Financial Precautions Safeguard Family Future

Among the tragedies in the aftermath of the 9/11 terrorist attacks of 2001 were the dire financial circumstances of many families whose breadwinners were killed or injured. The scope of the situation brought focus to the monetary crises that often face American families after unexpected accidents or illnesses - circumstances that can be avoided by taking some basic financial precautions.

To protect your family's future, take stock of your finances and consider the following tips:

• Maintain cash reserves. Long-term savings and investments form the cornerstone of financial stability. In addition to standard accounts, develop a cash or easily liquidated reserve account for emergencies; most experts recommend maintaining enough readily-accessible assets to cover three to six months of expenses.
  
  
• Be adequately insured. The term "risk management" refers to the combination of insurance types that best meet your particular needs. Standard categories of insurance include:
  
  
  • Life Insurance - While your employer may provide some coverage, it is usually wise to calculate the appropriate amount you need, and if necessary, supplement this employer provided policy with additional insurance. The types of life insurance from which you may choose include "Term," which provides coverage for a set period of time and pays benefits only in the event of death. "Whole Life," "Variable life" and "Universal life" policies, all of which include a savings component, are also available. The Life and Health Insurance Foundation for Education (LIFE) provides an online calculator to help determine the type and amount of life insurance you may need; at www.life-line.org.
    
    
  • Disability Insurance - Many employers also provide disability insurance, which helps cover living expenses in the event of a debilitating event. However, most families will benefit from a review of current policies to determine if additional coverage is needed.
    
    
  • Health Insurance - Major medical expenses can destroy a family's financial resources in a matter of months. If your employer offers health insurance, take advantage of it. In some cases, a separate or supplemental policy will provide more comprehensive coverage.
    
    
  • Long Term Care Insurance - Increasingly popular, this category of insurance can shelter a family's savings and the estate of the insured in case of long-term illness or disability.
    
    
• Plan your estate. Estate planning involves more than writing a will; it encompasses everything you own, from property to jewelry to business interests. A comprehensive plan will also describe your wishes about your own medical care and the management of your estate; even more important, it will ease the transition and financial concerns of your family.
  
  
• Keep records current. Seemingly minor issues, such as a blank in the "designated beneficiary" line of an investment account, can wreak havoc on a grieving loved one. Make sure all documents are accurate and up to date to avoid delays and legal problems.
  
  
• When it comes to safeguarding your financial future, you may want to consider seeking the help from a financial planner.

Additional Resources:

Publications

• "Wealth Care Kit," National Endowment for Financial Education booklet, online at www.nefe.org/wealthcarekit/index.html
• Federal Citizen Information Center, government-produced booklets, online at www.pueblo.gsa.gov
• Insurance Policy Papers and Reports, National Academy of Social Insurance, online at www.nasi.org/publications2763/publications.htm

Web sites

• Consumer Federation of America (www.consumerfed.org)
  
• U.S. Dept of Health and Human Services (www.dhhs.gov)
  
• Financial Planning Association (www.fpanet.org)
  
• American Savings Education Council (www.asec.org)
  
• Employee Benefits Research Institute (www.ebri.org)
  
• National Association of Personal Financial Advisors (www.napfa.org)
  

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