Be Prepared for an Emergency
Hurricane Earl that is battering the East Coast is a good reminder to us all that it pays to be prepared for disasters of all kinds. Here are several steps you should take to make sure you and your finances can withstand an emergency.
Fund your emergency fund. Set aside enough cash to cover several months of expenses' and pay for any insurance gaps or deductibles. If a natural disaster strikes -- or if you lose a job or face any other challenges -- this fund will tide you over until you can get back on your feet. Avoid locking the money up in certificates of deposit or stocks. Your emergency money should be there when you need it. See How Much Cash You Really Need for help figuring out how much to set aside.
Check your homeowners and renters insurance. Although standard homeowners insurance will protect you if a major storm hits, it will not provide flood or earthquake protection. Homeowners and renters can buy added coverage for these disasters. Also make sure you have an inventory of your possessions to make the claims process easier. See Prepare Your Homeowners Insurance for Storm Season.
Buy life insurance. Generally, you should consider enough life insurance to replace your income -- short-term and long-term -- if you die. See How Much Life Insurance Do You Need? for help figuring out how much coverage to get and 4 Ways to Save Money on Life Insurance for keeping the cost of coverage under control.
Purchase disability insurance. Most people get some level of disability coverage through their jobs, but these policies usually cover only 60% of your salary if you get sick or injured and are unable to work. You can increase your coverage by buying your own policy. See Why You Need Disability Insurance.
Gather important documents. A will provides the ultimate insurance, by outlining how your finances will be handled after your death (see Six Steps to a Good Will). You also should have a living will to explain your wishes about life-sustaining medical care if you become terminally ill and are unable to speak for yourself. Other documents you might need to claim benefits and ensure your financial security include:
-- Birth certificates
-- Citizenship and adoption papers
-- Marriage license and divorce papers
-- Social security card
-- Insurance policies (You must have the original life insurance policy to claim benefits.)
-- Medical records and information
-- Deeds to property, automobile titles, mortgage papers, leases
-- Military records
-- Investment records
Keep the documents listed above in a fire-resistant home safe or lock box. However, do not keep wills in a safe deposit box. It can be difficult for family members to gain access and might require court supervision to open. Keep a copy in your home safe or at your attorney's office. The original usually is kept with the county registrar of wills.
Create a portable survival kit. There may come a time when you have to leave your home quickly. Creating a portable survival kit with food, water and supplies to last at least three days will help hold you over until your situation stabilizes or help arrives. You can pack your own, or you can buy a basic, pre-made kit for a family of four at The Red Cross Shop for $89.
Stock up. FEMA recommends that you keep enough food and water in your home to sustain your family at least two weeks. Buy canned goods, dry mixes and other foods that store well. (Don't forget a manual can opener and a camping stove, in case you lose electricity.) To build your stash, purchase a few extra items each time you go to the store, or buy a little more when favorites go on sale.