Catastrophic events, ranging
from natural disasters to terrorist attacks, have clearly demonstrated that the
homes and livelihoods in which families have invested over many years can be
wiped out in a matter of hours. Once displaced, many victims of disasters
struggle to get back on their feet financially. While there is little you can
do to prevent a disaster from striking, there are steps you can take to protect
yourself and your family from financial ruin should you be forced to evacuate
your home in an emergency.
Here are some strategies you can
use to prepare financially for potential disasters:
Store important documents in
an “evacuation box.” Collect and make copies of all your key financial and
personal documents, including passports and birth certificates, wills, property
deeds, insurance policies, mortgage records, car titles, and MF and bond
certificates. Make copies of the front and back of all credit cards and driver
licenses. Then make a list of all your account and credit card numbers, as well
as a written and photographic inventory of all your valuables. You should also
prepare an envelope with enough cash or travelers checks to last your family
about three days.
All essential documents should
be stored in a bank safe-deposit box located some distance from your home or in
an airtight, waterproof, and fireproof safe or container that can be easily
taken with you in an emergency evacuation. Inform family members or trusted
friends of the location of the box in case you are not able to retrieve it
yourself.
Make sure you have access to
cash. Avoid tying up all of your assets in real estate or investments that
cannot be tapped without incurring significant Loss/penalties. Maintaining
funds equal to three to six months’ income in a savings or money market account
should be among your top financial planning priorities. You may also want to
have on hand several credit cards with high available balances or arrange in
advance a line of credit that could be used in an emergency.
Purchase necessary insurance coverage and review your policies regularly. Many people who have lost their homes to disasters find their insurance policies do not cover the cost of rebuilding. If you have householder insurance, review your policy annually to ensure it reflects the actual replacement cost of your home and its contents. This is especially important if your home has risen significantly in value or if you have made improvements to the property. Be aware that your policy may not cover damage due to specific causes, such as flooding.
In addition to householder insurance, you should consider
disability coverage to protect yourself and your family in case you are injured
in a disaster and unable to work for a period of time. You should also make
sure that your life insurance coverage is sufficient to meet the needs of your
family. Keep in mind that it may be possible to withdraw some or all of the cash
value from a life insurance policy, if necessary.
Your individual circumstances will ultimately determine what
steps you should take to protect yourself and your family from a possible
disaster. Remember, disasters strike with little or no warning—the time to
prepare is now.
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