Your home and your family are likely among your most valuable assets. So, how can you know that they’re protected?
From coming down with a sudden illness to being impacted by a natural disaster, life is often unpredictable and your circumstances can turn on a dime. These events can throw your world into turmoil and threaten your family’s financial stability if you’re not careful. That’s why it’s crucial to account for the unexpected by ensuring you have all the necessary protections in place for the things you value most.
Below, we’ll discuss strategies that can help safeguard your family from the unexpected.
1. Emergency Savings
Maintaining a healthy emergency fund is a crucial step toward protecting your family from financial uncertainties, whether it be the loss of a job, an accident, or an unexpected medical expense. As a rule of thumb, your emergency fund ought to cover three to six months of living expenses at a minimum, accounting for the cost of day-to-day goods and services as well as any recurring or forecasted expenses. This fund should be easily accessible (think low-risk, highly-liquid investments) and separate from your regular savings account to avoid unintentional spending.
2. Insurance Policies
Insurance acts as a safety net for your family in times of crisis. Different types of insurance can help protect you from a variety of potential risks:
Life Insurance: This ensures your family’s financial stability in the event of your demise or incapacitation. The benefit can be used to pay off outstanding debts, cover funeral expenses, and fund living expenses for your family. The two most common types of life insurance are term policies, which last for a predetermined period, and whole-life policies, which last indefinitely or until your passing or incapacitation. Term policies generally entail lower premiums, while whole-life policies are more pricey but have a cash value component to them that can grow over time.
Health Insurance: Medical emergencies can lead to significant stress and delay you from reaching your financial goals. A good health insurance policy can help mitigate this by covering routine check-ups, prescription medicines, and hospitalization costs. If you anticipate your medical needs exceeding the scope of a typical healthcare plan, consider investing in supplemental health insurance to bolster your coverage.
Homeowner’s or Renter’s Insurance: These policies help protect your home and personal property from damage due to events like fires, theft, or natural disasters. A portion of these policies can also protect you from liabilities, such as an accident that occurs on your property.
Auto Insurance: This type of insurance covers unexpected costs associated with car accidents, protecting your family from costly out-of-pocket expenses. Coverage extends to vehicle damage, medical expenses, personal liability, and even roadside emergencies, ensuring financial stability amidst unforeseen events on the road.
An advisor can help you review your insurance needs and make adjustments to your coverage as your circumstances change.
3. Important Legal Documents
Estate planning isn’t just about protecting your wealth – it’s about ensuring your family is cared for and your wishes are respected in the event of your death or incapacitation. A few of the most important documents to account for include:
Will: This designates how you want your assets to be distributed upon your death. Without one, the courts could decide how your assets are split, which may not align with your wishes.
Living Will & Healthcare Proxy: These documents outline your medical preferences should you become unable to communicate your wishes. Sometimes referred to as medical power of attorney, a healthcare proxy appoints an individual to make medical decisions on your behalf. Be sure to entrust this responsibility to someone you trust.
Power of Attorney: This legal document entrusts an individual to manage your financial affairs if you’re unable to do so. Same as with your healthcare proxy, choose a friend or relative you trust to act in your family’s best interests.
Having these documents in place can lessen the legal, financial, and emotional burden felt by your loved ones should anything happen to you. Consider consulting with an attorney, who can help you draft these documents accurately.
4. Emergency Plan
Natural disasters, pandemics, or home emergencies can occur with little to no warning, and preparing an emergency plan can help your family react swiftly and safely to these types of situations. Here are some different things to include in your emergency plan:
Evacuation Plan: Identify safe places in your home for various types of disasters. Plan escape routes and designate a safe meeting place outside of your home.
Communication Plan: Ensure every family member knows how to reach each other and where to meet up in the case of an emergency.
Emergency Kit: Prepare a kit with essentials like water, food, medicine, clothing, important documents, and enough cash to last a week.
Emergency Training: Equip your family with the knowledge and skills they need to navigate emergency situations. Basic first aid, CPR, and swimming can be lifesavers.
5. Regular Health Checks
Visiting a doctor on a regular basis can help you identify potential health issues before they become larger financial problems. It can also help you treat, manage, or outright avoid certain conditions proactively, which can benefit both your physical and financial well-being.
In addition to keeping tabs on your health and the health of your loved ones, encourage healthy habits in your family, such as eating balanced meals, getting regular exercise, and sleeping at least 7 hours each night. Don’t forget, mental health is equally important. Foster an environment where family members feel safe to express their feelings and seek professional help if necessary.
In the digital age, unexpected threats can also come from online. In fact, internet fraudsters pose a greater threat to your personal and financial well-being than ever before. That’s why it’s important to coach your family on safe online practices, such as creating strong, unique passwords, not sharing personal information, and recognizing phishing scams. Consider using a VPN for extra security and regularly updating your software and devices.
Is Your Family Protected From The Unexpected?
If the past few years have taught us anything, it’s that our circumstances can change in an instant. Preparing for the unexpected involves a number of responsibilities, from financial readiness to physical safety measures. While it’s impossible to foresee every obstacle, these precautions can provide a sense of control over the unpredictable, ensuring your family is protected and ready to face whatever comes your way.
If you would like to discuss your family’s needs or learn more about how to protect yourself from various risks, connect with us today.