Black communities e lack of adequate life insurance coverage and Mckinsey reported a relationship to financial inclusion in 2020. This gap in financial planning often leaves families struggling to cover final expenses for their loved ones.
Omari Aarons-Martin, executive director of the National African American Insurance Association (NAAIA), emphasizes the importance of life insurance conversations within families. He suggests getting life insurance policies for children early on.
Ryan L. Smith, executive vice president of Atlanta Life Insurance Company, the nation’s only remaining Black-owned and Black-founded insurer, stresses the importance of insurance in building financial stability and empowerment for Black Americans.
The Gap In ‘Black’ Insurance
A trust deficit exists between Black Americans and the financial services industry, including insurance. This distrust, coupled with lack of access and education, contributes to the underinsurance problem.
LIMRA’s 2024 Insurance Barometer Study reveals that Black Americans, along with other demographic groups, have the greatest need for life insurance. Many view life insurance primarily for final expenses, potentially limiting their coverage.
Holly Snyder of Nationwide Insurance points out that this perception may lead to insufficient coverage for income replacement or wealth transfer. She illustrates the importance of life insurance by noting that a $50,000 annual salary equates to $1.5 million over a 30-year career.
What Should Black American Insure?
According to Ryan L. Smith of Atlanta Life Insurance Company, a comprehensive insurance plan should extend beyond common policies like home, auto, renter’s, or pet insurance. A robust plan should include:
1. Life Insurance: Beyond covering final expenses, it can be a wealth-building and transfer tool.
2. Healthcare: Including supplemental health and long-term care insurance.
3. Annuities and Retirement: For financial security and income stability in retirement.
4. Business Insurance: For Black business owners, protecting assets and offering employee benefits is crucial.
How To Go About It?
It is advisable to work with Black insurance agents. NAAIA and the Association of African American Financial Advisors can help find suitable agents. Alternatively, one can start by asking for recommendations within their social circle.
Nationwide, through its involvement in the Financial Alliance for Racial Equity (FARE), is working to address the shortage of Black financial professionals. They offer educational resources and easy access to term life insurance quotes online.
Experts advise regular “insurance checkups” to ensure policies remain adequate over time. As Aarons-Martin concludes, “It’s never too early, and it’s never too late to think about your coverage or make sure you get covered.”
Story by Black Enterprise contributed to this article
