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Black Americans buying life insurance at higher rates than other groups

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Posted at 3:43 PM, Jul 28, 2021
and last updated 2021-07-28 15:49:56-04

The number of people buying life insurance in the first part of this year is the highest it has been in nearly 40 years.

LIMRA, a research organization for insurance companies, tells us these increased sales could be what happens for the next few years.

After the Spanish flu pandemic, LIMRA says life insurance sales went up pretty steadily for about four years. The company's CEO thinks we could see that trend now as well.

Right now, Black Americans are seeking out life insurance at higher rates than other racial groups.

A recent study from LIMRA found 56% of Black Americans own life insurance now. That's up 3% from 2020 and 4% higher than the rest of the population.

The study found Black Americans report a higher level of financial concern and COVID-19 made these concerns worse.

“When we look at things like, you know, the mortality rate when we think about things like the infection rate, it was just disproportionately high in the Black community in this country,” said Dave Levenson, CEO of LIMRA.

Nearly 60% of Black Americans in the study say they plan to buy life insurance in the next year. That's compared to 36% of the rest of the population.

But Black Americans are also more likely to overestimate the cost.

“If you took a 30-year-old, a healthy 30-year-old, and they purchased a $250,000 term policy, that might cost anywhere from $150 to $200 a year. But people overestimate that cost and, you know, people are saying that, you know, if I have to guess, it would be five times what it truly is,” said Levenson.

The main reason Black Americans think insurance is needed is only to cover funeral costs. Levenson says that perception could mean they don't end up buying enough coverage for income replacement to help after a loved one dies.