By BRIAN HEPP
Even if you weren’t glued to the constant news coverage, you’re probably well aware of the tragedies that have unfolded throughout our nation and around the globe as a result of natural disasters. All of those catastrophic events have served as a reminder that we can be significantly affected by unexpected events at any time. Whether a major disaster, or even a fire in your home strikes, it’s important to be prepared financially ahead of time for such an event.
Preparing for something like that involves two major steps. For starters, you’ll want to create an inventory — either a video recording or a list — of your important documents and a record of your possessions. You should also make sure to secure those documents and recordings once they have been compiled. In addition to your inventory, your other major effort should involve properly insuring against the possibility of losses in the event of a disaster. It will help your family recover financially, and get you back on track sooner.
To help keep important papers organized and secure, many people rent safe deposit boxes at the bank. But it’s also a good idea to keep photocopies of your important papers in an emergency kit that you can carry with you as well. Some of them will be useful — if not absolutely necessary — to help you recover from a disaster. Birth certificates, Social Security cards, property deeds and car titles are just a few of the many documents you will want to secure.
With regard to your investments, you also may be storing things such as stock certificates in your safe deposit box. Generally, it’s a better idea to have your brokerage firm hold those certificates for you in “street name.” Having the firm keep them prevents your certificates from being lost, stolen or destroyed. It also makes it easier for you when it comes time to sell your shares. What’s more, you may even help lower your anxiety by reducing the burden of keeping track of it all, which is probably one of the last things you want to worry about in a disaster.
In addition to helping you get organized, planning for a disaster gives you a perfect opportunity to review and update your insurance coverage. First, you’ll want to make sure you have adequate homeowner’s insurance. You also may need flood and/or earthquake coverage, depending on where you live.In addition,you should also consider other insurance that would provide for you and your family following a disaster.
Life insurance. It’s important to have sufficient life insurance coverage to protect your family should the unthinkable occur. You also should make sure to keep your coverage current as your family situation changes over the years.
Disability insurance. If you become disabled for any reason, your family would be struggling with the loss of your income at the same time that your medical expenses would be going up. Disability insurance can help to replace lost income and provide funds to cover medical expenses.
Long-term care insurance. A disaster also could leave you unable to care for yourself either permanently or for an extended period of time. Long-term care costs for nursing home care or even in-home care can be expensive. Fortunately, you can purchase specific coverage to help alleviate some of the burden of these expenses.
While we hope that we will never have to put a disaster plan into action, it’s important to at least have that plan in place should you ever need it. Careful preparation can help you limit the financial burden on you and your family in the event you face such a difficult situation. (This article is provided by Brian Hepp of A.G. Edwards & Sons, Inc. Member SIPC. Hepp is a financial consultant and (310) 453-0077 or at A.G. Edwards is a full-service retail brokerage that offers a complete spectrum of financial products and services, including stocks, bonds, and mutual funds, retirement planning and tax-advantage investments.)
Originally published in the Santa Monica Daily Press print edition on May 18, 2006. Read the original PDF.