When America talks about race and money, life insurance doesn't get as much attention as topics like wages or mortgages. But there are disparities in the way the insurance industry has served Black Americans too. Atlanta life insurance agent Ebony Ruffin, whose agency specializes in helping Black families build wealth, has seen these first hand.
“Black families are definitely buying life insurance now,” she says, as the Black middle class expands and the industry has gradually begun paying attention to them. But, she adds, the community remains “underinsured as a whole.”
Data bears out Ruffin’s observations. For example, Black respondents to a 2020 survey by Haven Life were actually a little more likely than whites to have life insurance coverage -- with 8 in 10 Black consumers saying they had it, compared with 7 in 10 white families.
But Black survey respondents carried a lot less coverage. Where the average death benefit for whites who had insurance was $150,000, Black consumers carried only $50,000 -- a third as much. Income disparities don't fully explain the gap either. Black respondents in the survey made $50,100 a year on average, only about $5,000 less than whites surveyed.
We spoke to Ruffin, founder of Ruffin Consulting Services, to hear what she thinks about how the life insurance industry is serving Black families.
Here's our conversation, edited for length and flow.
Q: Looking back historically, in what ways do you think Black customers were traditionally served, or perhaps ill-served, with life insurance?
Well, there was of course redlining when it came to how mortgages and bank loans were extended, or not extended, to Black customers. And I don't think the life insurance industry entirely escaped that legacy, of not serving Black families fully enough.
Insurance was sold to the community, the focus was on burial coverage. Term life was sold, but permanent life [like whole life and universal life] was never really mentioned. Burial insurance was the main product. When the insurance man visited my grandmother, for example, the conversation was, you know, "Mrs. Ruffin, we want to make sure you have enough money to bury your brother, we know you love him so much, and you want to make sure that you have enough in life insurance to bury him."
So while burial coverage was perhaps all that some families could afford, the emphasis on it may not always have served customers who could afford more coverage, to replace lost income and so on.
Q: What do you see as driving the healthy levels of acquisition now -- at least in terms of families having some kind of policy?
I think it starts with growing affluence compared with past generations. More people in the Black community are owning their own businesses, going to college, getting a good education, and with that has come higher levels of wealth -- and a desire to preserve that, and to pass it along to their children and grandchildren.
That concern with passing along wealth is increasingly important to the community as more things about our history are being uncovered and better disclosed. Events like the destruction of “Black Wall Street” underline that there have been a lot of barriers and threats to Black people keeping what they have. That’s made it a higher priority for people to do what they can now to lessen future pain, to create generational wealth so that the next generation actually has something to work with, rather than having to start again from the beginning.
Q: So people have policies but maybe not ones that provide sufficient protection. Why does the amount of coverage for Black policyholders so often fall short? And how do you address that with your clients?
Black families are still underinsured, and to me the root cause of that is not affordability, in the sense of not having enough for the premiums. Instead, I think it’s more of a mindset, perhaps based on the low amounts that their parents or grandparents may have taken out.
When people see what it costs to have a benefit of, say, five to seven times their annual income, as is often recommended, there can be a tendency to say: How can we tailor that cost back a little bit?
That resistance sometimes means selling the client a certain amount now, but coming back to them in a year to ask: Did you receive a raise through your job, how is revenue through your business? Are you able to increase your premium by $25 to $30 to get the coverage level you really need?
Q: On the whole, across all demographics, women are less likely to have life insurance than men. Do you notice a gender gap in coverage within the Black community?
I do, but it isn’t necessarily that particular gap. For a lot of the clients I work with, the women are leading the narrative of life insurance in their household. The men don't always find it a priority. Which is a real concern, of course, given the history of health for black men in our community. [Life expectancy in 2020 for Black males in the U.S. was nearly seven years less than the overall norm -- 68.3 years, compared with 75.1 years for the male population as a whole, according to the Centers for Disease Control and Prevention.]
We also have to acknowledge the fact that the woman in the household will more than likely outlive the man, and the cost of insurance for men is much higher. And premiums get higher, of course, the longer you wait to get insurance. So by the time a Black male gets to his late 40s or early 50s, and is considering life insurance, he will experience sticker shock, especially if he looks to get a permanent life policy.
Q: What could or should the insurance industry be doing to better serve its customers of color? .
I think the same things it needs to do better for all of its customers. The industry doesn't do as good a job as they should with any community in educating customers about their products and why they're needed. That’s why I decided to do an educational video series.
Also, I think the financial products industry as a whole could be smarter about finding ways to sell solutions that combine products. For example, I’ve decided to be certified to offer investment advice so that I can recommend, say, a solution of buying both a life insurance policy and an IRA, and have greater capability to make sure the solutions all come together.