You’re Probably Under-Insured (Even If You’re Rich)

Let’s get real:
Insurance isn’t fun.

It’s not exciting. It’s not sexy. It’s not something you bring up at dinner parties unless you’re trying to clear the room.

But here’s the truth:

The more wealth you build, the more exposed you likely are.

And most people — even the wealthy, even the successful, even the “I have a guy for that” types — are flying blind when it comes to their coverage.

Meet Dana

Dana was a successful practice owner who sold her business for $7.5 million. She had cash in the bank, real estate assets, a clear estate plan, and a conservative investment strategy.

But one thing she hadn’t reviewed? Her insurance.

Then one afternoon, a neighbor’s child tripped on her driveway. The fall resulted in a broken arm, a fractured wrist, and a lawsuit for $2.3 million.

Dana assumed she was covered.

She wasn’t.

• Homeowners policy: $500,000

• Umbrella policy: $1,000,000

• Shortfall: $800,000

And guess who paid it?
Not the insurance company. Dana did — out of pocket.

How Did This Happen?

Simple: Her coverage hadn’t been updated in years.

Her umbrella policy was set up when she had far less net worth. No one thought to raise it. No one reviewed it after the sale. No one asked what level of liability she now carried simply by being wealthy.

Because yes — being wealthy increases your visibility and exposure.

It doesn’t matter if you’re careful, responsible, or well-meaning.
If you have money, you have a target.

And in today’s world, lawsuits don’t always come down to “what’s fair.” They often come down to “what’s available.”

Insurance Most People Miss (Even Affluent Ones)

Here are four areas where we consistently find gaps — especially among high-net-worth individuals, business owners, and new retirees:

1. Umbrella Insurance

If you only remember one thing from this post, make it this:

If you have assets, you should have an umbrella policy.

Umbrella coverage is extra liability protection that sits on top of your home, auto, and rental property policies. It’s designed to kick in when your other coverage runs out — exactly like in Dana’s case.

The good news?
It’s inexpensive. A $5M umbrella policy might cost $500–$700/year. And yet, most people either don’t have one or are under-insured by millions.

We recommend reviewing umbrella coverage annually — especially after big life or financial changes.

2. Long-Term Care Insurance

Long-term care is one of the biggest unplanned risks in retirement.

And here’s the reality:

• 70% of people age 65+ will need long-term care at some point

• The average annual cost of care ranges from $60,000–$120,000+

• It’s usually not covered by Medicare

The question isn’t if you’ll need care.
The question is whether you’ll pay for it out-of-pocket or protect yourself in advance.

Modern long-term care policies are more flexible than ever — and many include return-of-premium or hybrid benefits so you’re not “losing” the money if you don’t use it.

At Compound Advisory, we help clients evaluate this based on cash flow, age, health, and family dynamics — not scare tactics.

3. Life Insurance (Yes, Still Relevant)

If you’re retired or don’t have young kids, you might assume you don’t need life insurance.

Sometimes that’s true.
But for higher-net-worth families, life insurance can still play a critical role in:

• Estate planning: Covering future tax liabilities

• Liquidity: Providing immediate cash for heirs

• Equalization: Splitting assets between beneficiaries

• Legacy planning: Funding charitable goals or family trusts

In some cases, permanent life insurance can also serve as a tax-efficient asset inside a broader portfolio.

It’s not for everyone — but if you’ve written it off entirely, it may be time to revisit.

4. Coverage for “Toys”

Boats. Motorcycles. Vacation homes. Jet skis. RVs. Snowmobiles.

If you’ve acquired more “lifestyle assets” as your wealth has grown, great.
Just make sure they’re appropriately insured — both for damage and liability.

These assets can create major risk exposure, especially if they’re lent out to guests, used seasonally, or stored in different states.

You don’t want to find out after an accident that your coverage doesn’t apply — or worse, that it’s invalid due to how the asset is titled or used.

Wealth Is Great. Protected Wealth Is Better.

At Compound Advisory, we believe insurance shouldn’t be an afterthought. It should be integrated into your overall plan — just like your investments, your tax strategy, and your estate structure.

We don’t sell insurance. But we review it, evaluate it, and help clients understand what they’re exposed to — before a lawsuit, health issue, or accident exposes it for them.

Final Thought: The Best Insurance Policy? Proactive Planning.

Here’s the thing about insurance:

You only notice when it’s too little or too late.

That’s why the best time to review it is before you need it.

If you’ve sold a business, inherited wealth, retired with significant assets, or simply haven’t reviewed your policies in a few years — now is the time.

Let’s look at the big picture, shore up the gaps, and make sure your wealth is as protected as it is well-earned.

Because building it was one thing.
Keeping it? That’s the real win.

Want a full insurance review as part of your plan?
Reach out to Compound Advisory and let’s build a financial strategy that doesn’t leave anything to chance.