Even in the best of times, your financial stability always seems to be at the mercy of fate. On your own, you can certainly make enough mistakes to create a precarious debt situation. That said those situations are usually within the scope of your control, making them preventable. However, there is another category of events that are out of your control that stand to create the kind of financial damage that is difficult to manage. These events are called financial emergencies or disasters.
What Qualifies as a Financial Disaster or Emergency?
As indicated above, a financial disaster or emergency is something that is beyond your normal control. Typical financial disasters or emergencies include getting laid off from work, a long-term medical problem due to illness or accident, death to a family member who contributes income to the household, liability issues related to an auto accident and damage done to personal property as a result of a natural disaster (flood, fire, tornado, hurricane).
Best Ways to Deal With a Financial Disaster or Emergency
The ideal way to handle a financial disaster or emergency is to have a savings account set aside for just these kinds of events. It takes time to save this kind of money, but the intrinsic value of having this kind of financial protection is worth its weight in gold. In lieu of significant savings, an investment in insurance usually offers enough protection to keep you financially stable regardless of the seriousness of the emergency. When you don’t need it, insurance feels like a waste of money. All of that changes the second a financial disaster or emergency occurs and you realize the financial impact is going to be minimized, making you grateful you made the investment.
Types of Insurance That Can be Used to Protect Your Financial Security
Regardless of how you feel about paying for insurance, you owe it to yourself and your family to protect your financial stability as much as you can. These are the types of insurance you need to cover the most likely negative events.
Mortgage and/or Credit Insurance – In the event of losing your job or getting sick, you don’t want to run the risk of defaulting on your mortgage or credit cards debt due to the inability to make payments. Mortgage and other types of credit insurance will cover your payments should you not be able to do so through no fault of your own.
Healthcare Insurance If you are fortunate enough to have healthcare insurance from your employer, you still want to make sure the coverage is adequate enough to cover most major medical situations. If you need to purchase it on your own, you want to make sure the coverage in comprehensive with manageable deductibles and co-pays.
Life Insurance – The loss of a family member is difficult to handle emotionally. When that person is a primary financial contributor to the household, you need to make sure you have a substantial life insurance policy on those persons in order to make sure the family is left with the resources to continue on and reorganize.
Auto Insurance – If you are like most Americans, you can ill-afford to pay for property damage, loss of life or the replacement value of your automobile in the case of an at fault accident. You need full coverage in order to assure your financial stability is not irrevocably damaged.
Homeowners Insurance – Your home and personal belongings have real value. You don’t want to lose that value should you become victim to a natural disaster. That could create a major financial setback. With the proper coverage, you should be able to replace most things of value with nothing more than a deductible payment.
If you would like more information about the importance of protecting you and your family through insurance policies, you should contact one of our professional debt counselors here at Rescue One Financial as soon as possible. We would like the opportunity to explain how insurance works and offer you advice on how to best protect you and your family.