Your Financial House Needs a Foundation: The Case for Life and Disability Insurance

By Toby Hartman, MM Insurance Associates

Most people think about their "financial house" in terms of savings accounts, retirement plans, and maybe some real estate. But here's the thing: none of that matters if the person who built it is suddenly gone or can't work. Life insurance and disability insurance are the foundation that everything else rests on, and far too many families skip them or underestimate them until it's too late.

Life Insurance: You'll Buy It More Than You Think

Here's something most people don't know: the average person buys life insurance roughly seven times during their lifetime. And almost every single time, they walk away thinking, "I probably won't need to do this again." Then life happens.

That's not a criticism -- it's just the reality of how life works. The triggers that should prompt you to revisit your life insurance coverage are actually the same milestones most of us look forward to:

• Getting married

• Buying your first home

• Having children (including twins or unexpected additions)

• Taking on student debt you wouldn't want to pass to a spouse

• Starting a business that requires borrowed capital

• A career change with new financial obligations

• A change in your extended family's situation

Each of these moments changes your financial exposure. A $500,000 policy you bought at 28 may not be remotely adequate when you're 35, have two kids, a mortgage, and a business loan. Life insurance isn't a one-and-done purchase. Think of it as part of your ongoing financial maintenance.

The Simple Rule of Thumb

If I had to paint with a broad brush, here's the minimum I'd want to see for anyone entering a major life stage:

At least $1 million in coverage on a 30-year term policy -- purchased the day you get married, the day you have your first child, or the day you close on your first home.

That may sound like a lot, but the numbers may surprise you. A healthy 30-year-old can get a $1 million term policy for somewhere in the range of $40 to $73 per month depending on health and term length. For many people, that's less than a gym membership. And studies consistently show that Americans dramatically overestimate what life insurance costs -- one recent survey found people guessed a $250,000 policy for a healthy 31-35 year old male would run around $1,486 annually, when the actual cost is more than seven times lower.

Don't Overlook the Homemaker

One of the most underinsured people in any household is the spouse who stays home. This is a significant blind spot.

The homemaker role has an enormous financial value that is almost invisible until it's gone. If something happens to the person managing the home, the children, the logistics -- the breadwinner's ability to maintain their career and income at the same level, especially with young children in the house, is severely compromised. Childcare costs alone can be staggering.

My recommendation: carry at least $500,000 in term coverage on a homemaker spouse. And the cost argument is hard to argue with. A healthy stay-at-home spouse under 30 could pay less than $500 per year for that coverage. That's roughly a dollar a day to protect your family from a financial catastrophe.

Term vs. Whole Life: What You Need to Know

The most common question I get is whether to buy term or permanent (whole life / universal life) insurance.

For the vast majority of people, buying term insurance and investing the premium difference is the smarter financial move. Term policies are straightforward: you pay a fixed premium, you're covered for the term, and if something happens, your family gets the benefit. Simple. Affordable. Effective.

Permanent products -- whole life and universal life -- carry a cash value component that accumulates interest over time. For certain people with specific financial planning needs, these products absolutely make sense. But they come with considerably higher premiums, and they come with strings attached: surrender charges that can apply in the first ten years are a big one. If you buy a whole life or universal life policy and your circumstances change, walking away early can be costly.

My strong recommendation: before purchasing any permanent life insurance product, sit down with a financial advisor who has a complete picture of your assets -- retirement accounts, business assets, real estate, personal savings -- and can genuinely evaluate whether the cash value component adds value to your specific financial plan. This isn't a decision to make at a kitchen table based on a sales illustration alone.

Disability Insurance: The Coverage Everyone Forgets

Now for the one that surprises most people.

If you asked your friends and family what the bigger financial risk is: dying unexpectedly or becoming too sick or injured to work, most would say dying. But statistically, you're far more likely to experience a disabling illness or injury during your working years than to die during them.

The Social Security Administration estimates that one in four of today's 20-year-olds will experience a long-term disability before reaching age 67. Cancer. Heart disease. Back injuries. Multiple sclerosis. A serious accident. These are not rare events -- they happen to people we know.

And here's what makes disability so financially devastating: you're still alive. Your mortgage doesn't pause. Your car payment doesn't stop. Your kids still need to eat. Medical bills may pile on top of your normal expenses. People wipe out retirement accounts and savings in under a year when a serious disability hits without adequate coverage in place.

Yet only about 43% of working Americans carry disability insurance, and many of those who have coverage through an employer don't realize how limited group benefits can be -- with caps on monthly payouts, definitions of "disability" that are narrower than people expect, and benefits that may be taxable if the employer pays the premiums.

The gap is staggering: nearly half of American adults say they recognize they need disability coverage, yet fewer than 1 in 5 actually have it on their own.

Social Security Disability Insurance (SSDI) is often the fallback plan -- but it's a fragile one. The average SSDI benefit as of early 2026 is approximately $1,630 per month. For a two-person household, that falls below the federal poverty guideline. And getting approved isn't easy: historically, only about 30% of applicants are approved, and the process from application to decision typically takes three to five months, sometimes longer.

What Disability Insurance Actually Does

Disability insurance is income replacement. If a sickness, injury, illness, or disease prevents you from working at the same level as before, a properly structured policy replaces a significant portion of your income -- typically 60-70% -- so your family can stay afloat while you recover or adapt.

Key things to understand when evaluating a policy:

Definition of disability matters. Some policies only pay if you can't work any job. Better policies pay if you can't perform the duties of your specific occupation. For a surgeon, a skilled tradesperson, or a business owner, that distinction is enormous.

Elimination period. This is the waiting period before benefits kick in -- typically 60, 90, or 180 days. The longer you can wait (ideally with an emergency fund to cover it), the lower your premium.

Benefit period. Do benefits last two years? Five years? To age 65? For long-term protection, a benefit period that extends to retirement age is worth the added cost.

Group vs. individual coverage. If you have disability insurance through work, read it carefully. Employer plans often cap monthly benefits at $5,000 to $10,000 -- which may fall far short of replacing your actual income.

The Bottom Line

Think of life and disability insurance as the foundation of your financial house. You can have the best investment accounts, the most carefully selected mutual funds, and real estate equity -- but if the person who earns the income is gone or can't work, all of it gets consumed in ways you never planned for.

The good news is that for most people in their 20s and 30s, coverage is far more affordable than they imagine. The cost of not having it is immeasurable.

If you're not sure where you stand, let's talk. At MM Insurance Associates, we take the time to understand your full picture before we make any recommendations. That's what an independent agent does -- we work for you, not for any single insurance company.