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When disaster strikes, there may not be time to think about your next steps. Often, decisions need to be made swiftly. That's why it's critical to plan for the unexpected before it happens.
Having a disaster plan starts with the basics—you'll need to consider family, food, and shelter. Much has been written and discussed about the prudence of having a family emergency plan that defines where your family should meet, lists emergency contacts, and calls for an emergency kit with important supplies. But planning for a disaster goes beyond those critical components—you also need a plan for your most important financial documents. Their future retrieval will be a critical component when you need to make important financial decisions in precarious times.
Some of the key highlights of disaster preparedness will be provided and point you to critical resources for complete information:
Take the time today to bring financial organization to your household—and be adequately prepared for the unexpected.
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Be Prepared—Secure the Basics
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When disaster strikes, there are many concerns that will immediately come to you. If your family is not with you, you will be concerned for their welfare. Are they OK? Where are they? What should you do now? To help you answer these questions in a time of crisis, create a family disaster plan with members of your family today, so that you are prepared for tomorrow.
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Create a Family Disaster Plan
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Choose two locations where your family can meet in times of crisis. One location should be near your home; another should be outside of your neighborhood, in the event that your entire neighborhood is affected by the disaster. |
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Choose an out-of-state friend or relative as a "check-in" contact for everyone to call. |
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Post emergency phone numbers by every phone—make sure everyone in the family has a copy and keeps it in a convenient location (car, work, briefcase, pocketbook, backpack). |
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Keep fire extinguishers on hand and make sure everyone in the house knows how to use them. |
Build Your Grab and Go Disaster Supplies Kit
If you are required to evacuate your home, you and your family will need to be equipped with critical supplies and resources. Below are some suggestions for the contents of your family's Grab and Go Disaster Supplies Kit.
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A three-day supply of water for each person in your household (store one gallon per person per day) |
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A three-day supply of non-perishable food. Good choices include ready-to-eat canned fruits, vegetables, meats, juices, soups, granola bars, hard candy |
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First-aid supplies—bandages, gauze pads, adhesive tape, antiseptic, thermometer, petroleum jelly, cleansing agent, sunscreen, tweezers, scissors, needle, safety pins |
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Non-prescription drugs, such as aspirin, antacid, syrup of lpecac (used to induce vomiting if advised by the Poison Control Center) |
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Battery-operated radio, flashlight |
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Extra batteries; extra cell phone batteries |
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Paper goods, aluminum foil |
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Manual can opener |
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Tape, whistle |
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Compass, map of areas, signal flares |
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Copies of important documents, including financial, medical, prescriptions, etc. |
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Be Prepared—Financially
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With disasters comes a financial impact. Of course, the type of the disaster and the extent of its impact on you, your family, and your home will determine exactly how high that financial toll will reach. To be as prepared as possible, it's time to get your financial house in order. Consider the following and take the important first steps to being prepared, financially.
Have the Right Protection: Insurance
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Protect your life, protect your health—Be sure that you have the proper amount of medical, disability, long-term care, and life insurance. Work with a qualified financial planner or insurance agent to determine the type and amount of insurance you need. |
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Protect your home—Be sure to have an adequate amount of renter's or homeowner's insurance to protect your home and valuables. At a minimum, you should purchase full replacement or replacement cost coverage, which allows the structure to be replaced (up to limits specified in the policy). Have your home periodically appraised to ensure that your policy reflects its current replacement costs and update the policy to include any home improvements. Make sure you understand what the policy will and will not cover and what the deductible is. |
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Flood insurance—Depending on where you live, you may want to consider flood insurance. Visit www.floodsmart.gov for more complete information about how to obtain flood insurance. You can also reach the National Flood Insurance Call Center at 1-800-427-2419. |
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Earthquake insurance—While premiums and deductibles for earthquake insurance are high, it may be worth it depending on where you live. Work with your agent to ask about coverage and determine the policy that is appropriate for you. |
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Consider purchasing riders to cover more expensive items, such as computer equipment, artwork, jewelry, etc. |
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Include copies of your insurance policies (and contacts of insurance agencies) in your Grab and Go kit. |
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Prepare for Disruptions in Income
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Quick cash flow—Put aside emergency cash funds, including traveler's checks and a roll of quarters (for phone calls). Include this in your Grab and Go Disaster Supplies Kit. Set aside enough cash eserves for your family to live for a minimum of three days, outside of your home and without access to an ATM or money machine. It is likely that, in a disaster, the power will be down and ATMs and credit card processing machines will likely be down as well. Banks may even be closed. |
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Longer-term emergency funds—Financial advisors agree that a prudent personal finance plan includes an emergency fund that could cover your bills for three to six months. Be sure that these funds are in an account that is easy to access, such as a bank savings account or money market account. Include copies of your bank and money market account statements in your Grab and Go kit. Learn more about MainStay's LifeFolio Checklist—a tool to help you organize these important financial documents. |
Looking for Extra Cash?
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Check for special disaster relief funds from federal, state, and local governments. Please note that disaster relief funds may only be available for primary residences, and may not be available for secondary or vacation residences. |
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Check with your company-sponsored retirement plan about the possibility of borrowing against your plan. Find out what rules and restrictions apply, if any. |
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Consider taking a loan or withdrawing some of the cash value from your whole life or universal life insurance policy. Keep in mind that there may be a fee from the insurance company and it may trigger a tax liability. |
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Speak with your financial advisor to determine the best sources of cash given your personal situation before making any decisions. |
Gain Control of Debt
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One key step to prepare for the unexpected is to get control over any debt that you may have. Paying down credit cards as much as possible will help ensure that you have access to more credit in an emergency. |
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A good rule of thumb is to pay off those credit cards with the highest interest rates first. If it is not possible to pay off the entire amount, at least pay more than the minimum required each month. |
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Include copies of loan and credit card statements (include account numbers and contacts) in your Grab and Go Disaster Supplies Kit. |
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Financial Organization—A Critical Step to Disaster Preparedness
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Most people don't discuss the location of their most important documents with their family, or even spouse. In times of need, it can be difficult to track down these documents, at best. At worst, critical information may be lost forever.
Often, it's the events that happen to us that remind us how important it is to access our key financial documents. When a natural (or other type of) disaster strikes suddenly, most will not be in the right frame of mind to determine which documents are the most important to retrieve—let alone where to find them.
MainStay's LifeFolio Checklist
MainStay Investments has developed a simple, yet highly effective tool that can help you gather your important documents, as well as organize them. MainStay's LifeFolio Checklist is designed to be your central document for financial organization. The LifeFolio Checklist will help you organize key documents, and then serve as the most important document you'll want to locate in a critical situation.
Experience has shown us that this may be one of the easiest, but most important gifts you can give yourself and your family.
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Speak with your financial advisor today to order your copy of MainStay's LifeFolio Checklist. |
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Then, locate and gather your important documents (will, insurance policies, retirement account statements, titles/deeds, investment and annuity statements, utilities, etc.) |
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Select a filing cabinet with drop files, preferably fireproof. |
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Complete the LifeFolio Checklist. |
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Create a home filing system. Visit the LifeFolio section of our web site for complete details or ask your financial advisor for MainStay's LifeFolio Home Filing System kit. |
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Contact your executor/executrix using this sample letter. |
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Update MainStay's LifeFolio Checklist and your files at least every six months. |
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The preceding information has been provided for informational purposes only. Neither New York Life Investment Management nor its representatives provide legal, tax, or accounting advice—please contact your own advisors.
For more information about MainStay Investments, contact your financial advisor or call 800-MAINSTAY (624-6782). |
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