Blacks purchase life insurance differently than other cultures

BY ANDREW STEWART

Being a black insurance advisor, I’ve had the privilege of seeing different unique habits, perspectives, and buying patterns from different cultures when it comes to life insurance. For the better part of last year, protests have taken place across the world to take a stand against the killings of unarmed black people. There has been a disproportionate amount of COVID-19 related deaths amongst black people. Conversations around racial injustice have also included other areas of disparity, such as economic inequality. So, I wondered are these troubling events changing the mindset of black people regarding life insurance.

As far back as the 1800s, some blacks associated life insurance primarily with one thing: paying for burial expenses. That narrow view grew out of a proud desire to not be a burden when they pass. I’ve sat with many older people and a common statement would be “I just need enough to bury me.” But it’s not their fault. It’s part of the ugly history of race-based life insurance pricing, a practice that promoted buying small policies to cover funeral costs and that didn’t fully wind down until the 21st century. It is well documented that blacks have been deliberately discriminated against for centuries regarding all sorts of access points to accrue generational wealth, from housing investment and business opportunities.

Today the predominant thought amongst blacks is life insurance is needed to pass on generational wealth. Yes, life insurance is a fantastic way to create that generational wealth but it’s because there is such a huge racial wealth gap, to begin with. White families have a higher median net worth compared to black families. For black people, buying life insurance is almost viewed in the same light as winning a lottery, a way to close that gap. Here is where I’ve found the biggest difference in mindset. Most white people believe in and purchase insurance to protect their assets and wealth from debt and taxes.

Here is the oxymoron. If black people believe in creating generational wealth through life insurance, then why is the median value of life coverage held by blacks three times lower than other cultures. We are still burdened with the same mindset of only wanting to shield our families from debt, burial costs, and final expenses.

Most cultures and individuals overestimate the cost of life insurance. What I have noticed is black people without life insurance believe the costs are too high for their budget and think the process is laborious. Some even believe that the whole thing is a scam. This boils down to a lack of education and a misunderstanding of the information that is out there. As with many clients, it can be difficult to get black people to personalize the benefits of life insurance. Marketing companies spend millions of dollars trying to attach a feeling to the product. I prefer keeping it simple. Life insurance is a financial tool. You must use it to address the issue first and your desires second.

I understand insurance can be a complicated product to understand because of the different types and options. But as black people, we need to upgrade and shift our need for the product. We take on the financial risk of having to provide for our families every day. We earn money for shelter, food, clothes, toys, education, cars, etc. Insurance is an opportunity for black people to transfer that risk and at the same time change the financial course of a family’s bloodline.