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Insurance

8 Minute Read

How Much Does the Average Person Pay for Insurance?

8 Minute Read

Budget items expenses.

One bad car wreck. One raging kitchen fire. One major surgery. If you’re not careful, just one thing can derail years of financial progress.

That’s where insurance comes into play. Every good financial plan has an offense and a defense. Insurance is your defense. It protects you from anything life might throw your way.

No matter who you are, there are certain types of insurance you absolutely need to have in place right now—three of which are auto insurance, homeowner’s (or renter’s) insurance and health insurance. And if you’re married, have kids or have someone in your life who depends on your income, you can add term life insurance to the list as well.

But it’s no secret that insurance can get pretty expensive. Just how expensive?

Let’s break down the costs behind each of these four types of insurance so you can figure out how much room you need in your budget to protect yourself and your family.

Auto Insurance

Screeech! Bang! There are few things worse than the jitters you get after a car accident. And it doesn’t take long for the adrenaline rush to be replaced by anxiety over the cost of repairing or replacing your car. Thankfully, auto insurance can soften the blow.

Connect with an insurance pro in your area today and save more. 

Nationally, the average U.S. driver spends $1,548 each year on car insurance—that breaks down to about $129 each month.1

Remember, though, that not all auto insurance bills are created equal. If Bubba next door drives his truck like a maniac and gets into a fender bender (or three) every year—and your driving record is squeaky clean—who do you think is getting the bigger auto insurance bill? You guessed it. The insurance company is going to charge Bubba more because he’s riskier to insure.

But your driving record is just the tip of the iceberg, because there are potentially dozens of factors that go into why your insurance premium is what it is. Here are a few of the most common things insurance companies look at when trying to figure out how much to charge you for car insurance:

  • Your driving record
  • Your age
  • Your marital status
  • Your education level
  • Your job
  • The type of car you drive (and how old it is)
  • Where you live

Let’s pump the brakes and talk about that last point for a second, because where you live could have a huge impact on how much you pay for auto insurance:

The Most and Least Expensive States for Auto Insurance2 (Annual Premiums)

Most Expensive

Least Expensive

1. Michigan ($3,096)

1. Maine ($935)

2. Louisiana ($2,379)

2. North Carolina ($955)

3. Florida ($2,309)

3. Virginia ($1,005)

4. Kentucky ($2,208)

4. New Hampshire ($1,037)

5. Rhode Island ($2,103)

5. Hawaii ($1,045)

Homeowner’s (or Renter’s) Insurance

Dorothy was right. There’s no place like home. And homeowner’s insurance is there to help protect your home and everything in it from the worst life has to offer. 

According to the National Association of Insurance Commissioners, the average annual homeowner’s insurance premium is $1,192—or about $100 each month.3

For most homeowners, the good news is that homeowner’s insurance is usually included in your mortgage payment, so it doesn’t really feel like an extra expense at all. But remember, your mortgage payment should be no more than 25% of your take-home pay—and homeowner’s insurance is part of that calculation.

Just like with real estate, the biggest factor that impacts how much you’ll pay for homeowner’s insurance is location, location, location. Folks in states with major cities and densely populated areas will likely have higher rates than more rural areas. And if you happen to live in a state where natural disasters are more common—think tornados, hurricanes and wildfires—you’re more likely to have higher insurance rates too.

Looking at the states with the highest and lowest homeowner’s insurance rates, it’s not very surprising to see that the states with higher rates have dealt with a major natural disaster in the past few years:

The Most and Least Expensive States for Homeowner’s Insurance4 (Annual Premiums)

Most Expensive

Least Expensive

1. Louisiana ($1,968)

1. Oregon ($677)

2. Florida ($1,951)

2. Utah ($692)

3. Texas ($1,893)

3. Idaho ($730)

4. Oklahoma ($1,885)

4. Nevada ($755)

5. Kansas ($1,584)

5. Wisconsin ($779)

 

Now, if you’re renting, you’re not off the hook. You need enough renter’s insurance to replace your stuff if it gets stolen or destroyed in a fire. Without it, you’ll have to replace everything on your own dime. And since renter’s insurance only costs roughly $15 per month, there’s really no excuse for you not to have it!5

Health Insurance

A trip to the emergency room turns into an emergency surgery, which then turns into a few days in a hospital bed to recover before you’re sent home. The costs start to add up, and soon you’re going to find yourself swimming in thousands of dollars in medical bills. And without health insurance, you’d be on the hook for the whole shebang.

The average annual premium for single coverage in 2019 was $7,188 per year, or $599 per month. But what if you need a plan that also provides coverage for your spouse and kids? The average premium for family coverage is $1,714 per month—that’s $20,576 each year.6 Yikes!

The good news is that if you’re with the majority of Americans under age 65 who get their health insurance through work, then your employer is probably footing most of your health insurance bill.7 For those who get health insurance at work, the average employee pitches in $103 each month for single coverage and $501 for family coverage—your employer pays for the rest.8

How much you’ll pay in health insurance premiums, especially if you’re buying through the individual marketplace, is based on several factors:

  • Your age
  • Where you live
  • Tobacco use
  • Single or family coverage
  • Type of plan (High Deductible Health Plan, PPO, HMO, etc.) 9

Here are the states with the highest and lowest average annual premiums for employer-based health insurance:

The Most and Least Expensive States for Health Insurance10 (Annual Premiums)

Most Expensive

Least Expensive

1. Alaska ($8,432)

1. Tennessee ($5,971)

2. New York ($7,741)

2. Arkansas ($5,974)

3. New Jersey ($7,507)

3. Mississippi ($5,993)

4. Massachusetts ($7,443)

4. Nevada ($6,032)

5. New Hampshire ($7,405)

5. Alabama ($6,089)

Life Insurance

Life insurance has one job: to help your family replace lost income if you suddenly died. It’s really “death insurance” if you think about it, but who really wants to buy that?

We recommend getting a 15- or 20-year term life insurance policy that covers 10–12 times the amount of your annual gross income. So how much might that cost?

We recommend getting a 15- or 20-year term life insurance policy that covers 10–12 times the amount of your annual gross income.

Well, if you’re a healthy 30-year-old who wants to take out a 20-year term life policy with $500,000 worth of coverage, you’d probably pay around $240 each year, or $20 a month.11

But your life insurance premiums might be different based on several different factors, including the length of the policy’s term, how old you are, your health history and tobacco use, your gender, and the amount of coverage you want.

Our friends at Zander Insurance can help you get a free term life insurance quote so you can get the protection your family needs.

How Much All Your Insurance Premiums Might Cost You

So how much will you pay on insurance? It depends on your situation. As your life changes, so will your insurance needs. It’s always a good idea to do an insurance coverage checkup every couple of years or whenever you go through a major life event so you know you’re up-to-date. Let’s take a look at a couple of different examples of what your insurance costs might look like. 

Meet Suzy. Suzy is single, rents out an apartment in the city, gets her health insurance through work, and has a pretty average driving record. How much is she paying for insurance each month? Let’s use some of the national averages we laid out above to find out.

Suzy’s Average Monthly Insurance Premiums

Auto Insurance

Renter’s Insurance

Health Insurance*

Total

$129

$15

$103

$247

*Employer contributions to an employer-based health insurance plan

But what about John and Sarah? They’re both 30 years old, have two kids, and bought a house in the suburbs last year. John gets insurance through his job and signed up for family coverage that also provides coverage for Sarah and the kids.

Both of them need life insurance, so they both take out 20-year term life insurance policies, each with a $500,000 death benefit. So, their insurance premiums probably look something like this:

John and Sarah’s Average Monthly Insurance Premiums

Auto Insurance

Homeowner’s Insurance

Health Insurance*

Life Insurance

Total

$258

$100

$501

$40

$899

*Employer contributions to an employer-based health insurance plan

If you feel like you’re paying too much for insurance . . . you’re probably right! Many drivers and homeowners have never shopped around for new auto or homeowner’s insurance. But many of the folks who do take the time to shop around for better quotes save hundreds of dollars on insurance each year.

We get it, shopping for insurance sounds like a hassle. But our insurance Endorsed Local Providers (ELPs) can do all the heavy lifting for you! They’re independent insurance agents who can shop around for quotes from different insurance companies so that you can get the best rate available. They can also help you make sure you have all the insurance protection you need.

Find an independent insurance agent today!

7 Hidden Insurance Costs to Avoid

Feel like you’re paying too much for insurance? You might be! From annoying fees to unnecessary insurance riders, there are some hidden costs you might be able to trim off your policy.

Insurance Tips for Married Couples

Getting married is a big deal! But once you get back from your honeymoon, you might want to take a fresh look at your insurance policies to make sure you have the right coverage in place.

Dave’s Easiest Money Saving Tip

You probably already know plenty of ways to cut back your expenses—everything from packing brown bag lunches to buying beater cars. But here’s one you might not have thought of yet. And it could save you a lot of money.

Do You Have the Right Coverage? 

Do You Have the Right Coverage? 

Find out with our free 5-Minute Coverage Checkup!
Take the Coverage Checkup

Do You Have the Right Coverage?  

Find out with our free 5-Minute Coverage Checkup!
Take the Coverage Checkup