Today’s New York Times story, entitled Losing Everything, Except What Really Matters, about the Sopers, a young Cottondale, Alabama family whose house was demolished, again reminded me that LIFE is wealth! The Sopers, a family who was geographically separated when the tornado hit were frightened for their lives, literally. Luckily, Mrs. Alicia Sopers had been raised in areas often hit by tornados as a girl, so knew enough to evacuate when the weather reports grew grim. That attentiveness, alertness and her actions most likely saved their lives–her and her two children. Meanwhile, Mr. Sopers was working in Nevada and only able to communicate via cell phone until that connection died. The mental angst each of them endured until they were able to speak again via cell phone after the tornado can only be imagined as horrific.
Until Corey Sopers could finally arrive home on an emergency cobbled return series of flights, Alicia Sopers saw the damage and wreckage of their home and began to feel the impact alone, until a neighbor was able to hold her as she wept. Then Ms. Sopers was able to see what she’d been assessing…the rubble of their house. Yet their ‘home’ was within their hearts; their spirits. Corey, Alicia and their two children began the arduous task of rebuilding their “things” with Mr. Sopers saying, “we’re building new memories now” as they began to clean out what was now trashed.
While money is surely important, I’m confident it was the last thing on the Sopers’ minds as they feared for their lives. This reminds me that if the human spirit can rebuild from tragedy such as tornado damage, we can surely garner our spirit and our courage to look at our money issues before we have bigger, more important situations that command our attention. Generally speaking, we can expect a few unexpected expenses along our financial path. We can expect a few changed plans and new intentions/goals which must be accounted (and paid) for. So, let’s plan our money journey so that when disappointment or perhaps even total physical property devastation befall us, we can recover more quickly.
As Americans, we often ask “what can we do?” in the face of this type of property and life extinction? Well, we can send prayers and give money to the victims, and then we can prepare ourselves so that if something like this would happen to us, we would be prepared in the best possible way.
We can check our insurance policies right now. Call your insurance agent and ask them if you are properly covered, should an “Act of God” cause your property to be ruined, are you covered properly? WE can all do this. Do you have replacement coverage on your contents, so that depreciation won’t significantly reduce your claims’ check? Without replacement coverage, a 5 year old TV which may have worked perfectly for you, would be depreciated 5 years, resulting in a very small check. Same goes for your sofa, your dressers, your beds, your computers; everything gets depreciated in an insurance claim unless you have “replacement cost” coverage on your contents. Same goes for your house structure. Be sure you have the type of policy that would replace your home. Both of these coverages–replacement on the structure and replacement for contents cost a tiny additional annual premium, yet are very much a great investment, in my opinion!
While we are at it, let’s examine if our life insurance is up to snuff right now too. If your death occurred yesterday, would your family have enough money to maintain their lifestyle for at least 5 years? If not, you are intentionally or unintentionally forcing your surviving family members to make what could be very unattractive and undesirable choices.
Remember, all life insurance does is buy time. It cannot bring anyone back, yet the funds can provide for the survivors for several years thus enabling them to take some time to adjust to life without you (and your salary).
If in doubt as to how much life insurance to carry, simply figure out how many years you’d like NOT to have to make a significant physical or geographic change to your lifestyle and then obtain a multiple of each earner’s salary. In other words, if you are earning $50,000 and wish to provide your surviving family members 5 years of their current lifestyle, then simply buy $250,000 of coverage. It’s really that simple. Then, if you with for the mortgage (or a good chunk of it) to be paid off, simply add that value or even 1/2 of it to the total amount. Same goes for paying a child’s education costs, for example. Depending on the age of the child or children, setting aside a lump sum of $25,000 or so, could compound to quite a handsome sum.
So, the takeaway here is that life is precious; our family members’ lives are precious. Let’s all thank God if our family is still alive, and then plan with the purchase of life insurance, for when the breadwinners aren’t alive.
Less important, yet of significance, is to upgrade our home owner’s or renter’s policies to include replacement cost coverage on both the dwelling and our contents.