Why African-Americans are so loyal to life insurance
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Bonnie Caver sits in her East Liberty home. Caver lost her husband 15 years after they were married in 1967, but they had taken out a life insurance policy that was valuable enough to take care of her for the rest of her life.
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When Bonnie Caver and her husband Jon married in 1967, one of the first things they did was buy life insurance policies, mainly because it was something they were taught from early on by their families to always have.
They had no idea how important their decision would be. Fifteen years later, Jon became seriously ill and then died of leukemia at age 46.
"My husband bought an insurance policy and created an estate before he had any idea he was sick," said Ms. Caver, 67, of East Liberty. "Because of that decision, I never had to work again."
The number of people in this country who own individual life insurance policies is at the lowest point in 50 years. But African-Americans continue to embrace life insurance more than people of other races and ethnicities.
A study recently released by two leading insurance industry associations, Limra, and the nonprofit Life Foundation, found African-Americans more likely to own life insurance (76 percent) than whites (62 percent) and Hispanics (54 percent).
"Our data shows in spite of the wealth gap -- and maybe because of it -- African-Americans have a much more positive view of life insurance than whites do," said Robert Kerzner, president and CEO of Limra, based in Windsor, Conn.
Researchers found the main reasons African-Americans remained so loyal to life insurance stem from a deep desire to avoid burdening others with burial expenses, as well as the fact that often life insurance is the only means of leaving an inheritance to their loved ones.
For all the benefits African-Americans have gained from owning life insurance, their historical relationship with the life insurance industry has been a complicated one.
In the early part of the 20th century, black families bought policies known as "burial insurance," which was sold door-to-door by primarily white insurance men. The black families were allowed to purchase policies to cover only the costs of burial, while white families could pay lower premiums and receive more life insurance coverage, according to lawsuits.
Insurance underwriters saw blacks as higher risk policyholders -- more prone to violence, less likely to hold steady jobs, more likely to have lots of children and a shorter life span. Sometimes the premiums charged were so high, they exceeded the death benefit if the policy were kept to its full term.
First Published August 14, 2011 12:00 am
