Protect Against Collisions and More If you drive a car in the United States, liability insurance must cover it. This type of policy pays for medical and property damage resulting from a vehicular accident. You can also purchase comprehensive and collision insurance to cover other costs. These additional coverages help protect the value of your car should it be damaged. If you are calculating how much it will cost to buy a car, you need to take into consideration the cost of insurance as well. In this article, we’ll review the basics of car insurance and the best auto insurance companies in America, including costs, pros and cons. This is a brief introduction to automobile coverage. Liability Coverage When an accident occurs, liability insurance covers you, household members and authorized drivers for the costs associated with property damage and bodily injury. It covers the cost to repair or replace property damage that you caused. [youmaylike] You are also covered if you cause the bodily harm or death to someone else while you are driving the car. This includes medical expenses, loss of income and specified legal defense costs. Collision Insurance If you are involved in a collision, this type of insurance will help pay for repairing or replacing your vehicle. If the collision is your fault, the coverage may extend to other damaged vehicles involved in the accident. States do not mandate that you buy collision insurance, but your lender or car dealer will if you finance or lease the car. Policies offer a range of deductibles, which is how much you’ll have to pay for repairs before the insurance kicks in. Larger deductibles lower the policy premiums but expose you to more out-of-pocket expenses if a collision occurs. Comprehensive Insurance Comprehensive insurance covers damage to your car that occurs for reasons other than a collision, including theft, fire, vandalism, weather and natural disasters. This coverage is often required if you finance your automobile. You can add riders to this insurance to provide coverage of additional costs, including auto towing, glass repair, daily rental while your car is in the shop and emergency roadside service. As with collision insurance, you can set the deductible on your comprehensive insurance policy to cut your premium costs. Gap Insurance If your car is severely damaged in an accident or other incident, you might find that your comprehensive and collision damage won’t provide enough coverage to pay off the amount you owe on the vehicle. Many policies pay only the fair market value of a totaled car, which might be only 80% of the amount you owe. You can buy additional insurance to plug this gap and ensure you can pay off the car loan in full if the vehicle is destroyed or stolen. Normally, car leases require you to buy gap insurance. If you pay cash or pay off your loan, you can save money by avoiding or dropping gap insurance when no longer needed. Top Five Auto Insurers These five insurers all offer full coverage policies and many additional services. Amica Amica is a superstar among car insurers, winning accolades from Consumer Reports and J.D. Powers. It’s known for handling the claims process smoothly. The average annual cost for full coverage: is $1,360. Pros You can have your car repaired at any body shop, without restrictions. Offers a premium package which, for an additional cost, provides full glass coverage, rental coverage, good driving rewards and identity fraud monitoring. Superior financial stability rating from A.M. Best. Cons Missing some discounts, such as military, low-mileage and prepay discounts. Must speak on the phone to get a quote. Sparse website when it comes to customer education. State Farm State Farm is the country’s largest multi-line insurance company. It excels in customer service and regularly garners high marks from customers. The average annual cost for full coverage: is $1,337. Pros Superior financial stability rating from A.M. Best. Excellent online quote tool, getting customers a quote in as little as five minutes. Easy claim handling and top service from its more than 18,000 agents and its easy-to-use mobile app. Cons Doesn’t offer coverage for new car replacements or uninsured motorists. Missing prepayment and automatic payment discounts. The Hartford While only 11th in size, The Hartford is big when it comes to policy options. It offers rates based on your actual driving as well as full replacement of new cars when destroyed shortly after purchase. Average annual cost for full coverage: N/A. Pros Solid benefits, including superior roadside assistance and towing programs. High marks from customers for their purchase experiences. One of the few insurers with mechanical breakdown coverage for out-of-warranty repairs. Cons Mediocre service interaction according to J.D. Power surveys. Sparse online learning materials. Geico Geico is the second-largest U.S. car insurer. It is a favorite among tech-savvy geeks who appreciate the insurer’s mobile app and excellent online service. The average annual cost for full coverage: is $1,627. Pros Geico offers plenty of ways to save, such as multi-vehicle, driving history and vehicle safety equipment discounts. Special savings for active and retired military members and federal employees. Full-featured mobile app for getting quotes, buying insurance, managing your policy, submitting claims, summoning roadside assistance and making payments. Cons Human help may be in short supply, as just about everything is handled online. No gap insurance is offered. USAA No insurer matches USAA for service to military members. Unfortunately, it's only available to active service members, their families and retired veterans. Average annual cost for full coverage: $896. Pros Superior financial stability rating from A.M. Best. Top-ranked purchase experience score from J.D. Power. Cons Missing gap coverage. Doesn’t offer interior vehicle coverage or new car replacement coverage. Limited availability. The Right One for You Competition in the insurance industry helps drive down prices and prompts insurers to offer money-saving features. For example, your carrier might reward you for a safe driving record and for having a long-term relationship with the insurer. The right insurer for you is highly rated for service, offers the exact coverage you want and does so at an unbeatable price. You should always gather multiple quotes before selecting an insurer, and make sure you get credit for all applicable discounts.
Understanding How Trust Funds Work
If you have children to worry about, then you should consider starting a trust fund. The cost of a college education has risen significantly over the course of the last few decades, and is well above the rate of inflation. In fact, according to Forbes, student loan debt is the second highest consumer debt category in the USA after mortgages. Unfortunately, there are a few ways around the sky-high cost of tertiary education, but a trust fund is the best place to start.
Even if you don’t have a child with college in their future, trust funds can be applied for many purposes. If a loved one wealthy in assets falls ill, or needs help with their retirement plans, a trust fund is an excellent option.
What is a Trust Fund?
A trust fund is an agreement that lays out how assets will be held and managed for the benefit of another individual. It is essentially a legal entity that holds onto and manages assets on behalf of another person or entity.
There are many reasons to have a trust fund. The most common reason to open one is for the foreseeable expenses that come with getting a college degree. For this reason, trust funds are often set aside by parents well in advance of college. These trust funds help college students pay for their tuition and books, and any other college-related expenses.
A trust fund requires a grantor, who sets up a trust (account) and fills it with their assets. At the other end of the trust fund, there is a beneficiary (the person who receives the assets from the trust fund as per the agreement). Lastly, a trust fund needs a trustee: an individual or institution that manages the assets before they are passed onto the beneficiary.
Benefits of a Trust Fund
The main benefit of a trust fund is that a grantor can set aside assets for another individual while controlling how these assets are gathered, managed, or distributed. Money in some trust funds is put to use in mutual funds or other forms of investment while the beneficiary awaits receipt of these assets.
Trust funds can be used for many different purposes. However, they fall into two generic categories: revocable or irrevocable trusts.
A revocable (living) trust allows the grantor to maintain more control of the trust fund during their lifetime. These trust funds are most often used by elder family members looking to pass down their wealth to younger relatives. This is because living trusts allow the assets in the trust to avoid probate, which would lead to the assets being distributed to the beneficiaries faster. Living trusts are private and distributed to beneficiaries with a higher degree of discretion. Lastly, while the grantor is still alive and conscious, they may change the details of the trust fund if they’d like.
An irrevocable trust is a different story when it comes to any changes. Irrevocable trust funds very often probate, but there are some considerable benefits to the grantor should they give away control of their assets to the trust fund.
Setting Up a Trust Fund
The first step to setting up a trust fund is planning, which you could complete on your own. Before you fill out a stack of paperwork, you need to determine the more significant variables on your own. You can start by asking yourself the following questions:
- What assets will be placed in the trust fund?
- Who are the beneficiaries?
- Who will take the role of trustee?
- How will the assets be managed? How will they be held/invested, and when will they be distributed?
- Who will manage the assets?
- Is the trust fund revocable or irrevocable?
- Under what conditions should the trust be ended?
After you have a basic idea of the job your trust fund will perform, you’ll need to find an estate lawyer. Estate law, which controls the regulations on trust funds, varies on the state level. While different states have different laws, trust funds are functionally somewhat standardized across the USA.
Your attorney will create a “declaration of trust," and/or other documents that codify your answers to the above questions into law. This step can be as simple or complex as the requirements that you lay out for your attorney.
Once all of the paperwork is finished, your attorney will need you to sign the paperwork to make it all official. From here, you only have a few steps left.
You’ll need to register your trust fund with the Internal Revenue Service, at which point they’ll give you a Taxpayer Identification Number for your trust. This number will allow your trust to declare its own tax returns and open its own bank accounts, among other things. This process can be completed online on the Internal Revenue Service’s website. The necessary documents can also be printed, filled out, and mailed to them.
Lastly, you’ll need to transfer the assets you plan on giving away into the trust fund. You can put many kinds of assets in the trust fund, including stocks, real estate, or cold, hard cash. There are different ways of storing different kinds of assets in a trust fund. You'll need to find out about the right way of having them transferred before placing them in the trust.
How Does a Trust Fund Work?
Once you’ve set up your trust fund, you may have some occasional work to do. You should keep detailed records of the trust fund and all its activities in case there is a lawsuit or discrepancy at any point in time. It is advisable to allow the trust to be managed by just one trustee with an all-in-one package for their trust fund management services.
As long as you complete the necessary steps to create the trust fund and keep records of its activities, the trust fund should fulfill its purpose as intended. The key points of a successful trust fund are good planning, good record-keeping, and good management.