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Introduction

Previous articles cover the basics and the how-to of insurance in general, but we realised that this one needs a little extra attention for you.

Life insurance remains one of the most powerful tools a family can use to protect their financial future, yet many families are underinsured or worse; not covered at all. For marginalized people who live hand to mouth, insurance is just another bill; for others, insurance companies are not to be trusted, due to past discrimination in financial services. Life insurance, however, is so much more than a policy: a way to build wealth, protect those one loves, and secure their financial futures for generations to come.

In contemporary times, financial technology is making life insurance more affordable and accessible than it has ever been. Digital platforms and services make it uncomplicated for a family to compare policies side by side, apply online, and often get approved in just minutes. That makes this a particularly good time for BIPOC families to reconsider their perspectives on life insurance —  it could be a game-changer in terms of financial well-being.

What is Life Insurance?

Life insurance is a financial safety net that provides a lump sum payment to beneficiaries upon the policyholder’s passing. It serves as a critical tool for protecting loved ones from financial hardship, covering expenses such as funeral costs, outstanding debts, and daily living expenses. More importantly, life insurance plays a key role in building generational wealth, allowing families to secure assets, invest in education, and create long-term financial stability.

Life Insurance Myths and Misconceptions Debunked

Despite all its benefits, there are common myths about life insurance that prevent many people from getting covered. Let us straighten out some of the biggest myths:

“Life insurance is too expensive.”

Most people believe that life insurance costs hundreds of dollars per month, which again is not true. A term life insurance policy, wherein coverage is provided for a stated period of time – usually 10, 20, or 30 years – can cost as low as $20 to $50 per month, contingent on age and health. That is less than what the average gym membership or dining out once a week costs.

“I don’t need it because I’m young and healthy.”

The “right time” to purchase life insurance is while you are young and healthy so that your premiums will be lower. Waiting until later, or until you have a health problem, will cost you much, much more-or, worse, you may not qualify at all.

“I don’t trust insurance companies.”

It is a fact that African Americans have had to endure a number of atrocities regarding financial services, including some very unfair insurance practices in the past. Today, however, fintech and new digital insurance companies are democratizing the industry and making everything more transparent. It is way easier than before to compare policies online and to find trustworthy companies offering affordable and unbiased coverage.

Why Life Insurance Matters

African American history is a long tale of families working hard at building a good life for their children. In an instant, tragedy strikes, leaving behind struggles and challenges in bill payments and maintenance of crucial assets such as a place to live. Life insurance protection ensures that should a breadwinner die, loved ones can pay bills, maintain a home, and even plan for future educational pursuits.

But beyond covering expenses, life insurance is a powerful tool to build wealth. The racial gap in wealth in America remains large, with Black households holding a fraction of the wealth of white families. Life insurance helps to close that gap by providing a lump sum of money to future generations that one can use to invest, start a business, or buy a home-things that create long-term financial stability.

How Life Insurance Helps Build Generational Wealth

One of the major financial difficulties African American families face is intergenerational family wealth. A lot of White families inherit their homes, businesses, and other investments, though many Black families start over anew with each subsequent generation. The financial cushion allowed by life insurance can change that pattern by securing money for descendants. Here’s how:

• Pays Off Debts: Life insurance in this case can help pay debts such as student loans, credit cards, or a mortgage when a family member dies, sparing the next generation from having to bear that responsibility.

• Covers Funeral Expenses: Funerals can be very costly, often coming in at more than $10,000. A life insurance policy ensures loved ones do not have to struggle to pay these costs.

• Provides investment capital: Money received from a life insurance claim can be invested in the education of a child, the opening of a business, or the purchase of property-all means of long-term wealth creation.

• Keeps the Family Home: Without life insurance, families sometimes have to sell their homes when a breadwinner dies. A policy can help cover mortgage payments and property taxes, allowing families to keep their homes and pass them down to future generations.

Investing in your family’s future

Life insurance isn’t just about preparing for the worst-it’s about building a solid financial foundation for your family’s future. And with fintech making affordable coverage easier to get than ever, there’s simply no reason to wait. By purchasing life insurance coverage today, black families are able to protect their loved ones from financial burdens and even build wealth for future generations. A well-placed policy can make all the difference in assuring the next generation not just survives but thrives.

Life insurance is a powerful tool for building generational wealth, but it’s just one piece of a solid financial strategy. Explore more expert insights on saving, investing, and wealth-building on Money 101.

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