I have an emergency fund that covers the next N months of life's expenses: rent, utilities, food, etc. But I recently realized I haven't accounted for insurance that is currently provided by my employer.
Through work I have dental, medical, vision, life, long-term disability, and accidental death and dismemberment insurances. If my employment ends (either voluntarily or not), I'll lose my insurances.
The most naive approach to preparing for this is to compute the cost of these insurances (mostly the monthly premiums) for N months and including that in my emergency fund. But I don't think that's practical for all insurances (e.g., life insurance).
My current plan is to:
- Include the monthly costs of medical, dental, and vision insurances in my emergency savings. My understanding of COBRA is that these must be made available to me after employment ends, so as long as I can pay the full costs, my coverage can continue post-employment.
- Buy my own (term) life, long-term disability, and accidental death and dismemberment insurances. These are fairly low-cost (ideally < $1,000/year for all) and ensure my family has a safe guard always in place should anything happen to me (the primary provider).
My question: Is this a reasonable approach to take, and are there other strategies for planning for insurance coverage in an emergency fund that I should consider?