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May 12, 2015 at 11:33 AM
The Great Recession was felt by all Americans. However, a recent study shows the downturn impacted African-Americans far more than the general population. Unfortunately, those who financially helped or supported family members faced greater economic hardship than those who did not. This reality sheds some light on the importance that African-Americans place on providing for and protecting their loved ones, despite the potential burden that those choices may have on their own financial situation.
This commitment to family could help explain why the African-American population is more likely to value and purchase life insurance than any other group. According to a study from the Voya Retirement Research Institute, 85 percent of African-Americans have and know about life insurance, a percentage that is higher than their Hispanic, Asian and white (non-Hispanic) counterparts.
The African-American population will total 74.5 million by the year 2060, making up nearly 18 percent of the U.S., according to 2012 data from the U.S. Census Bureau. This steady, continued growth presents a strong opportunity for the life insurance industry, given that both insured and uninsured African-Americans are more likely than the general population to express a desire to buy life insurance in the near future. And while African-Americans at all income levels are more likely to own individual life products, they often do not own adequate coverage and may be receptive to a review of their current policies.
Even if African-Americans, as a group, don’t need to be persuaded that life insurance is a priority, they can still benefit from the advice of financial professionals who take a holistic approach to retirement planning. Providing a broader view of their financial picture can help individual clients better understand the choices they are making, and how those choices could undermine their long-term financial security.
An industry survey shows that saving for an emergency, reducing credit card debt and developing budgets are considerably more important for African-Americans. Compared to the general population, middle-market African-Americans are more concerned about paying off student debt and about carrying debt into retirement.3 In Voya’s multicultural study, this group ranked “reducing debt” as their most important short-term financial goal — and for good reason.
