The Financial Foundation Pyramid: Why Protection Comes First (Part 1)
This blog post is an excerpt from our latest YouTube episode where we dive deep into the first pillar of financial success. You can watch the full episode on our channel for even more insights and examples!
Today we're diving into something that's going to change how you think about building wealth—the very first step of what I call the Financial Foundation Pyramid.
Now, before we jump in, let me be completely transparent with you. I'm a tax-free retirement planner, and yes, life insurance is one of the services my firm provides. But I'm not here to sell you anything today. I'm here to educate you because too many people are building their financial house on sand instead of rock.
The Truth About Building Wealth
Here's something that might surprise you: You can build wealth without starting with insurance. But if you really want to set your family up for generational wealth—if you want to create a legacy that lasts—then you're going to need life insurance and different levels of protection.
The Financial Foundation Pyramid has four crucial levels:
Protection (what we're covering today)
Debt Management
Emergency Fund
Investments
Without these four puzzle pieces in place, building wealth becomes exponentially harder. Today, we're starting at the bottom—the foundation that everything else sits on.
Why "Worse to Get Sick, Better to Pass Away"
I know that sounds harsh, but hear me out. Let me paint you a picture with a story about my windshield.
A few years back, I was driving and a nail cracked my windshield. I didn't have the money to replace it—no emergency fund, nothing. I was worried about driving with that crack, knowing it could shatter completely and cause a major accident.
When I called Geico, they didn't just cover the replacement—they scheduled everything, and I even got free tinting! But here's the thing: most insurance only pays at the end of life of the product.
Think about it:
Car insurance pays when your car is totaled
Health insurance often fights you on claims
Most life insurance only pays when you die
But what if insurance could sustain the life of the product instead of just paying at the end?
The Windshield Crack in Your Life
So what's the windshield crack in your life? What can happen while you're alive that shortens your lifespan?
Cancer
Stroke
Heart attack
Chronic illness
Terminal illness
Needing daily assistance
Getting sick is expensive. Really expensive. Not just the medical bills, but the lost income, the family stress, the retirement funds you'll have to tap into. That's why I say it's worse to get sick than to pass away—the financial devastation can destroy everything you've built.
The Three Types of Life Insurance
Let me break this down into the two main categories that matter:
Permanent Insurance (Whole Life)
Lasts until age 100
Builds cash value (though honestly, it's terrible at this—worse than a high-yield savings account)
Premiums never change
Pays out the death benefit at 100 if you're still alive
You've got options for payment:
20-pay: Pay for 20 years, covered for life
10-pay: Pay for 10 years, covered for life
Paid up at 65: Pay until retirement, covered for life
There's also Final Expense insurance—just enough to cover funeral costs (about $20,000 for adults, $7,500 for children, God forbid).
Temporary Insurance (Term Life)
Expires after 10-30 years
Much cheaper than whole life
More coverage for your dollar
Premiums locked in during the term
Here's the beautiful thing about term insurance expiring: You can use it strategically. Got a 20-year mortgage? Get 20-year term insurance. When the house is paid off, the insurance expires too. You're not paying for coverage you don't need anymore.
The Game-Changer: Living Benefits
This is where it gets exciting. Some term insurance policies offer living benefits or accelerated death benefits. This means they pay YOU money from your death benefit while you're alive if you need it.
Three types of living benefits:
1. Terminal Illness
Diagnosed with 6-24 months to live
They pay your death benefit upfront
Use it for treatments, family time, whatever you need
2. Chronic Illness
Can't perform basic activities (eating, bathing, dressing)
Pays ongoing income or lump sums
Covers nursing home or private care costs
3. Critical Illness
Cancer, heart attack, stroke, paralysis, blindness
Pays cash directly from your death benefit
Sustains your life without touching retirement funds
I had a client get diagnosed with colon cancer just a week after signing his policy. The insurance paid for his treatment. Today? He's cancer-free.
Group vs. Private: Why Exclusivity Matters
Most people get life insurance through work—that's group coverage. But remember: the more exclusive, the better the product.
With group coverage, you're lumped in with everyone else. If you're healthy and fit, you're paying the same as the guy who can't run a mile. With private coverage, you're evaluated individually. Healthier people get better rates and better benefits.
What's Next?
We've covered the basics of permanent and temporary insurance today, but we're just getting started. In Part 2, we'll dive into:
The drawbacks of each type
Strategic ways to use insurance
Universal life insurance
How to determine what you actually need
Remember, this isn't about selling you insurance—it's about educating you on the foundation that everything else sits on. You can't build a house without a foundation, and you can't build generational wealth without protection.
Want to dive deeper into your specific situation? The general education I share here is great, but we can only get specific when we look directly at your case. Schedule a consultation to see how these principles apply to your family's financial foundation.
Questions about today's content? Drop them in the comments wherever you're reading this—YouTube, LinkedIn, Facebook, wherever. I love helping out and answering your questions!
Have a beautiful week, stay productive, and check out Part 2 where we finish breaking down the protection pillar of your financial foundation.
This post is based on our YouTube episode "The Financial Foundation Pyramid: Protection (Part 1)." Watch the full episode for more detailed examples and Q&A. Don't forget to subscribe on YouTube for more wealth-building content!
