Have African-Americans been neglected, in understanding the need for life insurance? What has shaped African-Americans viewpoints towards life insurance, and what can be done to change some of these misconceptions?

The days of the debit insurance agent chasing your grandmother to collect the 10 cent premium have long gone. Yet in many ways, this interaction still has a chilling affect on many in the African-American community. At one time, life insurance in the African-American community became known as "burial insurance." African-Americans were allowed only to buy a small policy to bury themselves and this is how it was marketed to them. Yet many times, their Caucasian counterparts, who had the same type of insurance policy, paid less and were offered more coverage. However today underwriters of life insurance are not allowed to know the race of individuals applying for insurance.

Present day in the African-American community, some still have the "burial insurance" mentality towards life insurance. Yet many African-Americans have been upgraded, and have enough insurance to pay off their homes and to bury them. Through careful marketing in the late sixties and early seventies, African-Americans were steered to buying additional life insurance when purchasing a home. It seems creditors wanted to make sure as African-Americans moved into homes, that their investment in the mortgage would be paid off in the event of a premature death. As some African-Americans found new avenues of success in their careers, thanks in part to the civil rights moment, many of these individuals found themselves approached by insurance agents who began to enlighten them on life insurance. The "burial" and "mortgage protection" attitudes life insurance were replaced. Life insurance became the following:

To pay off all debt
Provide income to the spouse and children left behind
To set up a trust to leave money to their church or organization
Pay for children higher education including college, in the event of a death
A way to keep key employees from leaving current employment
A vehicle to buy out children not involved in the family business

Others African-Americans have fallen into I have "life insurance at work trap." At work you have $30,000 of life insurance or two or maybe three times your salary if you are lucky. Let us say you make it to retirement age with your company, and make $60,000 a year at the retirement. Many times you are allowed to convert your group life insurance at attained age, into a whole life or universal life insurance policy. You will not be paying $5 a month for your group insurance at retirement. So if you are a sixty-five year old male, and you want to keep $100,000 worth of coverage by converting your group insurance, you might see a premium of $469 a month. You might think it is not fair, but this is reality. Also sometimes you are allowed to keep one times your salary of insurance at retirement, then it cuts in half by age 68 and levels off at $10,000 at age 70. While others, still have no life insurance from their company's group insurance at retirement, because there is no conversion privilege.

If African-Americans have been buying life insurance for a death benefit or "mortgage protection," how are they being neglected? Unfortunately, some African-Americans' life insurance policies are so similar, that you would think they were lined up in the room to buy it. Purchasing this product should be based on your particular goals, keeping your family obligations in mind. People in the upper echelon of the African-American community, usually are aware of the uses of life insurance, and use them to better the lives of their families and businesses. There however seems to be a lack of financial planning and insurance knowledge transfer, from the elite in the Africans-American communities, to those who have less or not considered to be part of the professional class. Also, unfortunately some insurance agents try to sell products to American-Americans, instead of educating them, so that they can educate others about these subjects.

It is all about education in the African-American community, especially when it comes to life insurance. For many African-Americans, they turn to their ministers for guidance about insurance and financial planning. Hopefully their minister has gotten the message, and are willing to share their knowledge with all of their members. Otherwise we will continue to have a community, where children are orphaned because of the lack of proper life insurance or the spouse has lost the house, because they could not afford the mortgage. You have to be able to look past this year, $30,000 may take care of your daughter for a couple of years but Social Security will pick not pay the cost of raising a child. Some in the African-American community will spend $500 on a car note, but do not you have enough life insurance to feed, clothe, or send your children to college, as well as provide income for their spouse if they die. While some echo, "I do not want to leave my family rich," it is better to leave your family rich than poor.

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