Insurance Calculator

Insurance ROI compares what a policy pays out with what you paid in premiums. The formula is (claims paid - premiums paid) / premiums paid x 100. If you pay $12,000 in premiums and collect $9,000 in claims, your ROI is -25%. It's a way to see the cost of protection in plain numbers, not a measure of whether the policy was a good idea.

Usually not, and that's fine. A positive ROI generally means something bad happened, such as a crash, a fire or a major illness. Insurers need to collect more than they pay out to cover staff and profit, so most customers come out behind. The value lies in avoiding a loss that could wipe out your savings, even if you never file a claim.

For true insurance such as auto, home and health, any negative ROI is acceptable as long as the premium is fair for the risk covered. Compare quotes for the same coverage to judge that. Products that mix insurance with investing, such as some whole life policies, can be judged more like investments, so look at their fees, surrender charges and projected returns.

Divide your total premiums by your typical claim value, after your deductible. If you pay $1,200 a year for 10 years, that's $12,000. If a claim pays $6,000, you'd need two claims to break even. Try different values for the number of claims above to see it. A high break-even number on a small risk may suggest a higher deductible could make sense.

Sometimes not. If a repair costs little more than your deductible, you'd collect very little, and a claim may affect your future premium or discounts. Get a repair estimate, subtract your deductible, and ask your agent whether a claim could affect your rate. Many people keep savings for small losses and use insurance for the large ones it's designed to cover.

A deductible is what you pay before the insurer pays. Raising it lowers your premium but adds to what you pay on each claim. Divide the extra you'd pay per claim by the yearly premium savings to find how often you can claim before the higher deductible loses. Going from $500 to $1,000 to save $120 a year breaks even at one claim every 4.2 years, since $500 divided by $120 is 4.2. The calculator shows what your own deductible would need to save.

Most insurance decisions run for years, and claims are rare, so a single year says very little. Looking at 10 years, or 120 months of premiums, gives you a more realistic picture of the total you could spend and how many claims it would take to get that back. The total is a simple sum and doesn't assume premiums rise, though in reality they often do.

Any policy with a regular premium and a claim value. Start with our car, health and homeowners calculators. You can also use this one for renters, pet, umbrella or disability coverage by entering your own premium and claim figures. If you're paying once or twice a year, divide that premium by the number of months it covers.

Not always. A premium reflects your risk, your location, your deductible and the insurer's pricing as well as your coverage. Two policies with the same limits can have very different prices. Compare the limits, deductibles, exclusions and the insurer's claims record first, then look at price. Ask for quotes with identical coverage so you're comparing the same protection.

Most insurance isn't. You're transferring a risk, not building wealth. If you're offered a policy described as an investment, ask for the fees, the surrender period and the guaranteed values in writing. Some cash-value life policies suit particular needs, but they're complex. Compare them with buying cheaper term coverage and investing the difference using our investment calculator.