Preparing your Family and Finances for Natural and Man-Made Disasters
Kathy Longo, CFP®, CAP®, CDFA Tuesday, 31 October 2017
Disasters can strike with little notice. Some are the product of mother nature, such as Hurricanes Harvey, Irma, Jose and Maria, along with the horrible fires in California. Others, like the recent Equifax breach, are man-made. While these disasters may seem to have little in common, what they share is the personal and financial devastation left in their wake. The hurricanes devastated many homes and lives. In Hurricane Harvey alone, early estimates indicate that 230,000 homes were damaged and almost 13,000 of them were destroyed. The physical damage inflicted by Harvey was enormous, but the emotional fallout for all those directly impacted is harder to quantify. Losing your home, possessions and peace-of-mind is an unfathomable experience. While homes can be repaired and rebuilt, items such as old family photos and heirlooms are priceless and irreplaceable. The Equifax breach impacted the personal data of over 4.6 million consumers, leaving those affected fearing fraud and identity theft. Dire concerns about the health of your financial future can produce much anxiety, which only adds to the stress of a recent disaster. Both disasters left millions feeling afraid and vulnerable. Although it is always difficult to minimize the burden of stress and increase feelings of confidence and security after a disaster, being proactive and putting an emergency readiness plan into place before one strikes is invaluable.
Create a Family Communication Plan
Of all the things that you can fear during a natural disaster, the loss of a family member is the most devastating. Completing a family communication plan before an emergency strikes can help you avoid the panic and anxiety that accompanies being unable to contact or locate your loved ones during a natural disaster. FEMA has a fantastic family communication plan kit that will help you gather and store the emergency contact numbers, personal and insurance information and meeting places needed in the event of a natural disaster. Names, social security numbers and medical information for all family members can be kept in this kit which should be stored in a safe and accessible place. In addition, local and regional meeting places (in case family members become separated) should be chosen and known by every family member. Having a family meeting to discuss t he emergency plan is essential, and every family member must know the address and location of the emergency meeting places. Being prepared for a disaster means knowing what to do and where to go if the emergency plan is ever needed.
When confronted with the aftermath of a natural or man-made disaster, having immediate access to your important financial paperwork is key. Bank account information, passwords and usernames that may be critical to your initial recovery--this information is especially important in the case of a security breach such as the one at Equifax, and having it readily available can speed up your recovery process and cut down on the stress that results from such an event. Much like the family communication plan kit, storing this data in a secure and accessible place will prove to be invaluable if it is ever immediately needed. For our clients, Flourish provides a secure portal to store important documents. Please connect with our team if you are not utilizing this resource.
The Importance of Insurance
Despite your best efforts to protect yourself in the event of a disaster, sometimes gaps in insurance coverage can occur. For example, your homeowner’s policy may not cover all the emergencies that can occur during a disaster. Some policies don’t cover simultaneous events if one is excluded from coverage (flooding and storm damage are common exclusions). Being aware of any coverage issues before a disaster happens can help you manage your relief efforts more easily in the aftermath. Having long-term disability insurance is also very helpful should you become injured during a natural disaster. A serious injury can derail your income if you are unable to work for a period of time, and families with an injured breadwinner caught without this insurance can find themselves facing even tougher economic challenges as they try to recover from a disaster.
Identity Theft Protection insurance can often be added to your existing homeowner’s policy. This protection can cover expense reimbursements that are incurred when you are restoring your identity and provide you access to a consumer fraud specialist who can help guide you through the process.
Power of Attorney
Having a contingency plan in place for a trusted friend or family member to manage your power of attorney is another important piece of emergency preparedness. A power of attorney allows this person to make decisions for you if you become unable to make decisions for yourself due to absence or incapacity. Choosing your power of attorney before a disaster or accident can save your family and loved ones much stress in the event that you become incapacitated and are unable to make decisions for yourself. The person you choose need not be an expert on any particular topic – your faith in their character and ability to carry out your expressed wishes is the most important criteria. An ability to be organized is also an important trait needed for this role to ensure that your estate planning is carried out in a manner consistent with your wishes.
Disasters can wreak havoc on your life, but being proactive and prepared in case they occur can help ease the burden on you and your family as you take the time you need to rebuild and heal. Be it a natural or man-made disaster, the general emergency planning process is similar. Being prepared and having a plan in place will help ease your mind during this painful and overwhelming time. Having the peace of mind that your family and your finances are secure when a tragedy hits goes a long way towards revamping your lives and dreams as you look to the future and a more hopeful tomorrow.
About the Author
Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.