthquake fault line. A financial planner in Columbia, South Carolina, she always urges clients to carry enough property insurance to cover the full value of their homes and valuable possessions, even though the city hasn’t experienced significant quakes in recent years.
Her pitch usually isn’t successful. “Many of my higher-income clients won’t go for it, even though they have a huge percentage of their wealth tied up in real estate. You really need to protect those assets.”
Under-insurance is an especially acute problem with retired and pre-retirement clients, Scharr-Bykowsky says. “There’s less time to recover in the event of a big loss. People tend to buy their insurance when they’re young and don’t adjust it as they get older, so they can really come up short.”
Health and long-term-care insurance are part of most retirement plan conversations between advisers and clients. Yet other forms of insurance can fall through the cracks — especially property, life and disability insurance.
Hurricane Sandy offers just the latest reminder of the importance of adequate property/casualty insurance protection. It’s an especially significant consideration for high net worth households who may have more than one residence—perhaps in areas prone to natural disasters such as floods. Life insurance adequacy sometimes also is overlooked even for mass affluent clients.