o you know how much you should be paying for insurance? Do you even know the kinds of insurance you should have? And, a really low blow, do you even know how much insurance you already have? A bonus-round question: do you know of a non-circular definition for actuarial?

Yet you pay a lot for insurance - probably in the thousands of dollars each year. The average adult in the United States pays roughly 6 percent of his or her disposable income for insurance. That's more than the average savings rate of 4.9 percent.

You could doubtless cut your insurance costs by pruning your coverage and shopping around. Much more important, you could avoid the loss of virtually everything you own by making sure you have enough coverage to protect you from a catastrophic lawsuit, illness or accident.

Basically, when you buy insurance, you are betting against yourself. It's a hedge against sickness, accident, natural disaster, theft, death, and so on. The insurers set the odds.

Actuaries are not far removed from good bookmakers when they determine the underwriting risks of putting a 16-year-old behind the wheel of a vehicle that weighs 4,000 pounds and has 200 horsepower.

But there's a big difference between bookies and insurance companies: They don't all charge the same for the same bets. The bookies follow national odds and charge the same -10 percent when you lose. Insurers charge different amounts, depending on your state.

Why different rates in different states? Thank the McCarran-Ferguson Act, enacted more than 50 years ago. It permitted state regulation over the insurance industry. Not all companies in the same state charge the same rates. In fact, it's not unusual to see huge price variations - double or even triple - for comparable coverage.

But consumers have been wising up lately, thanks to easier access to the family secrets of the insurance industry - insurance costs, coverage details and the likelihood that an insured event will actually occur and affect you.

Where do you get this data? The Internet is an easy source for that data and a lot more - including sophisticated tools to evaluate the type, amount and price of insurance you need. You can even buy it online.

This report has also taken a close look at all the different products out there to determine which insurance you probably do need; insurance you probably do not need; and insurance you might need.

Basically, there are four groups of insurance most individuals should consider - insuring your stuff (property and casualty coverage), your health, your life and your future.

That includes everything you own, from the house and cars to your spouse's ring to your collection of baseball cards. In general, it's recommended that you pay slightly higher premiums to get the full replacement value of damaged or stolen property.

Take a look at your homeowners policy to see what is automatically covered and what isn't. Big-ticket items, including home computer systems, may need separate riders. Ask your insurance agent.

There is an easy way to slash the cost of your property and auto collision and comprehensive policies. Collision deals with accident-related damages while comprehensive deals with theft, vandalism and other types of damage, such as a tree falling on your car.

The sure-fire method: increase the amount of your deductible. The more you agree to absorb yourself in case of an accident or theft, the less it will cost you for the remaining bulk of your coverage every year. You are, in effect, a mini-insurer taking on some risk yourself. Higher than suggested deductibles often make sense on new cars, for example, and always make sense for older cars.

But don't try to cut corners on liability coverage of your home and cars. The greater your net worth, the more liability protection you need. Additional liability coverage is relatively cheap - one of the good deals in insurance.

You can get cost-effective additions to the liability coverage on your home and car by getting a so-called umbrella policy that tacks on higher liability limits to both policies. A possible downside: you must insure your car and home with the same company.

For your cars, you should also have uninsured motorist protection, and, depending on your state, no fault coverage. Note: don't double-pay for your own auto medical coverage, if it's already part of your health insurance. Talk with your benefits administrator at work to understand the medical coverage that extends to use of your car.

Homeowners should explore supplemental coverage, including mortgage insurance and title insurance. Make sure the coverage benefits you, and not just the company that holds the mortgage on your home.

Remember, home insurance does not generally cover floods, windstorms and earthquakes. If your home is in a designated flood plain, you should get federal flood insurance.

If you live in California, earthquake insurance is widely available, although the basic coverage offered by the California Earthquake Authority is so skimpy - a 15 percent deductible against the value of your home - that you may find it cost-effective to seek a supplemental policy. Windstorm insurance is available in seven Gulf and Atlantic Coast states.

Corporate America's sustained efforts to hold down its benefits costs have led to a managed care revolution which, whatever its efficiencies, may be providing less health care than many Americans want to receive. This, coupled with an aging population that faces ever-increasing medical bills, has stimulated big business for supplemental health-insurance policies.

Generally, the odds are probably stacked against consumers with most of these policies. Unlike more competitive and lower-margin businesses for auto, home and term life insurance, specialty health policies are seldom bargains (except at the group level, where savvy corporate benefits experts help drive down premium levels).

Disability insurance, long-term care insurance and cancer insurance are catastrophic-risk policies that you should consider if your family would be financially ruined if you were incapacitated for a long time.

"Gap" products make most sense for older Americans on fixed incomes who simply need to be able to count on their monthly expenses. The logic of such coverage is clearer once you understand basic coverage elements of the federal health programs, Medicare and Medicaid.

When you determine your need for life insurance, you can use a growing number of online calculators, provided by insurers to determine how much money your spouse and family would need if you die. Many of them yield astronomical levels of insurance - "Thank you, Ms. Smith. You should buy $1,311,000 worth of additional coverage RIGHT NOW!"

Still, the calculators think of things you might forget, so use them. Note: The financial health of your insurer shouldn't be taken lightly. Unlike savings deposits in a bank, life insurance is not guaranteed. There are several major financial ratings firms (A.M. Best, Standard & Poor's, Moody's, Duff & Phelps are the leaders) who evaluate the financial condition of life insurers and hand out what are called "claims paying ability" ratings. Nearly all insurers are rated at least "A."

This may be a pretty good grade in school but not in the insurance business, where the grades can scale up from A to A+, AA-, AA, AA+ and AAA. You will find that high-rated companies charge more for their policies. But in life insurance, paying for quality is its own form of insurance.

Figuring out how much insurance you "need" is the easy part. Determining what types of policies to purchase is a lot harder. And this is where most of the arguments about life insurance advice may be found.

The phrase "buy term and invest the difference" resonates with us. If you follow this advice, you would cover your insurance needs with a term policy. Period. You can buy term with various guaranteed renewal periods, which makes sense if you are seeking protection tied to a time-related event (until you retire, for example, or until your kids are out of college).

Term rates are substantially cheaper than policies with some form of cash accumulation. The argument is often made that you should buy term and invest what you do not spend on a cash-accumulation policy. Sounds great, but do you have the discipline to do that? And where would you invest the money?

As you travel "up" the scale of life insurance products, you will encounter more and more policies with investment choices comparable to mutual funds. Here, the simple "buy term and invest the difference" argument is, well, simplistic. Universal life and, particularly, variable universal life products, can be terrific insurance and investment options for savvy consumers. Which brings us to the future.

Life insurance death benefits are exempt from taxes, which makes life policies a great way to shield your heirs from punitive estate taxes. By purchasing life insurance products that also carry investment options, you can generate current income while still having the leverage that an insurance policy provides (leverage in the sense that a dollar of premium "buys" you many times that level of death benefits).

You should sit down with a pro - financial planner, insurance professional or investment adviser - and learn about specific products and how they fit into your needs.

Annuities are generally placed at the pinnacle of insurance-investment products (but leave a little room at the very top for variable universal life policies and other highly tailored and flexible insurance tools). Annuities let you invest in an insurance product that can:

Along with investment-oriented products, you should explore health insurance protections that will prevent your family from watching your estate get drained by a long-term, incapacitating illness.

Long-term care insurance is a primary product for such safeguards, as well as exploring supplemental coverage for Medicare. While you are the covered party, this insurance is really for your spouse and children. Sit down with them, perhaps with a financial professional to help, and map out sensible plans. Waiting until you have a stroke or other medical emergency is not the way to go here.

Many insurance shoppers mistakenly think that price should be their only concern. They may never expect to file a claim or have further dealings with the insurance company. Well, service does matter, and you should factor it into your insurance decisions. And, sadly, accidents and claims happen often enough so that the odds favor a claim.

Shop aggressively when seeking an insurer; rates do vary substantially among carriers. But don't ignore service complaints. Many states collect consumer complaint information and publish annual guides. Beware: The big companies get big numbers of complaints, so don't get overly swayed by raw numbers. The best complaint studies adjust the numbers and provide comparative figures that let you see the incidence of complaints at all sizes of companies.

We all need insurance. Using the information here will help you get what you need, without paying more than you have to.