Who are HNIs?
HNIs, or high-net-worth individuals, are people who have liquid assets worth 5 Crores or more. These people are further divided into high-net-worth individuals (HNIs), very-high-net-worth individuals (VHNIs), or ultra-high-net-worth individuals (UHNIs).
What are the HNIs interested in?
High-income individuals, when buying term insurance plans, prefer:
Customisable Coverage: HNIs like customizing their term plan cover amount according to their needs and adding relevant riders as per their suitability.
Special Exit Benefits: High-income individuals prefer to exit the term insurance plan using special exit benefits once their liabilities are over.
Female Customers: Various women, working and housewife are now buying term insurance for HNIs to secure the financial future of their loved ones.
What is the Importance of Term Insurance for HNIs?
“Term insurance is crucial for everyone with dependents, but even more so for HNIs. For HNIs, liabilities such as home or car loans that run into crores can be substantial. They often have significant business obligations and potential high-cost education expenses. HNIs face many risks, including substantial liabilities from properties and personal loans. They may also encounter business continuity challenges where their sudden death could disrupt operations. Market volatility and economic stability can impact their investments, making a term plan with a high cover amount essential.” – says Rhishabh Garg, BU Head of Term Insurance at Policybazaar.
What are the Challenges Faced by HNIs?
HNIs face various challenges like the following:
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Market risks due to investments in market-linked investment options increase the risk of price changes and returns
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Investments in market-linked products decrease liquidity as these products have a 3-5-year lock-in period
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Unregulated investment products, can leave the customer at risk of fraud and mismanagement
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Investing a large amount of money in one product or asset can increase the concentration risk
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HNIs tend to pay larger taxes, including estate taxes, capital gains, and more