THREE WAYS TO PREPARE FOR YOUR FINANCIAL SURVIVAL
CRITICAL STRATEGIES FOR PROVIDING FOR THE ONES YOU LOVE WHEN DISASTER STRIKES!
BY BRIAN M. MORRIS
When talking about preparation in general, it is important to look at it within the structure of what I refer to as the Emergency Threat Spectrum (ETS). This is a tool I created as part of my training syllabus to rate common, everyday emergency events such as short-term power outages and inclement weather events at one end and a total collapse of society on the other.
EMERGENCY THREAT SPECTRUM (ETS)
Progressing from least to greatest threat:
• Common Emergency (Minimal risk to life and limb)
• Common Emergency (Life-threatening)
• Local/Regional Disaster
• National/Worldwide Catastrophic Event We’ll look at a three-pronged, holistic approach to mitigating the risk of finding yourself lacking the financial resources needed to protect and provide for yourself and your loved ones, regardless of where you may find yourself on the ETS.
ANOTHER ASPECT OF SECURITY
Often, you will hear people (including me) say that you should consider basic human needs, such as food, water, shelter, security, communications, and health when preparing for emergencies. While I stand by that advice, I believe that “security” is too frequently used in a one-dimensional way.
Typically, when we think of security, we are referencing weapons to protect ourselves, our family and our property. Those are legitimate concerns, but they don’t address all the security concerns that should be considered when reacting to an emergency or catastrophic event.
Chances are, eventually you will run out of rations, your water stores will go dry,
Tents will deteriorate, batteries will die, weapons will break and your medical supplies will be depleted. When the day comes that your stores are gone or you desperately need something you don’t have, having the resources to buy or trade for supplies vital to your survival is highly valuable.
Other circumstances where “valuables” are crucial include times when you must bribe your way past a checkpoint or secure passage to someplace safer or with more available resources. Realistically, someone will always have something you need and having the ability to make a peaceful exchange of goods or services is completely dependent on each side having something that the other party finds valuable.
LIFE INSURANCE DEMYSTIFIED
Fellow emergency preparedness professional Spiro Demetriadi is a longstanding and respected member of the tactical and emergency response communities as well as a successful financial services professional. He provides us with an explanation of term and whole life insurance options. I cannot stress enough the importance of having a life insurance policy as part of your emergency preparedness planning strategy. [T]he primary reason for having life insurance in the first place is to replace the income of the majority breadwinner of the family… allowing them to continue to maintain the same lifestyle that they were living when you were alive. There are generally two types of life insurance contracts: term life insurance and whole life insurance. In both scenarios, if the policy is in force and the insured person dies, their beneficiaries will receive a death benefit.
Term Insurance is like renting a house and whole life is like owning a house. Term coverage will end at some point, where whole life coverage will continue until the end of a person’s life, no matter how long they live.
Term insurance has a fixed death benefit amount and has a lower monthly premium compared to whole life and when the term insurance contract ends (typically in 20 years), you have no more coverage or cash value. That could be a big problem if you are in your mid 60s and try to secure life insurance. Will your health be good enough to qualify and if you could qualify, could you afford it since the older you get, the more it costs?
Whole life has a higher monthly payment compared to term insurance and over time it has cash value growth. The death benefit also grows over time in whole life insurance. Should one day you need access to cash, you can borrow against your whole life contract (like taking out an equity line on your home). The difference is with whole life you can borrow the money tax-free and never have to pay it back, where with a home loan, at some point the bank will need to get paid back. Whatever money you borrow from whole life, it will be subtracted from your death benefit.
Many life insurance companies also offer a disability waiver option as part of a life insurance contract. If you qualify, it is a good thing to have because should you ever become disabled, the life insurance company will pay your premium for as long as you are disabled.
Here is an example of how to calculate the proper amount of life insurance:
Home mortgage: $200,000 Miscellaneous debt: $35,000 Income ($75k for 20 years): $1,500,000 College for children: $300,000 Total death benefit needed: $2,035,000 Another important thing to think about is just like having quality gear that you must depend upon when you need it the most in a survival situation, the same goes in choosing a quality life insurance company. If you are going to be making payments for decades until you die, you want to have the confidence that the company will be around to honor that commitment and pay out that death benefit to your beneficiaries. One way to do that is to look at a company’s long history and financial strength.