It’s no secret that there is a wealth gap between African-Americans and Caucasians in America. In fact, the net worth of the average Caucasian family is about 10 times greater than the net worth of the average African American family. And the gap exists in all aspects of people’s financial lives, including when it comes to the amount of life insurance that each group has. This disparity is just as concerning as any other aspect of the racial wealth gap, because life insurance is a necessary and affordable way to protect the people who depend on you. After all, death doesn’t discriminate.
Is There Racial Disparity in Life Insurance Coverage?
Surprisingly, African Americans are more likely to have life insurance than Caucasians, but studies show that, on average, they only have a third of the coverage that their Caucasian counterparts have. One study conducted by industry group LIMRA shows that almost half (46%) of African American adults say they need more life insurance, compared with just 38% of Hispanics and 29% of Caucasians who say the same.
What’s Causing the Life Insurance Coverage Gap?
The life insurance coverage gap has a long history: after the Civil War, life insurance companies began classifying African-Americans who were former slaves as higher mortality risks, meaning they were charged more or were denied coverage altogether. This practice of classifying African Americans as high-risk continued until the 1960s, and was a part of years of discriminatory policies that reduced African Americans’ access to medical care, housing, education, and, yes, even life insurance. 
Fortunately today, thanks to the Civil Rights Act of 1964, it is illegal to discriminate based on race when evaluating a life insurance application. The Civil Rights Act also put an end to any discriminatory practices that increased premiums for African American holders of life insurance policies.
Still today, though, African Americans are less likely to see life insurance as a way to protect their families’ financial futures, and more likely to see it as a way to deal with the cost of their mortality:
- African American adults (31%) are more likely to associate life insurance with paying for burial costs than White (19%) and Hispanic adults (24%)
- African Americans (29%) are also less likely than Caucasians (37%) to cite income replacement as a reason to buy life insurance.
Closing The Gap
The fact of the matter is most people, no matter their race, overestimate the cost of life insurance, and think that a policy is something they can’t fit into their budget. But that is simply not the case: there are many different policies to choose from that can start as low as $15 a month!
It is important that life insurance companies make it clear that policies are accessible for everyone, and that there are multiple types of policies to choose from, so anyone can find an affordable policy that provides the coverage their family needs.
The best way to find the best policy for you is by working with a licensed agent from a top-rated insurance company. They can help you find a policy with affordable rates, and give you ideas on how to cut down on costs. We have listed some companies to work with that will be able to find you the most coverage for less. Always check multiple sites to make sure you have bargaining power and to know the advantages of each company. Make sure a hard time for your loved ones isn’t made harder by a financial burden, check life insurance rates today.
