Life Insurance Lowdown

For decades now, the entire life insurance industry, experts, lay persons and just about everyone else in between has been telling us about the need for life insurance and about the various types of life insurance available. What is missing is an educated viewpoint on life insurance needs in various communities. African-Americans are one community that has yet to understanding the need for life insurance.

There was a time long ago when life insurance in the African-American community was 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. And the worst part was the open discrimination — more often than not, their Caucasian counterparts, who had the same type of insurance policy, paid less and were offered more coverage. Thankfully, today underwriters of life insurance are not allowed to know the race of individuals applying for insurance. However, the attitudes towards life insurance haven’t changed much since the days of burial insurance. Financial-shopper-network.com reports:

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 have enough life insurance to feed, clothe, or send your children to college, as well as provide income for their spouse if they die.

Read more: African-Americans and Life Insurance

Most people tend to worry about the type of insurance they should take. Is a term insurance or whole life insurance better in the long run? The simplest route is to take a term insurance. It makes the most sense. There is also no need to splurge on your insurance. You should buy just as much insurance as you need, and only for as long as you need it.

When you take a term insurance policy, you will be paying only the amount required for insurance. You are not charged anything extra as ‘investment’. So, the money you save when you opt for term insurance can be put to better use. You can invest it in long-term investments like stock market index funds, or any other kind of investment. By combining term insurance with investments on your own, you’ll be minimizing your insurance costs and maximizing your investment potential. Another plus for term insurance is that it’s a very competitive segment of the insurance business, with companies open to lowering costs to win customers.