I am not an SEO genius by any means. I have only read and studied for a year. But I would like to offer my opinion.

I don't believe Google would penalize you for building your site in any fashion you wish. Basically, you are segregating the life insurance side of things by starting a folder, as you've noted. If you don't cross link the two, then you essentially created a silo (new term for me lately! I love it!). You'll split the link juice of your domain between the pets and the life insurance silo's (which you may not want to do actually, it might make your pet side suffer some. Can anyone else chime in on this?). But then your life insurance folder will from there carry and share it's own juice if you interlink it with itself without cross linking it to the pet side. Hopefully if you build up the life insurance side as well as the pet side, both will reap the benefits.

I personally think it might be better to grab a second domain for such a completely different topic. If you went from pet goods, to animal artwork, to traveling while accommodating pets, THEN you might be okay, because those are connected in some fashion. You can't connect pets and insurance.