New studies show that Blacks living in America are investing in life insurance policies at a higher rate than previously reported.
The deadly COVID-19 global pandemic has created an awareness and urgency surrounding wealth management and estate planning for those disproportionately impacted by the virus.
LIMRA’s 2021 Barometer Study, which included 3,000 people, discovered an outstanding 56 percent of Black Americans own life insurance policies. While this number is 3 percent higher than 2020 policyholders, it beats out the percentage of the general population by an additional 1 percent. As extraordinary as these statistics appear, there is another 19 percent of Black Americans who want life insurance and may not be able to qualify.
David Levenson, president and CEO, LL Global, LIMRA, and LOMA, said, “While our research shows that Black Americans are more likely to own life insurance than any other race, the reality is 46 percent — 20 million adults — say they need (or need more) life insurance coverage, which identifies a significant coverage gap.”
“It is up to our industry to help these individuals get the coverage they need to protect their families’ financial security,” he added.
The research shows even before the pandemic, Black Americans experienced a different financial concern than other races. The devastation of COVID-19-related deaths and the financial burdens associated with end-of-life expenses, particularly in instances of premature death, further amplified these concerns. A large percentage of Blacks view this as the primary reason for them to obtain a plan.
“Black Americans are more likely than other market segments to view life insurance only for burial and final expenses. Thirty percent of Black Americans believe that life insurance is only for final expenses and 66% say that is the primary reason they own life insurance. Just 48% of the general population say the same,” the study stated. “This perception of life insurance could result in Black Americans not purchasing enough coverage to provide income replacement or enable wealth transfer, two key ways life insurance can benefit loved ones after a wage earner dies.”
In an interview with Yahoo! Money, Wendy Edwards, a financial services professional who has worked with New York Life and other insurers for over 30 years, agrees with the findings based on her experience. She finds fault with this logic because it doesn’t help yield generational wealth or security — another use for a policy.
“What I hear is, ‘My parents didn’t help me, so I’m just going to bury myself’…[leaving] every generation starting over, unlike other communities where they’re giving legacy to the next generation,” she said. “Instead, we have a financial loss and an emotional loss creating a recipe for disaster.”
Coronavirus-related emergency fund issues (like paying monthly bills and mortgages after the loss of a job) also came into play in determining why some are acquiring policies.
“The prevalence of these concerns, coupled with the disproportionate impact of COVID-19 on Black Americans, are driving forces behind their likelihood to buy life insurance in the next year,” Levenson shared. “Our research shows 6 in 10 Black Americans plan to purchase life insurance within the next year, which is much higher than the national average (36%).”
Alison Salka, a senior vice president and director at LIMRA, echoed the words of Levenson, saying to NBC News, the pandemic “brought the idea of mortality to the forefront of people’s minds. So generally, we found that because of the pandemic, almost a third of customers said they were more likely to buy life insurance because of it. That number goes up for different demographic groups, like Black Americans.”