So is it really true! African-Americans don't buy life insurance like the general population? Are past discriminatory practices affecting insurance companies relationships with African-Americans and other minorities? Can the slowing economy be affecting general purchases of life insurance? Is this just a myth that's been perpetuated over the years?
Opposite to popular belief, I'm proud to say," African-Americans do buy life insurance". In retrospect, African-Americans actually buy more life insurance than the general population. A study recently released by two leading insurance industry associations, LIMRA, and the nonprofit Life Foundation, found African-Americans more likely to own life insurance (76 percent) than whites (62 percent) and Hispanics (54 percent). The average white household has a net worth approximately three times greater than that of the average black household (Wolff, 1994; Kennickell, Starr-McCluer, and Surette, 2000). Data shows in spite of the wealth gap -- and maybe because of it -- African-Americans have a much more positive view of life insurance than whites do," said Robert Kerzner, president and CEO of Limra, based in Windsor, Conn.
"A study recently released by two leading insurance industry associations, LIMRA, and the nonprofit Life Foundation, found African-Americans more likely to own life insurance (76 percent) than whites (62 percent) and Hispanics (54 percent)".
The Life Insurance Marketing and Research Association (LIMRA) is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies,conducted a study on the purchase of life insurance by the general population stated,' Our findings indicate that African-Americans are more receptive to buying life insurance today than in the past and that they have a more positive attitude towards life insurance companies and their field representative than the general population".
Researchers found the main reasons African-Americans remained so loyal to life insurance stem from a deep desire to avoid burdening others with burial expenses, as well as the fact that often life insurance is the only means of leaving an inheritance to their loved ones. With a simple savings account, you put your money in the bank and the institution promises a certain interest rate (as pitiful as it might be). It's a risk-free product. With life insurance, you make premium payments and, if you die during the covered period, the insurance makes a payout to your beneficiaries. Several reports outline the financial goals of African-Americans to the general population and found that the top three goals-having enough money for a comfortable retirement; having adequate health insurance; and paying off debts such as student loans, credit card debt and mortgage-are the same. However, African-Americans place more importance on having life insurance and having a plan to replace income if unable to work than the general population.
"Researchers found the main reasons African-Americans remained so loyal to life insurance stem from a deep desire to avoid burdening others with burial expenses, as well as the fact that often life insurance is the only means of leaving an inheritance to their loved ones".
"In the past, the emphasis was on burial. But now the focus should also be on wealth building and creating an estate for our children as we pass."
"Several life insurance companies, including MetLife, Prudential, Liberty Life and about 20 others, were forced to settle race-based claims totaling millions of dollars for policies they to sold black families during this era".
"Prudential found the same thing other financial companies have reported - that although a majority of African-Americans want advice on saving and planning for retirement, many say they don't know or can't find a professional they can trust".
The legal system has now made it a violation of federal laws for any life insurance company to use race as part of the criteria for underwriting, evaluation of risk, or pricing of an individual's life insurance policy. In fact, underwriters are not permitted to even know an applicant's race anymore.
There is a long-standing perception that the financial industry has fallen short in terms of reaching and serving the African-American community," Prudential says. According to Dereck L. Smith JR, LUTCF, "There still seems to be a lack of financial planning and insurance knowledge within our community as a whole. For insurance agents, looking for business, listen up! African-Americans place greater emphasis on the goal of having adequate life insurance. They are also more likely to consider purchasing life insurance for themselves or for someone else in the household compared to the total U.S. population, according to a new LIMRA study.
"There is a long-standing perception that the financial industry has fallen short in terms of reaching and serving the African-American community," Prudential says.
I have outlined what insurance companies need to do to eliminate the myth African-Americans don't buy like insurance.
At Robert S Dilworth Financial Services, we understand the benefits of insurance on society. African-Americans need to understand the vital importance of life insurance. The days of mere "burial insurance" and ridiculous premiums are dead and gone. If you're an African-American with a family and financial assets to protect but no life insurance, talk to one of our agents as soon as possible. We advise clients against purchasing financial products based on fancy sales presentation or rehearsed sales scripts.
We suggest clients ask the question(?) How does this product coincide with your short or long-term financial goals?
Plan for the future....benefit today"!!
Check us out at www.rsdfs.com