How Does Life Insurance Differ From Auto Insurance

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All You Need To Know About Life Insurance:

Life insurance is for the protection of your family members after you die. It gives financial support to your family in order to pay for burial expenses as well as routine expenses such as utility bills, education, and other costs.

Life insurance essentially materializes after one dies; however, there are some life insurance companies that give monetary benefits during the lifetime of the person in the form of cash values and accelerated benefits.

Life insurance helps ensure that your dependents are able to maintain their living standards even after your decease. The beneficiaries receive money after the policyholder dies, called a death benefit. This is a tax-free sum. Normally there is more than one beneficiary.

So you must decide during your lifetime as to how to divide the sum of money amongst the beneficiaries. A policyholder must also decide the secondary beneficiary, who is the person to receive the death benefit in case the primary beneficiary dies before the policyholder.

When you buy an insurance policy, you agree to pay a premium against it. This premium is dependent on several factors. These include your age, gender, occupation, physical wellbeing and habits such as whether you use tobacco and alcohol or not.

People who have a number of dependents on their income are most likely to buy insurance. People such as businessmen who have debts and liabilities also are likely to insure their lives so that their family does not have difficulty in returning the dents after they decease.

Similarly, those who own large properties and assets that could be subject to a high amount of taxes after their death also buy life insurance.

Read also: Your Credit Score And Auto Insurance Quotes

Understanding Auto Insurance:

Auto insurance is very important. In fact, to be lawfully driving in the US you must get your car insured.

Auto insurance protects you, your family and others on the road from damages arising from unforeseen accidents. Not just that, it guards your car as well as others and their property in accidents.

Every state has its own minimum level of insurance required. In Texas it is as follows:

  • $30,000 per person and $60,000 per accident for bodily injury liability
  • $25,000 for property damage
  • $30,000 per person and $60,000 per accident in case of uninsured motorist coverage

When you buy auto insurance, you pay a premium against it just like life insurance. This premium is dependent upon several factors. Some of the common factors are:

  • Your credit history is one of the most important factors determining your premium rate. If you pay your bills on time and maintain a healthy level of credit your premium rate is likely to be low.
  • Driving record is also a great influential factor of insurance premium. If you have had a clean driving history with no major offense with regard to traffic laws, you are likely to be charged a lower premium. On the other hand, if you have had a poor driving history tainted with accidents and traffic violations, your premium will rise.
  • Demographic factors such as age, gender, occupation, and area of residence also influence auto insurance rates.

Difference Between Life Insurance And Auto Insurance:

The biggest and most obvious difference between life insurance and auto insurance is that you make a life insurance claim only once that is when the policyholder dies.

On the other hand, in case of auto insurance, whenever the car is damaged or policyholder hurts, you can make an insurance claim. Life insurance protects the policyholder after he dies.

Whereas, car insurance protects the life of the policyholder and his vehicle, passengers in his car, the other party and their vehicle and any affected property. Car insurance is mandatory in the US, unlike life insurance. Many companies offer services for car, life, and home insurance.