5 Things to Know About Life Insurance and Black America
Many Black people have been told they should have life insurance but view the financial tool with limited lens. Some believe it’s simply to take care or burial expenses, while others don’t quite understand the stipulations of policy they have. Here are 5 things to know about life insurance and Black America.
Surprise! Black people are more likely to purchase life insurance than other groups
While countless Go Fund Me’s have given the impression that Black people just don’t purchase life insurance, the opposite is true. According to Black Enterprise, as of 2017 at least 60 percent of Black Americans have life insurance compared to 46 percent of the general market population.
This was further confirmed by a study by the Gatton College of Business and Economics, which said “our analysis finds that African Americans hold significantly more life insurance than Whites after accounting for other confounding factors such as income and education.”
Further, the article states even when Black people don’t have life insurance, they are more inclined to believe it is necessary than their white counterparts.
Many in Black America see life insurance as a way to build wealth and create pathways to financial freedom for the future generations.
In an interview with Black Enterprise, Eugene Mitchell – a corporate vice president and African American market manager at New York Life – touted the wealth building benefits of life insurance.
“The money can be used for everything from paying for college tuition, enhancing a retirement nest egg, tithing to a church, and funding charitable giving to create sustainable wealth and economic empowerment in black America,” Mitchell said.
He said they are on a mission to create billions in tax-free income for the Black community.
“We are on mission to create $50 billion of tax-free future income in the Black community,” Mitchell said. “I believe the issues in the Black community are not crime [or] drugs; those are symptoms of a greater and deeper rooted issue, which is about economics.”
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There’s a debate on whether term life insurance or permanent life insurance is better for Black people.
While term life insurance’s premiums are more affordable, the coverage only lasts for a set term. Permanent life insurance lasts a lifetime but is more costly.
There are different types of permanent life insurance including whole, universal and variable. Each one has different benefits and cash values.
Black Americans should be wary of rogue life insurance agents
Buyers should be on the lookout for agents more concerned about earning high commissions than selling customers the best policy for them. Experts recommend, Black people (and all customers for that matter) do their diligence when vetting agents and the policies being considered for purchasing.
Life insurance can also be seen as an investment tool for Black America
Instead of just using life insurance to cover burial expenses, many Black agents are trying to get their communities to use it as an investment tool.
“You really can’t work your way to wealth, you have to invest your earnings somewhere,” Mitchell said. “It’s time to consider tools like life insurance, as well as, looking at places where we can find money to invest.”
He added, “We can insure our parents, ourselves and our children to build this within our own families. By getting our mindset and spending habits right, we can start setting up college savings plans and down payments for homes like others,” he said.