valuepenguin calculated the cost of four common types of insurance to assess the financial burden of being fully insured for most Americans. Based on a comparison of national and state median income and the cost of auto, homeowners/renters, life and health insurance, ValuePenguin determined that most Americans can be fully covered for less than 20% of their income.
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For seniors, the cost of coverage is higher. Your limited income, combined with the high costs of life insurance, mean that ultimately having comprehensive coverage is more expensive than it is for most people. most seniors pay 23% of their income for insurance.
We also factored in the cost of flood insurance to see how unaffordable it would be to purchase coverage for a typical home. The cost of insurance for those most at risk of flood damage is only slightly higher than it is for most people. after adding a flood insurance policy, the total cost of insurance only increased 1% relative to a person’s income.
The cost of insurance is 14% of a person’s annual income, but in some states, the cost can exceed 20%
Americans can expect to pay $10,010 per year on their insurance. we found that renters pay slightly less for full coverage than homeowners. Since renters insurance does not cover the structure of a rented home, the risk is lower for insurers and the cost is cheaper for the insured. most renters pay 12% of their income for insurance over the course of a year.
Health insurance is the most expensive coverage for most people. Marketplace policies account for 59% of a person’s insurance costs, while Kaiser Family Foundation (KFF) data on average annual premiums (not counting deductibles) for employer-sponsored health insurance suggest that the cost may be higher for those who obtain coverage through their workplace.
Auto insurance coverage is the second most expensive form of insurance after health, even though auto insurance only costs a fraction of what most health insurance policies cost. Auto insurance accounts for 16% of a typical person’s annual insurance costs. homeowners insurance lags behind at 14% and life insurance lags behind at 10% of the total cost of insurance per year.
Of course, like the cost of insurance, the percentage of income an insured can expect to pay for coverage varies by state. Costs relative to income are highest in Michigan, West Virginia, and Louisiana. In these states, a person can expect to spend more than 20% of her income on insurance costs.
the high cost of car insurance is the main culprit in michigan. In the state, full-coverage auto insurance costs more than $4,000 a year, far more than in any other state. in west virginia and louisiana, extremely high health insurance costs (and a high average cost of auto insurance, in the case of louisiana) combine with low median incomes to create a higher insurance burden for most people .
by contrast, in new hampshire, washington and maryland, the cost of insurance is less than 10% of a typical person’s income. Health insurance tends to be more affordable than average in these states: Coverage only costs $4,292 per year, which is more than $1,000 cheaper than the national average. furthermore, in these states, the median income exceeds $85,000 per year.
reduced health care costs for seniors cannot offset higher auto and life insurance premiums
The cost of insurance is comparatively higher for seniors than for most Americans. The average cost of insurance for seniors amounts to 23% of their annual income. this increase is due to lower incomes for most people in this age group and higher prices for life and auto insurance.
Health insurance costs for the typical senior are much lower than $5,940, the average cost of health insurance for younger people. the cost of senior coverage is $2,179 per year. Public health insurance costs are only 20% of a senior’s annual insurance budget.
The cost of life insurance is much higher for older people compared to younger people. we found that the cost of a term life policy represents 51% of the expenses a typical senior would pay for insurance per year. this is more than five times the average cost of life insurance for people ages 25 to 60.
Seniors also face slightly higher auto insurance premiums from most carriers in most states. The average cost of auto insurance for seniors is $1,738 per year, which is $102 more expensive per year than most people pay. car insurance amounts to 16% of the total cost that the demographic group pays for insurance.
flood insurance may be more affordable for at-risk properties than most people realize
The threat of flood damage is not high for most people. While mortgage lenders require their borrowers to purchase homeowners insurance on their properties, lenders only require flood insurance for homes located in areas that the Federal Emergency Management Agency (FEMA) has designated as high risk.
This is why about 6% of owner-occupied homes have flood insurance, according to an analysis of NFIP policy data. In addition, the cost of coverage can be high. the average cost across all states is $734 per year, an unwanted expense for homeowners whose homes aren’t necessarily in the highest-risk category.
however, the cost may not be as onerous as it seems to many people. Purchasing a flood insurance policy results in a 1% increase in the total cost of insurance for most people. In the most expensive state for flood insurance, Vermont (where only 1.4% have policies), adding flood insurance to a medium-risk home results in a 4% increase in the total cost of coverage over a year. year only.
ValuePenguin identified the median income of people ages 65 and older and people ages 25-44 using the Census Bureau’s 2019 American Community Survey (ACS). We found the combined cost of insurance for the following forms of coverage:
For our analysis of senior health care, our profile had medicare parts a, b, and d. for part b, whose costs are determined by income, our profile was only responsible for the base premium. for part d, our profile would have only had to pay $33.06, the minimum base premium according to the centers of medicare and medicaid services (cms).
To find the cost of car insurance for most people, we found rates in every zip code in every state for a driver between the ages of 30 and 65 with no accident history and average credit .
Our homeowners insurance rates reflect the cost of insuring a median value home in each state.
Our life insurance refers to the average cost of coverage in a 20-year term life policy for people under the age of 65. for seniors, a separate fee was used.
valuepenguin’s analysis used insurance rate data from quadrant information services. These rates were obtained publicly from insurer filings and should be used for comparison purposes only; your own quotes may be different.