And taking the risk that the insurance company won't pay out for some reason. And creating more paperwork and recurring expenses to keep track of. $5 mil is a lot but it isn't enough to take eyes off expenses.
If you have a house and it burns down in a fire, you will spend hundreds of thousands of dollars or more replacing it.
If you get rid of health insurance, there is enormous potential downside risk.
If someone is on your property and injures themselves or you accidentally harm someone, they can sue you for millions.
Insuring against all of this and more is almost certainly under 1000 per year. That is a trivial expense for someone with that much money. Even shit ROI on a portfolio is yielding at least a hundred thousand per year in growth assuming this person no longer works. The more money you have, the more insurance you want because you have far more to lose.
Um, no.
Average auto insurance premium is $1,470/yr. [0]
Average homeowners insurance is $1,130/yr. [1]
Average health insurance (in 2018, probably more now), was $440/mo., Or $5,280/yr. [2] (And average health insurance will leave a lot of exposure to costs, so you still have a lot of downside risk at that price.)
The idea that you could almost certainly insure against all of that for under $1,000/yr is...wildly inaccurate.
[0] https://www.thezebra.com/auto-insurance/average-auto-insuran...
[1] https://www.creditdonkey.com/average-cost-homeowners-insuran...
[2] https://www.ehealthinsurance.com/resources/affordable-care-a...
That was a bit of stretch, no? I agree with the other points.
A $5mm umbrella policy with one of the best insurance companies in the US is like $500/year. I just went out and got a quote on it last week. The best part is if that were to happen, the person suing will have to go up against the insurance company’s lawyers, who are most likely very good.
Even if the probability of that happening was in the low single digits, would you really want to run the risk over $500/yr?
No, healthcare costs plus lost wages and other damages for injuries can get into the millions quite easily, and slip and fall injuries are a real legal liability of property owners.
If you end up in a bad situation, getting liquid enough to pay out a big judgement will kill you with taxes.
No, you can't, unless your income is large compared to your assets and not dependent on them.
It's not about the house or car, it's about that $10MM in your bank people want to go after by claiming that you tripped them and they broke their back.
This isn't a problem I'm ever likely to deal with, but what was the thinking behind this one? I'd have thought >$1 mil in net worth is the time to cancel any insurance you have (maybe not health) on the basis that you can self insure now.