Saturday, 14 May 2016

How to Compare Car Insurance

How to Compare Car Insurance

There's more to car insurance than the dollar amount.

woman considers how to compare car insurance
When comparing car insurance quotes online, it helps to compare apples to apples; in other words, you want to be sure that the quotes you get are for identical - or at least very similar - auto insurance policies. Here are some things to be looking for when you compare car insurance quotes:

Ensure Coverages, Limits and Deductible Amounts are the Same
Higher coverages and limits, as well as lower deductibles, will raise the premium you pay. At the same time, lower coverages and limits and higher deductibles will lower your premium. Be sure, also, that you are comparing the same coverage period, usually a 6-month or 12-month term.

Use the limits listed on your current policy, or use our Car Insurance Coverage Calculator to select the amounts you'll use to compare car insurance rates.

Know What Coverage You're Getting
Auto insurance policies have a number of components. When you compare car insurance it's a good idea to be familiar with concepts such as:

  • Liability
  • Medical payments and personal injury
  • Uninsured/underinsured motorists
  • Collision and comprehensive
Before you compare car insurance quotes, learn more about Car Insurance Coverages.

Know What Policy Features are Included
When Liberty Mutual provides you with a car insurance quote, we list all coverages and features of the policy so that you know exactly what's included in your quote, and which items may have an additional cost, such as towing or car rental coverages. When you compare car insurance, make sure you're getting the coverage you need and the features you want.


Rights to Sell Structured Settlements

Structured settlement terms are unable to be renegotiated once the annuity contract has been issued. For some, this means not being able to access their money when they need it.
The structured 
However, for those who have a financial need, there is a way to access their funds by selling payments. The structured settlement secondary market emerged because people wanted a way to sell future payments for a lump sum today. So companies now exist which buy structured settlements in exchange for cash now.
As with any major financial decision, the choice to sell should be something you carefully consider. Federal and state regulations requires the sale of structured settlement payments to go through a judge to ensure it’s in the best interest of the person selling.

Structured settlements

Taxes Decoded: Qualified vs. Unqualified

Structured settlements are often divided into two categories: qualified for tax exemption and unqualified for tax exemption.
Exceptions can exist however, so consult a financial professional when preparing your state and federal taxes.
Qualified Structured Settlements


The traditional structured settlement for physical injury or sickness claims must meet certain requirements in order to qualify for tax exemption. These requirements include: the settlement amount has to be placed in an annuity, periodic payments are fixed and determinable as to amount and time of payment, claimant cannot modify the periodic payments, and those payments must be payable to the recipient or liability insurer.


This type of settlement is used when claims for damages fall outside the usual scope of physical injury, sickness or wrongful death and thus are not tax exempt. They are often used for claims involving racial discrimination, sexual harassment, wrongful termination, or violation of the Americans with Disabilities Act of 1990 or the Employee Retirement Income and Securities Act of 1974. The tax benefits differ among the types of transactions.

Structured Settlements Explained

Legal language aside, structured settlements are simple. In a civil case, someone is either forced or agrees to pay someone else money to right a wrong. Instead just writing a check, the at-fault person outs the money towards an annuity from a life insurance company. In that annuity contract are details on the series payments the person who was wronged will receive from the life insurance company. quickly.
The process is around 40 years old. In the 1970s, the courts ruled that a medication called Thalidomide given to pregnant women was responsible for serious, lifelong birth defects, structured settlements emerged as a way to make sure the money awarded to the child lasted a lifetime.
Still, today, most settlements from civil cases are lump sums. There are two key differences between lump sum settlements and structured settlements: long term security and taxes. By structuring the money over a longer period of time, a structured settlement offers a better future guarantee of money than a single payout which can be spent quickly. Money you receive from a personal injury is almost always tax free when you receive it. However, once the money is yours, you’re liable for taxes and dividends from the lump sum.

Pros & Cons to Structured Settlements

Structured settlements are ideally suited for many different types of cases. However, once the terms are in place, they cannot be changed. Because of these inflexible contracts, some recipients choose to sell their payments for a lump-sum payout.


  • In the event of the recipient’s premature death, the contract’s designated heir can continue to receive any future guaranteed tax-free payments.
  • Payments can be scheduled for almost any length of time and can begin immediately or be deferred for as many years as requested. They can include future lump-sum payouts or benefit increases.
  • Unlike stocks, bonds and mutual funds, structured settlements are not dependent on fluctuations of financial markets. Payments are guaranteed by the insurance company that issued the annuity.


  • Once terms are finalized, there’s little you can do to alter them if they do not meet your needs. You cannot renegotiate the terms if your financial situation changes.
  • Funds are not immediately accessible in case of an emergency, and recipient cannot invest the lump-sum payout in other investments that carry higher rates of return.
  • Tapping into your structured settlement without selling payments will cost you money. You will pay surrender charges and IRS penalties if you withdraw funds before age 59½.

Structured Settlements: Pros and Cons

Many civil cases, particularly accident and personal injury lawsuits, never make it to trial because the parties reach a settlement agreement earlier in the litigation process. Generally, a settlement requires the plaintiff (person brining the lawsuit) to discontinue any further legal action in exchange for receiving a money payment from the defendant or the defendant’s insurance company. Settlement payments are usually lump-sum (all at once) or structured (regular payments over a period of time).
A structured settlement is an arrangement that provides the plaintiff with regular payments over the course of several years or for the rest of the plaintiff's life. They are especially helpful when the plaintiff suffers a serious and permanent injury known as a catastrophic injury. With a structured settlement, a defendant's insurer typically funds an annuity policy for the plaintiff. An annuity produces a continuous stream of income over the term of the structured settlement. Annuity contracts can be quite complex to cover a variety of expected expenses.
Before accepting any settlement agreement you should always discuss all available options with a tax attorneypersonal injury attorney or certified public accountant (CPA) to fully explore tax consequences of a verdict or settlement. Below are some pros and cons of structured settlements for you to consider.
  • A structured settlement may provide a plaintiff with a substantial tax benefit because personal injury settlements are considered "tax-free" under the U.S. Tax Code. However, some exceptions apply and can make portions of a settlement taxable, such as an award of punitive damages or interest that accrues on the settlement. Speak to a qualified attorney to learn more. 
  • Structured settlements offer plaintiffs the certainty of payments over a fixed period of time. However, lump sum payments may be better suited for cases involving minors, as they allow for long-term investing, or those suffering from a debilitating injury that will require future medical expenses. 
  • Parties may tailor annuities to cover a plaintiff's specific needs and all sorts of future demands or contingencies.
  • In most states, annuities are protected by state insurance laws which guarantee that the obligations of a insurer will be covered. Although federal law doesn't allow an insurer to formally declare "bankruptcy," most states have a safety net for insurance companies that become insolvent: insurance companies and policy claims will continue to be covered and paid by the home state's guaranty association, subject to state limits. 
  • A lump-sum payment may be combined with a structured settlement to meet immediate expenses, such as medical bills, repayment of debts, rehabilitation costs, and the like.
  • Parties can dedicate funds of a structured settlement to cover unanticipated advances in medicine so that if medical science develops a miracle cure, the plaintiff can give it a try.
  • A structured settlement may help parties who are far apart in their settlement negotiations to reach an agreement acceptable to both the plaintiff and the defendant.
  • Certain parts of a settlement, whether a lump sum payment or a structured settlement, can be taxed, including punitive damages, some attorney's fees, purely emotional damages not stemming from physical injury, and more. 
  • A plaintiff may fear that, no matter how the settlement protects against negative economic conditions such as inflation or recession, unknown changes in the economy could make the annuity payments too small.
  • In the past, some insurance companies were reluctant to disclose how much they would have to pay to buy an annuity covering the amount of the settlement. A structured settlement frequently costs insurance companies less than it would to make a lump-sum settlement. Without this information, the plaintiff's attorney was not be able to make a complete assessment of the benefits and drawbacks of a settlement offer. Today, however, most states, such as New York and Florida, have some form of a disclosure law known as a "Structured Settlement Protection Act" (SSPA). These laws require insurers to be upfront about their costs.  
In many circumstances, a settlement may be a faster, cheaper, and less stressful alternative to trial. An experienced personal injury attorney can discuss the facts of you case with you and help you decide whether a structured settlement would be in your best interests.  
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