Everyday Money Habits · Classroom packet
The insurance you actually need.
Insurance is one of the most heavily sold products there is, which makes it one of the hardest to think about clearly. This packet gives a group a single test that sorts any policy — the ones worth buying, the ones to skip, and the handful that depend on your life. The core idea is narrow on purpose: insurance is only for the catastrophes you couldn't write a check for. Guess an odds, sort the list together, find each person's gap, and everyone leaves with one move.
Lead a group through sorting insurance into need / skip / depends with one test, surface the disability gap most people miss, and name one move each.
You're running a class, small group, or kitchen-table session for adults and want a no-prep handout on which insurance actually matters and which to refuse.
For the leader
Anyone can run this — a teacher, a small-group or mentorship leader, a parent at the kitchen table — for two people or a full room. No math background needed. Four beats:
- Open with the question — don't name the idea yet; let the room argue it first, then reveal the sentence.
- Take the odds guess together, then reveal it — it resets what "risk" everyone should worry about.
- Sort the list into need / skip / depends, running each through the one test. Then everyone ticks the personal check.
- Before you close, everyone names one move — a policy to check, a gap to fill, an add-on to cancel — and a date.
- 0–4 Open with the question; then name the idea.
- 4–8 Guess the odds; reveal.
- 8–17 Sort the list — need, skip, or depends.
- 17–22 Find your spot — tick the personal check.
- 22–27 Talk it through.
- 27–30 One move each.
"Almost everything sold as insurance falls into one of three piles: coverage you genuinely need, coverage you should refuse, and a few that depend on your life. Today we'll learn the one question that tells them apart — and find the gap most of us are quietly carrying."
The surprise lands twice: most groups over-buy the small stuff (warranties, add-ons) and under-buy the one that matters most — disability. And when whole life comes up, keep it descriptive: it has a couple of narrow honest uses (the answer key names them), it's just not the savings-and-protection bargain it's sold as.
The narrow cases where whole life, an income annuity, or a private disability policy genuinely fit are decided with a fee-only advisor or an attorney (someone paid by you, not by the sale), not settled in a group. Point people there rather than resolving it in the room.
1 · The whole idea, in one sentence
Which of these is worth insuring: a cracked $200 phone screen, a $1,500 car repair, or a $400,000 hospital stay? Where is the line — and what makes it the line?
Insurance is only for the catastrophes you couldn't write a check for — never the small stuff, and never as an investment.
Here's the test that sorts any coverage in one question: if this happens and I'm not insured, can I write a check and move on? A $200 phone screen, yes, so you self-fund it. A $30,000 surgery, no — and that's exactly what insurance is for. There's a second half to the rule, too: never buy insurance as an investment. Everything sold beyond that catastrophe line is a budget item dressed up as risk management. The next few minutes put both halves to work.
2 · Guess the odds
Before the sort, one guess. Out of 100 people your age, how many will become disabled long enough to stop working at some point before they retire? Don't look it up — put down the room's best guess, then we'll reveal it.
Hold that number. Whether it's higher or lower than you'd think decides which risk this whole session is really about.
3 · Need it, skip it, or depends?
Go down the list together. For each coverage, tick one column: run it through the test — could you write a check and move on if the worst happened? If yes, you don't insure it. If a whole group disagrees on one, that's usually a "depends."
One more check before you tick: is any of this being sold to you as an investment or savings, not pure protection? If yes, it's a Skip — even if you couldn't write a check for the worst case.
4 · Find your spot
Now make it personal. Tick what's already true for you. The first unchecked box, reading top to bottom, is the gap worth closing next.
- I have health insurance, and each open enrollment (the yearly window to change coverage) I weigh the high-deductible plan against the standard one: the premium I’d save versus the deductible (what I pay out of pocket before coverage starts) I’d likely reach.
- If I drive, I carry auto liability coverage well above my state’s bare minimum.
- If I rent, I have renters insurance; if I own, I have homeowners insurance with replacement-cost coverage (enough to rebuild, not just the home’s depreciated value) and a deductible my emergency fund could cover.
- I have long-term disability coverage, through my employer or my own policy, to replace my paycheck if I couldn’t work.
- I have term life insurance only if someone depends on my income.
- I don’t own cash-value life insurance (whole, universal, or variable, all the same bundle under different names) bought as an investment.
- I’m not paying for extended warranties, identity-theft insurance, or other small add-ons I could cover out of pocket.
The one most people miss is the fourth — long-term disability. It's the boring box, and it's the one most likely to actually get used.
5 · Talk it through
- Someone says, "Lock in low life-insurance rates while you’re young." You’re single with no one depending on your income. What’s the flaw in that pitch?
- Becoming disabled before retirement is more likely than dying young — yet disability is the coverage almost everyone skips. Why do you think we insure the less-likely risk and skip the likelier one?
- A friend sincerely pitches you whole life insurance as savings-and-protection in one. How do you say no without arguing or straining the friendship?
- Walk your own list from the top. What’s your first unchecked box — and what life change would send you back to walk the whole list again?
A case to argue
A couple is expecting their first child. Until now, if either of them died, no one's finances would really change — so they never bought life insurance. In a few months a small person will depend on their income and can't earn one of their own. A coworker is nudging them toward a whole-life policy "to protect the baby."
What would you tell this person?
Practice saying no, out loud
One person plays the agent — a sincere friend or coworker who just got "certified" — pitching a whole-life or annuity policy with the real lines below. Everyone else is the customer. The goal isn't to win the argument; it's to rehearse the words that end it calmly, without straining the friendship.
- "It's life insurance you'll never outlive — it saves and protects at the same time."
- "Lock in these low rates now, while you're young and healthy."
- "Think of it as forced savings — you'll thank yourself in twenty years."
- "And you can borrow against the cash value whenever you need it."
6 · One move, this week
The outcome is a single line: my first gap is X. Do that one thing this week — check whether your employer offers long-term disability and sign up if it does, price a term life policy if someone depends on you, or cancel one add-on you're paying for and don't need. Go around the group; each person names their move and a date.
Answer key · for the leader
Keep this page back, or hand it out after the sort. The point isn't a perfect score — it's the one test, and the gap almost everyone is carrying without knowing it.
More than 1 in 4 of today's 20-year-olds will be disabled long enough to stop working before they retire — higher than the odds of dying young. Yet disability is the coverage most people skip. That's the whole session in one number: the risk we insure heavily (an early death) is less likely than the one we ignore (a lost paycheck).
- Health insurance
- Auto liability coverage (if you drive)
- Renters insurance (if you rent) — or homeowners insurance (if you own)
- Long-term disability insurance
Each one covers a catastrophe you couldn't write a check for: a major illness, a lawsuit for damage you caused, a fire that takes everything you own, or a lost paycheck. Disability is the quiet one — the gap most people are already carrying.
- Whole / universal / variable life insurance bought as an investment
- Extended warranties
- Identity-theft insurance
- Life insurance on a child
Every one fails the test: the loss is small enough to self-fund, or it's an investment wearing an insurance label. Whole life "skip" doesn't mean "never" — it does make sense in a couple of narrow cases, chiefly estate planning at very high net worth, or providing for a lifelong dependent. Those are settled with an attorney or a fee-only advisor, not bought across a break-room table. For nearly everyone else, term life plus investing wins.
- Term life insurance depends on one thing: if you died tomorrow, would someone’s life get financially worse? If yes (a partner, a child, a co-signer who’d be stuck with your debt), you need it. If no, you don’t, no matter how young or cheap the rate.
- An umbrella policy comes later — once you have real assets or exposure to protect: a paid-off home, savings worth suing for, a teen driver on your policy. Not a first-job purchase.
Any answer that names the catastrophe test works — e.g. "I insure what would wreck me and I can't write a check for; I self-fund the rest and I never treat insurance as an investment."
Run it through the one test: if a parent died, would the child's life get financially worse? Now, yes — so term life stops being optional. The answer is term, not whole: a fixed premium for the years the child is at home, usually 10 to 12 times income (a healthy 30-year-old often pays $25–$40 a month for a $750K, 20-year policy). Both earning parents need their own, and a stay-at-home parent too — replacing the care they provide is a real cost. And don't skip the likelier risk, disability. The coworker's whole-life nudge is the wrong tool for this need — the job is pure, cheap protection for the years the child's at home, not a savings-and-protection bundle. Drawn from the "we're having a baby" Moment (M23) on the site.
The customer doesn't need to out-argue the agent — the winning move is a calm redirect that closes the pitch without a rebuttal: "I think we have different needs than this policy solves for. For protection we're using term; for savings, a Roth and the 401(k) match." Agents are trained to handle objections, not "we have a different plan." What each line hides: "saves and protects" is two ordinary products (term plus a savings sub-account) stapled together at a markup — unbundled, the same dollars grow far larger; "lock in rates young" is a non-answer when no one yet depends on your income; the cash value sits near zero for years while premiums pay commissions. Keep the honest carve-out so the "no" stays credible: whole life does fit two narrow cases — estate planning at very high net worth, or funding lifelong care for a dependent — both settled with an attorney or a fee-only advisor, not across a break-room table. Drawn from the "someone pitched me a whole-life policy" Moment (M1) on the site.
Based on the Guide to insurance.
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