While many factors in the financial landscape may be in flux from day to day, one long-term trend is certain: America’s multicultural population is growing rapidly, presenting life insurance producers with an historic business opportunity. According to the U.S. Census Bureau, by 2050, non-Hispanic whites will no longer be the nation’s majority population. Between now and then, Hispanic and Asian populations are expected to double, and the African-American population is expected to remain stable.
Despite this opportunity, however, many life insurance producers are cautious. They understand the need to take action to ensure the future of their business. But they’re not clear on what steps to take and how to avoid making errors that may alienate the very multicultural prospects they’re trying to attract.
Fortunately, a recent study is shedding light on some of the issues insurance producers must understand to effectively market to multicultural groups. The study, commissioned by the ING Retirement Research Institute, looked at the behaviors, attitudes and preparedness of various ethnic groups — including African-Americans, Asians and Hispanics — regarding their financial security and future retirement. The study confirmed that Americans, regardless of background or cultural heritage, aren’t planning enough for their financial security and retirement, aren’t saving enough, and are not always getting the professional advice that could help them get on track.
Despite these common challenges, however, the study also uncovered key differences between ethnic groups that may help life producers adopt more nuanced approaches in their marketing efforts. Here are some highlights from the ING study:
Life insurance: Nearly 1 in 4 African-Americans (23%) responding to the survey have life insurance coverage equal to four or five times their salary. That’s higher than coverage among the total population (18%). The majority of respondents have life insurance — 90% or more for all groups, except Asians. Roughly 1 in 10 has life insurance but is unsure of the amount.
Estate planning: Nearly all respondents plan to leave their heirs an inheritance of some kind, typically personal belongings, real estate or a house or assets, savings or investments. About 70% of African-Americans plan to leave life insurance proceeds, compared to 51% for whites, 55% for Hispanics and 44% for Asians. This is consistent with the higher-than-average coverage levels purchased by African-Americans in the study. Asians were the least likely to have a last will and testament (26%), compared with 31% for Hispanics and 37% for white respondents.
Retirement preparedness: Across the board, respondents expressed that they do not have a good handle on their retirement preparation. Hispanics responding to the survey feel the least prepared for retirement, with 54% indicating they feel “not very” or “not at all” prepared. This compares with the 50% of African-Americans, 48% of whites and 44% of Asian respondents who indicated they don’t feel prepared. These feelings correspond with the amount saved in employer-sponsored retirement plans, where Hispanic respondents reported having the lowest average balances ($54,000) in their retirement plans.
Financial information: The study found non-whites were more likely than whites to use the Internet and media to gather investment information and guidance. African-Americans (54%), Asians (53%) and Hispanics (50%) pointed to the media and Internet as primary sources for financial information and guidance. Just 45% of white respondents showed that same preference. By contrast, 31% of whites reported that they were working with a financial professional currently, which was more than Hispanics (19%), African Americans (20%), or Asians (22%).