Is Your Insurance Bill Too High for Your Income?
Insurance is essential protection, but if premiums take up too much of your paycheck, they crowd out the money you'd otherwise save or invest. Skimp too much, though, and you could be left exposed exactly when you need coverage most. A widely used rule of thumb is to keep total private insurance premiums — life, disability, critical illness, supplemental health, and similar policies — around 8-10% of your monthly after-tax income. This calculator takes your monthly income and total premium payments and tells you whether you're under, right on target, or paying more than that range, along with how far off you are.
Diagnosis Guide
| Ratio | Diagnosis |
|---|---|
| Under 8% | Possibly underinsured (room to spare) |
| 8-12% | Within a healthy range |
| Over 12% | Too high — review your coverage |
The right ratio shifts with your age, dependents, and financial situation. Someone just starting out might aim lower to prioritize building savings, while a person with dependents or a higher-risk job might reasonably run a bit higher. Cash-value or investment-linked policies also behave differently than pure protection coverage, so if your ratio comes back high, it's worth breaking down exactly which policies are driving the total before you cancel anything. This tool gives a general estimate — a full review should factor in your actual policies.
Frequently Asked Questions
Around 8-10% of monthly income is a common target. Above 12% is often a sign your premiums are crowding out savings.
This ratio is for private policies you pay for directly. Payroll-deducted employer health premiums are usually tracked separately.
※ General guideline using an 8-10% benchmark; your ideal ratio may differ based on your situation.