Life Insurance and The African American Community

               

      Life insurance is one of the few investments that can have a transformative effect on families and future generations. No other culture embraces the fact more than the African-American Community. 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)"1. The vision in the African American community has always been towards the next generation. Starting with our ancestors, former slaves that purchased the first policy’s in hope of what future generations could accomplish. 

     For a long time the only type of insurance offered in the African-American community was a high cost, low benefit burial policy.  Insurance carriers back then saw African-Americans as higher risk policyholders -- more prone to violence, less likely to hold steady jobs, more likely to have lots of children and a shorter life span. Sometimes the premiums charged on these policies were so high; they exceeded the death benefit if the policy were kept to its full term.2

    Thankfully that sort of practice is prohibited. Insurance companies are not allowed to use race as a criteria for evaluating risk or setting a price for an individual policy. Underwriters are not even permitted to know the race of an applicant for life insurance.

    As the times changed, life insurance agents that went door to door became some of the most trusted figures within in the African American community, offering a policy that went further than just burial.  While many African-Americans were restricted from being able to invest in the larger brokerage houses, many African Americans saw the cash value component of life insurance as a safe way to save money. For the first time life insurance gave people the ability to accumulate wealth that could be used in their life time.

   Today there are fewer door to door salesmen, and old adage of that life insurance is just for burial is still the leading reason why African Americans purchase Life Insurance. As the fabric of the African-American community to continue to evolve, so must our understanding of insurance and its transformative effects.

There are so many programs that can make a difference in the African-American community, and life insurance is one of the best tools we can use to put action behind them. 

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1. https://www.nerdwallet.com/blog/insurance/african-americans-value-life-insurance/

2. http://www.post-gazette.com/business/businessnews/2011/08/14/Why-African-Americans-are-so-loyal-to-life-insurance/stories/201108140272