How much does an average person pay for insurance?

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A serious car accident. A blazing fire in the kitchen. Great operation. If you're not careful, just one thing can slow down years of financial progress.

This is where insurance comes in. Every good financial plan has an attack and a defense. Insurance is your defense. It will protect you from whatever life throws at you.

No matter who you are, there are certain types of insurance that you absolutely must have right now. Three of them are auto insurance, home (or tenant) 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 be quite expensive. So expensive?

Let's take a look at the cost of each of these four types of insurance so you can determine the space you need in your budget to protect yourself and your family.

Car Insurance

Yell! Explosion! There are few things worse than the hustle and bustle you feel after a car accident. And it doesn't take long for the adrenaline to be replaced by worry about the cost of repairing or replacing your car. Fortunately, auto insurance can ease the blow.

Contact an insurance professional in your area today and save more.

Nationally, the average American driver spends $1,548 each year on auto insurance, broken down into approximately $129 per month

Remember, however, that not all auto insurance bills are created equal. If Bubba next door drives his truck like crazy and rides in a fender (or three) every year and his driving record is impeccable, who do you think will receive the highest car insurance bill? You guessed it. The insurance company charges more Bubba because it is riskier to insure him.

However, your driving record is only the tip of the iceberg, as there are dozens of factors that can explain why your insurance premium is the way it is. Here are some of the most common things insurance companies look at when trying to figure out how much to charge for auto insurance:

  • Your driving record
  • Your age
  • Your marital status
  • Your education level
  • your work
  • Car Type
  • Where you live
  • Home insurance (or tenant)

Dorothy was right. There is no place like home. And home insurance will 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 home insurance premium is $1,192, or about $100 per month.

For most homeowners, the good news is that home insurance is usually included with your mortgage payment, which doesn't seem like an additional expense at all. Remember, however, that your mortgage payment should not exceed 25% of your take-out payment. Home insurance is part of this calculation.

As with real estate, location, location, and location are the most important factor that affects the amount you pay for home insurance. Residents of states with large cities and densely populated areas are likely to have higher rates than more rural areas. And if you live in a state where natural disasters are more common - think tornadoes, hurricanes, and wildfires - you're also more likely to have higher insurance rates.
If you are renting now, you are not free. You need adequate rental insurance to replace your belongings if they are stolen or destroyed in a fire. Without them, you will have to replace everything yourself. And since renters insurance only costs around $15 per month, there's really no excuse you shouldn't have it! 

Health Insurance

A trip to the emergency room turns into emergency surgery, which then turns into a hospital bed for a few days to recover before being sent home. The costs add up and you will soon be swimming thousands of dollars in medical bills. And without health insurance, you would be able to handle it all.

The average annual premium for individual coverage in 2019 was $7,188 per year or $599 per month. But what if you need a plan that also covers your spouse and children? The average family insurance premium is $1,714 per month.