Published On: Fri, Oct 28th, 2016

The Importance of Life Insurance for African Americans

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Life insurance has always been really important to the African American community. Because African Americans didn’t always have access to the same investment opportunities to accumulate wealth as Caucasians, life insurance served as an extra source of savings and as a way to pass on an inheritance to loved ones, giving them a more secure financial foothold. While this wisdom has been passed down, the practice of it has slowed.

With the drastic changes in our economy in the last 10 years, purchasing life insurance took a back seat while many struggled to find and keep jobs, hold on to their homes, and climb their way out of debt. Recent times have shown that more people are again thinking about retirement and what they will leave behind. LIMRA, an insurance marketing and research consortium, found in their 2013 study that while 85% of Americans realize they need life insurance, only 62% of all Americans actually have it. The study also showed that most of those people only have life insurance through their jobs, which average $10,000 per employee.

Considering a funeral costs approximately $10,000 on the low end, if the objective is to provide more than just burial costs for family, this bare minimum is not enough.  Even though times may have changed, the desire to provide and protect our families and their future hasn’t.

Important of Life InsuranceAccording to a 2015-2016 Prudential study, 55% of African Americans gave themselves high grades about life insurance protection and only 31% graded themselves highly in planning for wealth transfer. Thankfully, African Americans have more access and information to avenues of wealth accumulation than ever before. Yet, the numbers are extremely low considering the accessibility of life insurance. It is an important step in the right direction of someone trying to secure his/her family’s financial well-being.

Considering Term Life Insurance

As someone who is currently working my way out of debt, I struggled with making life insurance a priority. I want to get out of debt as quickly as possible, but the truth is if I pass away tomorrow, my husband would still be strapped with that debt when I
had the option to take care of the burial costs and free him of our debt burden. According to LIMRA’s 2015 Barometer study, the number one reason most people didn’t purchase life insurance was due to perceived cost. I have definitely reprioritized my budget after learning that some term life insurance policy premiums cost less than a daily cup of coffee.

There are different types of life insurance, and some of them do have very expensive premiums.  Thankfully, term life insurance policies are an extremely affordable option for those who have financial concerns like mine. These polices provide protection for a specific period of time in five year increments, from 10 up to 30 years.

Because there is no accumulation of value over the life of the policy, the premiums are a lot lower than many other options. Term life insurance policies only pay out benefits if death occurs during the term of the policy. Their policies do allow you to renew your coverage once the term ends, and some policies may allow you to convert to another type of life insurance policy if it better suits your situation.

Isn’t Life Insurance Just for Married People with Children?

If you are young and single, you may not see the need to get life insurance because you don’t yet have a spouse or children, but it is still worth considering. First, while you are young and healthy is a great time to lock in great rates for a policy before you have health concerns that may raise your premiums. Second, if someone co-signed for your student loan debt, making them a beneficiary is a great way to cover them if something happens to you.  Also, because insurance is for the unexpected, a policy would cover your funeral costs in case you pass away so your family won’t have the added stress of those expenses.

It can be overwhelming to know where to start shopping for life insurance. With SelectQuote, you can compare policies and prices without numerous phone calls or high pressure tactics. They have been in business for over 20 years and have expertise in matching people with the right coverage and best prices for their needs. SelectQuote can also help you with other types of insurance: auto, home, and senior care. Often, bundling types of insurance with one carrier can help lower your rates.

No one wants to think about death, but insurance is there to cover the “what if’s” of life. Life insurance can provide a substantial sum so that your loved ones are financially sheltered when you pass away. It gives you the peace of mind of knowing the loss of your income or the debt you leave behind has not become an arduous burden to them.

 

This article was sponsored by SelectQuote, but all thoughts and opinions are my own.

Sherrian Crumbley

Author at KNS Financial
One half of the dynamic duo at KNS Financial, Sherrian writes about personal finance topics from the every woman point of view.

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About the Author

- One half of the dynamic duo at KNS Financial, Sherrian writes about personal finance topics from the every woman point of view.

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Did you know?

African Americans are significantly more likely to have some type of debt (94%) compared with the general population (82%). Credit card debt, student loan debt, and personal loans are all significantly higher in the African American community.

Source: Prudential’s 2013 "African American Financial Experience" study