In the event of a disaster, your first priority will be to protect your own life and health — and your family’s. Think about the steps you can take now to plan financially for the possibility of a life- or health-threatening emergency.

Your Health
If you or a family member is injured in a disaster, coverage such as medical insurance, disability policies, and long-term care could quickly become your most important assets. But do you know what your plans cover— or what to do if you don’t have coverage? Following are answers to some questions you may have.

What should I look for in a health insurance policy?
When you’re looking into details of a health insurance policy, consider the tips outlined below.

• Know what’s covered. Find out what the plan will cover and what your out-of-pocket costs might be if you are seriously injured in a disaster so you can anticipate (and save for) these costs. Call the telephone number or use the Web address listed on the back of your health-care card for information, or ask your employer or insurance agent for a booklet that describes your policy in detail. Learn about your plan’s coverage for catastrophic or longterm injuries, including coverage for rehabilitation and the lifetime maximum the policy will pay. If the plan falls short, find out if you can switch to another plan that has better coverage, even if it costs a little more. Or, consider joining your spouse’s medical plan or buying supplemental medical coverage.
• Understand the process. Learn what procedures the insurance company requires you to follow in the event of an emergency. For example, can you go to any hospital, or must you be treated at a certain one to receive full payment? How quickly must you notify the insurance company that you received emergency care?
• Keep your coverage in force. Do your best to make sure you never go without health insurance for more than 62 days (two full months). Otherwise, you may have to wait up to a year for coverage for a preexisting medical condition. If you leave your job, a federal law known as COBRA generally allows you to continue coverage under the previous employer’s medical plan for up to 18, 29, or 36 months, depending on the circumstances and the state you live in. In general, COBRA applies to group health plans maintained by employers with 20 or more employees. You must pay the full cost of coverage (at the group rate) plus up to 2 percent to cover administrative costs. Certain states have mini- COBRA laws that allow you to continue your health insurance even if your employer has fewer than 20 employees.

I don’t have health insurance. What can I do?
A few options to consider include:

• If you change jobs, look for a company that offers a group health insurance plan. A health insurance benefit can be worth thousands of dollars.
• Purchase an individual plan. Even if you can’t afford the best plan, at least try to buy insurance that would cover a catastrophic injury or illness. If you have a medical condition that makes you ineligible for an individual plan, check into your state’s plan for uninsurable individuals. The cost can be high and the coverage limited, but paying for a serious injury without a health-care plan will cost even more. Call your state’s insurance commission to learn about the program in your state.
• Find out if you are eligible for government programs. A county social services office or hospital social worker should be able to tell you if you or your family might qualify for government health-care programs, such as Medicaid, Medicare, veterans’ benefits, or the Children’s Health Insurance Program (CHIP). Or, go to www.govbenefits.gov, a federal government Web site, for information.

What about disability insurance?
If you were injured in a disaster and could not go back to work for a few months — or for many years — how would you and your family manage financially? Disability insurance, which pays a monthly income to disabled individuals who qualify, could provide part of the answer. The section that follows covers some things to know about disability insurance.

• Group coverage is not always the best coverage. If your job offers disability insurance, review the plan so you’ll know what it provides. Your employer may pay the cost of such a plan. Be aware that the employer can cancel a group policy, and coverage will terminate when you leave the job. In addition, the policy will generally reduce its benefit payments by the amount of any benefits you receive from workers’ compensation or Social Security.
• Buy an individual disability policy. A policy you buy on your own may be more expensive than group coverage, and you will have to qualify for it. (For example, if you engage in high-risk activities such as skydiving, you may not be able to buy disability insurance.) But, it also may provide better benefits than an employer’s plan. Generally, disability coverage is limited to 60 to 70 percent of your gross income, so try to get as much coverage as possible for as long as possible. Look for an “own occupation” definition of disability, which means you will receive benefits if you are disabled and cannot work in your original job, even if you can work doing something else. Shop for a plan that provides a benefit for a partial or residual disability, meaning that you are able to work but not at full capacity. In addition, look for a non-cancelable, guaranteed renewable policy with a cost-of-living adjustment.
  
  With these features, the policy premiums can’t be changed.
• Understand the income tax implications. In general, if you pay the premiums for a disability policy, the benefits are tax free. If an employer pays the premiums, the benefits will be taxable income to you. (Credit card disability benefits are generally non-taxable income.)
• Know that you may qualify for other benefits. If you are totally disabled by a disaster or any other cause, you might qualify for Social Security benefits. (To learn more, go to the Social Security Administration’s Web site at www.socialsecurity.gov.) If you are injured on the job during a disaster, workers’ compensation might kick in, and if you are a veteran, you could be eligible for veterans’ disability benefits. These types of benefits, however, may take months or years to obtain.

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Your Life
If you lost your life during a disaster, would your loved ones be able to manage financially? Having adequate life insurance could mean the difference between their financial security and financial catastrophe.

How much life insurance should I have?
Factors to consider include how many dependents you have, their ages and needs, your debts, and the ability of your spouse to earn a living. Your CPA financial planner or other financial adviser can help you determine the amount of insurance that best suits your needs. Then, periodically evaluate your life insurance coverage, especially every time there is a change in your life, such as a marriage, divorce, or birth of a child. This is also a good time to make sure that the individuals you named as beneficiaries are still the ones you want to receive the proceeds of your life insurance.

What kind of life insurance should I have?
Again, that depends on your needs. Term insurance provides coverage for a specified length of time, such as 10 or 20 years, and pays benefits only in the event of death, while cash-value insurance, which includes whole life, variable life, and universal life, may be a better buy for long-term needs.

In general, term insurance will provide a larger death benefit but cost less when you are younger. Cash-value insurance will cost more initially, but the premiums may remain level over your lifetime. In addition, you may be able to withdraw some of the cash value, or take out a loan against it, if you need extra money in an emergency. Cash-value insurance, also known as permanent insurance, may be kept throughout your life. Term insurance generally ends prior to normal life expectancy.

When shopping for either a term or cash-value policy, find out if you can collect all or part of the policy’s face value before death if you become terminally ill. You also may want to consider purchasing a waiver of premium rider, which would cover your premiums if you became disabled.

To determine the type and amount of life insurance you need, work with a qualified financial planner or insurance agent. (Do not rely solely on information obtained from online calculators because similar information will produce a broad range of results depending on the calculator you use.) Before buying any type of insurance, always check the financial stability of the company. Independent rating services, such as A.M. Best Company (www.ambest.com), Duff & Phelps (www.duffllc.com), Moody’s Investors Service (www.moodys.com), Standard & Poor’s (www.standardandpoors.com), and Weiss Ratings Inc. (www.weissratings.com) can provide this information.

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Life Savers Taking a few simple precautions could help you avoid injury or save a life in a disaster — and they don’t have to cost a lot of money. For example, sign up for a Red Cross first aid and CPR class and have other household members enroll in one, too. Also, make sure you have the following items at home: Smoke alarms: Install one outside sleeping areas and at least one on every level of your home. Carbon monoxide detector: Install them according to manufacturer’s directions near sleeping areas. Fire extinguishers: Keep one in the kitchen, basement, garage, near the fireplace, and anywhere a fire could begin. Get training from your local fire department on how to use them. Disaster supplies kit: See Making A Disaster Plan for instructions. Test your smoke alarms and carbon monoxide detectors once a month. Replace the batteries in them once a year — on a birthday or anniversary, for example. Check the gauge on the fire extinguisher as recommended by the manufacturer or at least once a year. Replace the extinguisher or have it recharged if the gauge is out of the “good” range.