How much for lifetime health insurance?

By Felix Salmon
June 13, 2011
Caroline Graham's interview with Bill Gates has lots of interesting nuggets, but this bit in particular, about the amount of money his children will inherit, got me thinking:

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Caroline Graham’s interview with Bill Gates has lots of interesting nuggets, but this bit in particular, about the amount of money his children will inherit, got me thinking:

He won’t specify what they will get, but the reports that they’ll receive ‘only’ $10 million each can’t be far off, because he concedes, ‘It will be a minuscule portion of my wealth. It will mean they have to find their own way.

‘They will be given an unbelievable education and that will all be paid for. And certainly anything related to health issues we will take care of. But in terms of their income, they will have to pick a job they like and go to work. They are normal kids now. They do chores, they get pocket money.’

He is determined that his family life should be as unaffected as possible by his fortune.

It probably goes without saying that if you want your family to be unaffected by your fortune, you probably shouldn’t bring up your family in a $100 million house and invite your friend Bono to stay the night when he’s playing a local gig. And that if you have $10 million in the bank as you’re just entering the workforce, your investment income is almost certainly going to vastly exceed anything you can earn from picking up a job and going to work. So if Gates wants to force his children to “find their own way,” he’ll either have to give them much less than $10 million, or else encrust that money with so many restrictions on how it can be spent that the absolute amount doesn’t really matter anyway.

Still, the bit which stuck with me was where Gates said that “anything related to health issues we will take care of.” I have no idea where to even begin answering this question — so maybe one of my readers can help. Here goes:

How much would it cost for Bill Gates to buy a lifetime’s worth of gold-plated health insurance for one of his daughters, covering any conceivable medical expense, in full, not only for her life but also for any future spouse and all future children she may have? Assume this is a single-premium deal, where he simply writes a check today and his daughter and her hypothetical future family are covered for the rest of their lives.

While there’s a certain amount of moral hazard here — his daughter could turn out to be some kind of sanatorium addict — let’s assume for the sake of argument that the kid is perfectly healthy and well-adjusted today. If you were a big health insurer, how much would you need to charge before taking on that kind of liability?

It seems to me that this is a product which would be of interest not only to Bill Gates but also to many other high net worth individuals looking to ensure that their kids are medically looked after for as long as they live. Is the problem that it would be too expensive for even a billionaire to buy? Or is it just that no insurance company would ever dare write it?

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