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Insurance: Hedging the Risk of Uncertain Loss

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Back in 2016: Vichai Srivaddhanaprabha (L) with former Leicester manager, Claudio Ranieri, after winning the Premier League © getty images


Leciester City football club is suffering a great loss after the tragic death of its owner, Vichai Srivaddhanaprabha – a man much loved by his club and community. The club owner was often seen flying out of the King Power Stadium, rather than leaving by car. But on October 27, his helicopter went down at about 8.45pm, just 200 metres away from the stadium where Wilfred Ndidi had scored the Foxes’ equaliser against West Ham United, which closed the game at a 1-1 draw.

The 60-year-old Thai billionaire had an impressive résumé: he bought the English football club in 2010 for £39 million, owned King Power Duty Free, and ranked as the 5th richest man in Thailand (reportedly worth US$4.9 billion, as of October 2018). Only last year, he made a massive investment by purchasing six horses for £2.05 million, in a bid to conquer horse racing at Royal Ascot. 1 In May 2017, he bought his second football club, OH Leuven in Belgium.

Life is risky. It raises the question: was Mr. Srivaddhanaprabha or his helicopter covered by any kind of insurance?

It appears so. The insurer for the crash has just been revealed. According to The Insurance Insider, the Lockton-brokered aviation policy is led by insurance giant AIG. It said the crash, which involved the tycoon’s AgustaWestland AW169 helicopter, will cost the market approximately $38 million. 2

The thrust of our article, therefore, is the role of insurance in wealth planning. It harps on what should painfully be the obvious: a sound insurance strategy will always minimise the impact of a disaster, and help protect people and businesses from the financial risk and consequences of life’s events.

Tying up loose ends


insurance is often ignored in financial planning, yet it plays a vital role in a well-rounded wealth management and succession-planning strategy.

A good personal financial plan pinpoints a range of risks and determines whether to buy insurance to protect against them — and how much to buy.

The easiest and most cost-effective way to mitigate these risks is through insurance products, which cover every imaginable area of living: Special interests (aviation, yachts and watercraft, classic automobiles, Fine Art); Safeguarding property (homeowners, valuable articles, commercial property, automobiles); Added protection (flood, wind, earthquake, umbrella/excess liability); Guarding against the unthinkable (kidnap and ransom, extortion); Business and family interests (directors and officers, family office liability)

But, here’s the big question: how do you determine the type and extent of insurance you really need?

The answer is hidden in plain sight: When expert advisor Simon Tanner talks to clients about insurance, he usually starts with a simple question: “What is your greatest asset?3

Clients often talk about their homes or their investment portfolios, but Tanner is looking for a different response.

The reality is, your greatest asset is your ability to earn an income,” he says “When you’re [considering] insurance, what you’re really looking at is protecting that asset.”

With that as a basis, the two priority areas of insurance to consider for protection against the devastating financial effects of death, disability and long-term care expenses are:

  • Life insurance, which, in addition to providing a death benefit, is often used for tax planning or to clear up any remaining liabilities at death. In the event that you pass on prematurely, life insurance will protect your loved ones (estate tax relief, business succession, wealth transfer, executive benefits). Annuities, on the other hand, can help protect your retirement by generating guaranteed payments that are designed to last as long as you live.

  • Living benefits, which include disability insurance, critical illness insurance and long-term care insurance that provide healthcare benefits while one is alive.



Ultimately, investors buying insurance must decide on their priorities, after which they will have a really good idea of the type of insurance that fits their needs, over what period they want protection, and how much (through comparison shopping) they are willing to pay for it.

Says Tanner: “I have never delivered a claim cheque where someone has asked what type of insurance it was. The questions at the time of death, illness or disability are: Is this enough money? Did we have enough coverage? Is my family going to be okay?”

Record breakers


When it comes to insuring against life’s hazards, the wealthy often require unique solutions. Defending a fortune against the exposures inherent in lavish living, luxury yachts, priceless art, or numerous homes requires highly sophisticated insurance policies that work in concert. Here are two instructive scenarios:

  • Most valuable: life insurance policy

An undisclosed tech-industry billionaire in the US set a Guinness World Record in 2014 for the most valuable life insurance policy ever written. According to Guinness World Records news service, the $201 million policy features “a combined death benefit to be paid upon the death of the single insured.” 4

For anyone wondering why a billionaire tech mogul would take on such a sizable life insurance policy, the policy underwriters explained, in a 2014 interview with Forbes: “In California, there are state death taxes that are exceptionally high. If your properties are leveraged, then those loans are called immediately and need to be paid off. So if you want to head yourself against such a risk [your beneficiary] can receive the proceeds [from life insurance] without being exposed to taxes.” 5

  • Most expensive: car crash

Rowan Atkinson, the British actor made famous by his role as Mr. Bean, is believed to have received the largest automobile accident pay-out in history. When, in 2011, Atkinson crashed his McLaren F1 into a hedge, his insurance company ended up paying £910,000 for the repairs, making the compensation what is believed to be the single-largest auto insurance claim ever. Atkinson would crash the car two times while he owned it – but that didn’t stop someone from purchasing the vehicle for £8 million when the actor put it on the market.


Risk management forms the basis of any financial plan, which should focus on insuring for what can go wrong, so you can invest for what can go right. The thought of delegating the financial risk of death, illness or disability to an insurance service provider might not be exciting or glamorous, but it is the smart move. And it provides financial peace of mind, in all cases.

For professional advice on insurance options,

please contact Wealth and Investment Advisors at ARM | |

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