Is Insurance Part of Your Preparedness Plan?

Many articles and plans for preparedness talk about fire starting, water, shelter, and food storage.  Those are very good topics that should be learned as part of our survival skills, but what about insurance?  When spending the money that we all do in being prepared doesn't it seem wise to invest in protecting it?

With the economy the way it is right now, the thought of the added expense of more insurance plans makes me cringe.  However, imagining what life for my children and I would be like if we lost my husband is even harder to imagine.  His check pays the mortgage, the car payment, utilities, all of our health/medical insurance and not to mention clothes, food, and basic day-to-day needs.  If something were to happen to him, *life as we know it* would end.  This thought sets us on a journey into the world of financial preparedness.

Wikipedia describes a financial plan as;

In general usage, a financial plan is a series of steps or goals used by an individual or business, the progressive and cumulative attainment of which are designed to accomplish a financial goal or set of circumstances, e.g. elimination of debt, retirement preparedness, etc. This often includes a budget which organizes an individual's finances and sometimes includes a series of steps or specific goals for spending and saving future income. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and long-term savings. A financial plan is sometimes referred to as an investment plan, but in personal finance a financial plan can focus on other specific areas such as risk management, estates, college, or retirement.

A successful financial plan and monthly budget will allow you to see where costs can be trimmed to set aside money for the type of insurance you need to protect your family.

Different types of insurance your family can consider are;

• Life Insurance: Life insurance is a contract between an insured (insurance policy holder) and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person.  Depending on the contract, other events such as terminal illness or critical illness may also trigger payment.  The policy holder typically pays a premium, either regularly or as a lump sum.  Other expenses (such as funeral expenses) are also sometimes included in the benefits.
  The advantage for the policy owner is "peace of mind", in knowing that the death of the insured person will not result in financial hardship for loved ones and lenders.  It is possible for life insurance policy payouts to be made in order to help supplement retirement benefits; however, it should be carefully considered throughout the design and funding of the policy itself. ~ Source
• Health Insurance:  A recent Harvard study noted that statistically, "your family is just one serious illness away from bankruptcy."  They also concluded that, "62% of all personal bankruptcies in the U.S. in 2007 were caused by health problems and 78% of those filers had medical insurance at the start of their illness."
  Those numbers alone should urge you to obtain health insurance, or increase your current coverage.  The key to finding adequate coverage is shopping around.  While the best option and the least expensive is participating in your employer's insurance program, many smaller businesses do not offer this benefit.
  Finding affordable health insurance is difficult, particularly without an employer-sponsored programor if you have a pre-existing condition. According to the Kaiser/HRET survey, the average premium cost to the employee in an employer sponsored health care program was around $4,100.  With rising co-payments, yearly deductibles and dropped coverage's, health insurance has become a luxury less and less can afford, yet even a minimal policy is better than having no coverage.  The cost for a day in the hospital can range from $985 to $2,696.  Even if you have minimal coverage, it can provide some monetary benefit for your hospital stay. ~ Source

• Auto Insurance:  There were over 10-million traffic accidents in the U.S. in 2009 and 33,808 people died in motor vehicle crashes in those accidents, according to data released by the Fatality Analysis Reporting System (FARS).  The number one cause of death for American's between the ages of 5 and 34 were auto accidents.  Over 2.3 million drivers and passengers received treatment in emergency rooms in 2009, and the costs of those accidents including deaths and disabling injuries was around $70 billion.
  While all states do not require drivers to have auto insurance, most do have requirements regarding financial responsibility in the event of an accident.  Many states do periodic random checks of drivers for proof of insurance.  If you do not have coverage, the fines can vary by state and can range from the suspension of your license, to points on your driving record, to fines from $500 to $1,000.
  If you drive without auto insurance and have an accident, the fines will probably be the least of your financial burden.  Your car, like your home is a valuable asset you use every day.  If your car is damaged in an accident and you have no auto insurance, you will have no way to replace that vehicle unless you have a large savings account, and you don't really want to tap into that savings when auto insurance could cover the cost.
  If you, a passenger or the other driver is injured in the accident, your auto insurance will pay those expenses, and help guard you against any litigation that might result from the accident. Auto insurance also protects your vehicle against theft, vandalism or a natural disaster such as a tornado or other weather related incidents.
  Again, as with all insurances, your individual circumstances will determine the price of your auto insurance.  The best advice is to seek out several rate quotes, read the coverage provided carefully and check periodically to see if you qualify for lower rates based on age, driving record or the area where you live. ~ Source

• Long-Term Disability Coverage:  This is the one insurance most us think we will never need, as none of us assumes we will become disabled.  Yet, statistics from the Social Security Administrationshow that three in 10 workers entering the workforce will become disabled, and will be unable to work before they reach the age of retirement. Of the population, 12% are currently disabled in some form, and nearly 50% of those workers are in their working years. ~ Source

• Renters Insurance:  An insurance policy which provides most of the benefits of homeowners insurance, with one notable exception.  Renters Insurance does not include coverage for the dwelling, or structure, with the exception of small alterations a tenant may make to the structure.  This way the tenant has liability insurance and the tenant's personal property is covered against named perils such as fire, theft, and vandalism.  The owner of the building is responsible for insuring it, but bears no responsibility to the tenant's belongings. ~ Source

These are a few of the more common insurance types that you can research and consider investing in.  Always check with your employer first and see what types of insurance they offer.  Only you can decide what type and how much insurance is right for you and your family  While insurance can be costly and require sacrifice of some of life's daily pleasures, the bottom line is that without it, you (or your family) could be financially ruined if you have a bad car accident, become disabled, lose your job or have a house fire.  You could also leave your family in a world of hurt if you do not take responsibility now and purchase life insurance.

There are many different options out there to pick from and many plans that are affordable.  Why not make sure you and your family are covered financially in the event of a disaster?  It is definitely something that we, as preppers, should consider a top priority in our plans.