Milestone 2: Proper protection

Protect your income before you grow it

Most people think wealth building starts with investing. It starts with protection. One uninsured accident or early death undoes a decade of decisions overnight. Protect the foundation first.

The biggest overlooked risk is loss of income. If you pay the bills, your ability to earn is your most valuable asset. Six months without it hurts. Permanent loss is catastrophic if anyone depends on you.

Protection isn't about fear. It's about making sure one bad day can't erase what you're building.

Key points

• Health insurance isn't optional. Medical debt is the #1 cause of bankruptcy. Even a high-deductible plan with HSA beats being uninsured.
• Life insurance protects income, not you. If anyone depends on your paycheck (spouse, kids, co-signed debt), term life is cheap and usually enough. Lock in rates while young.
• Two ways to estimate your need. 10X Method: annual income x 10. DIME: Debt + Income x 10 + Mortgage + Education costs. Use the bigger number.
• Disability insurance is the most skipped. You're more likely to lose income from injury or illness than to die young. For variable income, this gap is brutal.

The rule of thumb

Insure against things that would destroy you. Don't insure against things you could absorb. $500 deductible is fine. $100,000 medical bill isn't. A missed paycheck is fine. Five years without income isn't.