Underinsured Motorist Coverage

  

Categories: Insurance

You were in the right. You drove properly. The huge fender bender and change? It wasn't your fault. It was the texting teenager who hit you. They have no insurance...or at least not enough insurance to cover your damages, let alone theirs.

It's for this situation that you carry underinsured motorist insurance. Don't leave home without it.

See: Underinsurance.

Related or Semi-related Video

Finance: What is whole life insurance?6 Views

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and finance Allah shmoop What is whole life insurance Well

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if health insurance is a safety net for your health

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then guess what life insurance is yet a safety net

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for your life I e In case you die which

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unless you found the fountain of youth or a genie

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in a lamp well it's gonna happen sometime with life

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insurance There's the owner of the policy who is from

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usually also the insured You know the person whose death

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makes it rain money The person who would get that

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money is the beneficiary And of course there's the insurer

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the life insurance company who takes your money every month

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They're also the ones that cough up a lot of

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cash when you eventually bite the dust Well whole life

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insurance hole there with a W is a type of

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permanent life insurance That kind of investment E It's permanent

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because it follows you for life like an insurance of

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Grim Reaper you know always lurking in the shadows You

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know whole life insurance was born from its mother term

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life insurance and back in the day when life insurance

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was just getting it start in life while term life

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insurance was the only option Like you'd pay fifty seven

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bucks for a month's worth of a million dollar life

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insurance policy in your twenties if you didn't die that

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month Well congratulations But then the insurance company kept all

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the money you just gave them and then it would

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start all over again the following month For the insured

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life insurance can feel kind of like a lose lose

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situation If you live well you're making payments that go

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into an abyss and if you die while you're dead

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But at least your kid or mom or whoever the

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beneficiary is has some money Well life insurance buyers got

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tired of this term life insurance gamble every month losing

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all the money they gave to the insurance companies So

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they began Teo What's called Oh yeah think And then

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using the power of frighteningly large groups will they began

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to invest the money into markets with like a thirty

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year time horizon No more giving over of all that

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fifty seven bucks every month to the insurance company watching

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all the money go down the drain As you might

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imagine the life insurance company's weren't very fund of people

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getting smart on them investing their money for insurance instead

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of dropping it into well you know the insurance black

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hole So they decided to cut a deal with those

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wanting to be insured They said We'LL cover you for

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three months instead of one If you fall off a

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bridge or get hit by a bus while your wife

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and kids will be seeing a cool million dollars and

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then they said will invest half of your monthly premium

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in an index fund Yes we'LL even let you choose

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which index fund we put it into and the other

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half Well we get to keep And if you want

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to back out and terminate the plan not because you're

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in a wooden box but because you ran out of

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money or moving or something Well you can keep eighty

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percent of what's left in that pot Well this whole

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structure for the revolved into what we have today whole

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life insurance which covers you not for one month or

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three but for life Remember it's permanent You could still

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cancel payment or future payments but it would cost you

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a pretty penny Whole life insurance includes building up savings

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from part of your premium payments not watching all your

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premiums go into the insurance black hole Since whole life

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insurance is permanent it acts as a no touchy investment

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account And because it has high fixed payouts when you

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die well it's super expensive In essence Ah whole life

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insurance plan is a tricycle style a handhold the investment

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vehicle that tries to pull a Miley Cyrus right getting

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the best of both worlds For those with the cash

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and discipline and the ability Teo stay alive that we

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watch out for that bus You can replace the need

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to even have a whole life insurance policy by simply

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buying your own shares of an index fund or mutual

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fund all on your own with no insurance company middleman

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taking a cut then you own one hundred percent of

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the investment and all that's left to do after then

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is you know not die for a decade or three

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Enjoy your loot

Find other enlightening terms in Shmoop Finance Genius Bar(f)