Congratulation on your success! 

Because of the way we all have to purchase insurance, it falls into the category of Prepaid Expenses, a prepaid expense asset to be more precise.  We buy insurance and pay in advance for a certain amount of coverage.  Let’s use round numbers for an illustration; say your prepaid period is for one year and the cost is $1,200.  That make it fairly easy to compute: $1,200 divided by 12 months = $100 for each month. 

In order to properly account for your expenses, you will allocate the cost in the actual period covered.  When you pay the premium the total amount is recorded in your prepaid expenses asset account (Prepaid Insurance, in this case) and, of course, a corresponding credit to your cash account.  For each month covered (at the end of the month) the appropriate fraction of the cost is transferred to the insurance expense account.

Here are the journal entries; the first to record the purchase of insurance, the second to record the expense after one month:

Debit     Prepaid Insurance           1,200

Credit    Cash                                                      1,200

 

Debit     Insurance Expense              100

Credit    Prepaid Insurance                                 100