Protect What You Build

By this step you have savings, shrinking debts, and growing investments. Step 8 is about the risks that can erase years of that work in one afternoon: an uninsured illness, a liability lawsuit, a death without paperwork, a drained account. The principle throughout: insure the catastrophic, self-insure the small stuff.

The insurance that matters

Health insurance: non-negotiable

Medical debt is a leading cause of American bankruptcy, and a single hospital week can out-cost a car. Never go uncovered, even between jobs (COBRA, a marketplace plan, or a spouse's plan bridge the gap). When choosing plans, compare the worst case (premiums plus out-of-pocket maximum), not just the monthly price. A high-deductible plan pairs with the HSA if your emergency fund can genuinely cover the deductible.

Disability insurance: the one everyone skips

Your future paychecks are your biggest asset, and the odds of a multi-year disability during a career are far higher than the odds of dying young. Take employer long-term disability coverage if offered; consider an individual policy if you are self-employed or your employer offers none. Aim to cover ~60% of income until retirement age.

Term life insurance: only if someone depends on you

If a partner, children, or co-signers rely on your income, buy term life: a simple death benefit for a fixed period, sized at roughly 10–12× your annual income, with the term matched to your years of obligations. It is cheap while you are young and healthy. Whole life and other investment-flavored policies mostly solve the seller's income problem, not yours; invest the difference in index funds instead. No dependents? Skip life insurance entirely.

Liability: auto, home or renters, umbrella

Raise the liability limits on auto and home policies well beyond the state minimums; the crash you cause is the risk that reaches your savings. Renters insurance is a few dollars a month and covers both your stuff and liability. Once net worth clears a few hundred thousand dollars, a 1–2 million dollar umbrella policy extends liability protection over everything for a surprisingly small premium. Track your net worth so you know when you have crossed into umbrella territory.

The paperwork that protects people you love

• Beneficiaries first. Retirement accounts, life insurance, and bank payable-on-death designations transfer by the named beneficiary, overriding wills entirely. Audit them after every marriage, divorce, or birth; the ex-spouse-still-named story is a legal classic.
• A basic will directs everything else and, most importantly, names guardians for minor children.
• Powers of attorney (financial and healthcare) let someone act for you if you cannot. Cheap to set up, priceless in a crisis.
• An access map: a document your person can find, listing accounts and where the passwords live. Locked-out grief is a preventable second disaster.

Fraud defense

• Freeze your credit at all three bureaus (Equifax, Experian, TransUnion). It is free, blocks new accounts in your name, and thaws in minutes when you need a loan. This is the single highest-value fraud defense in the U.S.
• Unique passwords + a password manager + two-factor authentication on every financial account.
• Assume urgency is a scam. No real bank, broker, or government agency demands gift cards, wire transfers, or "verification codes" on an unsolicited call. Hang up and dial the number on your card.
• Review statements monthly. You are the fraud detection system with the most context.

The quiet risk: lifestyle creep

Every raise whispers that you deserve a nicer everything, and spending that rises with income cancels the entire path. The defense is mechanical, not moral: when income rises, raise your automatic savings first (at least half of every raise), then enjoy the rest guilt-free. Your savings rate should climb with your career, not just your spending.

Action items

• Verify health coverage and long-term disability at work.
• If anyone depends on your income, price 10–12× income in term life.
• Audit every beneficiary designation this week.
• Freeze your credit at all three bureaus.
• Move to Step 9: Reach financial independence.