How insurance pricing works
Insurance companies use actuarial models to price risk, but the inputs are simpler than you think. Your age, location, credit score (in most states), coverage limits, and deductible all adjust a base rate up or down. Understanding these factors helps you shop smarter and avoid overpaying.
Auto insurance: the rating factors
Your premium is driven by: driving record (the biggest factor), age, location, credit score (where allowed), coverage limits, and deductible. Two drivers with identical cars can pay vastly different rates based on these factors. Our Auto Insurance Rate Calculator models the common variables to estimate what you should be paying.
Life insurance: needs vs. wants
The DIME method — Debt, Income, Mortgage, Education — is the most widely recommended framework for sizing life insurance. It captures the four financial obligations that would fall to your family if you died tomorrow. The sum, minus existing coverage and liquid assets, is your gap. Term life covers a specific period (10–30 years) and is significantly cheaper than whole life.
Health insurance: the worst-case scenario
Your out-of-pocket maximum is the most you'll pay for covered services in a year. Once you hit this limit (through deductible + coinsurance), your insurer pays 100% of covered costs. For 2025, the federal limit is $9,450 for an individual and $18,900 for a family plan. Our Health OOP Max calculator shows your worst-case medical year.
Property insurance: rebuilding vs. market value
Your homeowners dwelling coverage should reflect the cost to rebuild, not the market value of your home. Construction costs, local labor rates, and building codes vary significantly by region. Underinsurance is common — many homeowners discover too late that their Coverage A limit wouldn't cover a total loss.
Income protection: disability and beyond
Disability is statistically more likely than death during working years. Employer-provided long-term disability typically covers 40–60% of pre-disability income, but that may not be enough — especially after-tax. Our Disability Insurance Income Replacement calculator shows the gap and helps you size a private policy to fill it.
Related calculators by situation
- Life & health: Life needs, health OOP, disability, key-person
- Legal claims: Settlement value, DUI costs, workers' comp