Car Insurance Quote Basics – Understanding Your Options
Are you looking for car insurance? If so, there are different types of auto insurance that you can get. Some of these types include personal injury protection, property damage protection, medical payments and comprehensive coverage. Below is a summary of how each type of insurance works.
}Personal Injury Protection – This is the cheapest policy type, but also the type that offers the least coverage. You pay a fixed amount of money for coverage, and if your coverage is active, then your insurance company will kick in when needed. Personal injury protection protects you against the financial responsibility of harm you cause to someone else’s car, property or even yourself by driving while intoxicated.
Collision Coverage: This is the type of policy that will pay you back damages that you caused in an accident. If you have no other assets, you may want to consider adding extra collision coverage to your standard auto policy. On top of the standard deductible that you will pay when making a claim, you will also be required to pay a higher deductible amount than the total amount you may claim on your vehicle. The higher the deductible you choose, the lower your premium will be.
Medical Payments: Usually, car insurance companies offer coverage for accidents that occur due to car accidents, car thefts and serious injuries. However, this type of accident reimbursement will only pay you if you suffer a physical injury during the accident. Besides, you will also be required to pay medical fees incurred as a result of your accident. On top of this, you may also be responsible for additional costs for rehabilitation that you may need due to your accident.
Term Life Insurance Policy: Another option you may want to consider is a term life policy. Unlike a whole life policy, a term life insurance policy only has a set duration. It means that you are not covered forever, something that whole life insurance policies do not offer. With a term life policy, you can choose to make a lump-sum payment, or you can take advantage of what is known as an endowment effect.
Endowment Effect: With an endowment effect, the cost of your premiums will increase each year until you reach a level of income that allows you to pay for the expenses that you would have incurred over the years without insuring yourself. It is usually around ten per cent of your total life insurance policy cost. To determine if you qualify for this effect, you will need to submit a medical exam. It is important to note that this requirement does not mean that you will not qualify for coverage. You have to be at a certain age to qualify for the endowment effect.
Cash Value vs Accumulated Cash Value: A car insurance policy is insured for a set period or an endowment policy. A car insurance quote will also inform you of the difference between these two types of coverage. Accumulated cash value coverage allows you to make large payments throughout the policy’s life without having to worry about how much the car may worth when you die. However, if you decide to sell the car before the maturity date, you will need to take a loan out against the value of your car to pay off your premiums.
You should also note that both of these policies do not have any lock-in period. As long as you pay your premiums within the prescribed time, the premiums will remain the same throughout the term. As long as you do not withdraw money from your account, you will never lose your coverage. It is different from the locked-in period of a whole life insurance policy, where you can only access your side fund if you pay your premiums within the specified time. Therefore, if you choose the Accumulated Cash Value option, you are often better off paying higher premiums with fewer benefits.