Fire Drill For The What Ifs
November 18, 2014A co-worker recently had a scare when her husband was admitted to the hospital for a possible heart attack. His family has a history of heart problems so she was terrified at the thought of her life without her best friend, having to explain to her children they’d lost their dad, and not spending the rest of her life with him. She shared with me all sorts of thoughts that started creeping into her head…all of the “what ifs.” (Luckily for her, his health problem was not severe, just early symptoms of diabetes, and his problems are treatable with lifestyle changes.)
As she contemplated the “what ifs,” she compared them to a fire drill. Just as in school, you go through the motions of getting up and going to a designated place so if the real fire occurs, you know exactly what to do. I realize that many of the “what ifs” in our lives are statistical probabilities and that taking the time to run through the “fire drills” will save people a lot of stress when a crisis occurs. Below I listed several crises and questions to help you create your own “fire drill” strategy for each one.
Health Crisis: If you have to call 911, what is your probable out-of-pocket expenses? How much do you have to pay in hospital expenses? Does your insurance cover the hospital you and your family are the most likely to visit?
Unable to work for a few days: If you are hospitalized, how do you take time off: sick day, PTO, vacation, etc? What if you have no days left, will you be unpaid for those days you took off? How do you take time off when it is a loved one, not you who is ill?
Unable to work for longer than a week: Do you have short or long term disability insurance? How much do you get paid? How long do you have to wait to get the first check? How long will you get the disability benefits? If it is long term disability, do you get it if you can’t do your job or any job?
Car Accident: How much does your insurance cover if you are hurt or hurt someone else? If your car is totaled and you have a car loan, is it forgiven? If the other driver hits you and does not have insurance, are you still covered? If you can’t drive your car, do you get a rental car?
Home Damage: How are you reimbursed for water, wind, and electrical damage to your home? If you are robbed, do your get the money to replace the stolen items or the depreciated value of the items that were stolen? How do your prove that you owned the stolen items? If your home is so damaged you cannot live in it, does your insurance provide hotel reimbursements?
Death: If your loved one passed away, will the insurance be enough to cover funeral expenses, debts, a place to live, funds to live off of and your kid’s education? Can you maintain your lifestyle on one income? Do you have a will?
Thinking through the what ifs and knowing some the unknowns will give you peace of mind when a crisis occurs. Even better, by running through these “fire drills” you can also see gaps that you can fill, like getting long term and short term disability insurance, adding features to your auto policy like loan forgiveness, and adding replacement costs vs. the cost of the item plus depreciation to a homeowner’s policy. Going through these drills, seeing gaps and making changes will go a long way into making sure that a short term crisis does not create long term financial headaches.