According to a recent census, over 29,000 car accidents happen every day in the United States. While this is a staggering figure, what is just as alarming is the number of people who mistakenly assume their car insurance policy will cover all expenses and liabilities if a death occurs. The reality is you cannot expect your car insurance policy to act as a life insurance policy if you die in an auto accident. Let us look at an unfortunate but common scenario – someone losing his or her life as a result of a car accident. The car insurance policy will only take care of the car, and potentially help the family of the deceased individual with funeral expenses. If heirs are paid anything at all, it is not nearly as much as if a life insurance policy is paid out. Additionally, with almost half of all auto death cases going to court, being sued after death is not as uncommon as it may sound. If the deceased individual caused the accident and has assets, the other motorist might sue. A car insurance policy will not meet the financial needs necessary to obtain legal counsel or payout additional monies above what the car insurance policy originally held.
To break it down even further, consider the liability coverage on your car insurance. Your own liability coverage does not pay your family if you die in an automobile accident. If another driver caused you to be in the accident, his or her liability coverage will pay your family. In many states, the minimum required liability amount is only $12,500 – an amount that would barely cover funeral costs. If your heirs cannot survive long-term on $12,500 in the event of an accident and loss, it is time to consider life insurance.
To properly provide for your family in the future, obtaining a life insurance policy is your best bet. Whether it is a car accident, illness or other accident-related death, heirs need not be left with an additional financial burden while already experiencing a painful loss. Life insurance guarantees heirs are financially brought back to the point they were before the loss of a family member, spouse, etc.
Even though many people are aware of the benefits of owning a life insurance policy, many have foregone securing a policy because they think it may be too expensive. Not only is life insurance cheaper than most people think, as life expectancy averages continue to climb higher, life insurance prices become lower. According to LIMRA, a well-known insurance trade association, the average price for a 20-year, $250,000 term policy for a healthy 30 year old costs around $150.00 a year. In the event of death, a $250,000 life insurance policy can help children or a spouse pay funeral expenses, debts, mortgage payments and ease unnecessary stress during a time of loss.
For those still concerned with the price of a life insurance policy, knowing the difference between a term policy and a permanent policy may help with making a final decision. A term policy provides temporary insurance over a specific period, say ten or twenty years. A permanent policy lasts a lifetime. Because term policies tend to be more affordable than permanent policies, many people obtain a term policy.
If a car insurance policy is the only protection you currently have for yourself and your family, consider securing a life insurance policy as soon as possible. A policy is not as expensive as you think and its value will be immeasurable to your heirs if needed in the future.
