According to a 2021 study, 75% of Black Americans believed they should have life insurance, yet only about 56% of them have a life insurance policy. Some people feel that life insurance is merely a means to pay for burial expenses, but this is not the case. Life insurance is an affordable way to provide financial security to your loved ones after you die. In this article, we will explore several reasons why all Black people should have life insurance.
Relieves your family of the financial burden of funeral costs
When my mother passed away years ago, my siblings and I had to band together to pay for her funeral costs. The casket was the most expensive item, however, other costs added up quickly. According to the National Funeral Directors Association, the average cost of a funeral in 2021 was $7,848. The chart below outlines some of the typical costs for a burial.
A life insurance policy ensures that your funeral expenses do not pose a financial burden on those you leave behind. A policy of at least $10,000 would help offset typical funeral costs and is fairly inexpensive.
Serves as an income replacement
The loss of a main source of income can be devastating for any family, but even moreso for one that is struggling to make ends meet. Therefore, it is especially important for those who are heads of households to have a life insurance policy in place. Life insurance can help your family maintain or even exceed their standard of living once you are gone.
Most people chose a spouse or other close adult as their beneficiary. However, if you have young children or concerns about your family’s financial responsibility, consider setting up a Trust as your beneficary instead of an individual.
Can help pay off family debt
Many people may feel that once they die their debts no longer need to be repay. However, this is not always the case. Creditors can go after an individual’s estate to collect on unpaid debts. Additionally, in some states the surviving spouse is responsible for paying off debts of the deceased. Therefore, a life insurance policy is essential for anyone carrying debt. Insurance proceeds can be used to settle car loans, mortgages, and other obligations. This frees your family from the burden of monthly payments, while ensuring that they still own the asset.
Provides wealth for your children or family
Many black families face financial challenges due to poverty, unemployment, or health concerns. A life insurance policy can be used to reverse your family’s financial situation once you are gone. Life insurance proceeds can provide your family with a nest egg for future needs, money to start a business or attend college
Where can you get life insurance?
Through your employer
The best place to obtain life insurance is through your current employer. Most employers offer some form of life insurance, even if they don’t pay part of the premium. Some companies may even offer cash incentives when you sign up for an insurance product and perform a wellness check each year. This cash can offset the cost of your premiums, which would make them even more affordable. Employer provided life insurance is generally very inexpensive.
The great thing about obtaining life insurance through your employer, is that you can generally take the coverage with you and keep the same rate if you leave.
Through your car insurance provider
Most major insurance providers offer life insurance or partner with a life insurance company to provide the product to their customers. If you cannot obtain life insurance through your employer, you should check with your regular insurance provider. You may even be able to receive a discount for being an existing customer.
Through a life insurance company
Below is a list of a few major life insurance companies that provide life insurance in the United States.
How much does life insurance cost?
The cost of life insurance generally depends on your age, health, and amount of the policy. Employer provided life insurance policies are usually very inexpensive. Depending on your age, you can get life insurance for yourself for a few dollars per pay period.
Some policies even allow you to lock in your rate. If you purchase a policy at a young age and keep it, your rate will not go up as you age or your health declines.
Larger policies (generally over $250K), may require you to complete an Evidence of Insurability form to answer questions about your health. These policies carry a higher premium, but are worth it if you own a home.
Life insurance for your children is even cheaper. Small policies (between $5,000 – $15,000) are usually less than $1.00 per pay period.
Why you should have life insurance
Death is an inevitable part of life, so it is important to plan for the financial impact it may have on those left behind. A life insurance policy can be the difference between helping or hurting your family financially once you are gone. As discuseed in this article, life insurance provides a wide range of benefits. I hope that learning about life insurance and its importance will help you take steps to safeguard your family in the event of your death.
