Despite being more likely to have life insurance, Black individuals are far more underinsured than whites

NEW YORK, Sept. 24, 2020 /PRNewswire/ -- Important research today from Haven Life reveals that Black individuals are far more underinsured than white individuals. Haven Life, a customer-centric life insurance agency backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual), conducted this national survey during Life Insurance Awareness Month to better understand how Black and white individuals view life insurance, and what (if any) impact that might have on the racial wealth gap.

The key insight from the survey shows that while Black respondents are more likely to have life insurance, their coverage amounts are strikingly lower than what is recommended to adequately protect their families' financial futures. Eighty-one percent of Black respondents indicate they have life insurance, either through work or individually, compared to 70 percent of white respondents. Median incomes for the Black and white survey respondents are similar: Black respondents earn $50,162 and white respondents earn $54,823. Yet when asked about their existing life insurance coverage amounts, white individuals state they have a median coverage amount of $150,000, while Black individuals report having $50,000 in coverage.

The life insurance industry suggests that adequate life insurance coverage should be 5 to 10 times the amount of a person's income. Based on this calculation, both Black and white survey respondents do not buy enough life insurance coverage, but Black respondents are substantially more underinsured.

Additional findings from the survey include:

• Black and white respondents similarly think their death would financially impact their loved ones. Sixty-two percent of Black respondents believe their death would have a "substantial" impact on their family's financial futures compared to 61 percent for white respondents.
• Black respondents are more likely to view life insurance as a key component to build generational wealth. When asked about the reasons why life insurance is needed, "building generational wealth" is nearly three times more important for Black respondents (22 percent) than white respondents (8 percent).
• White respondents are more likely to buy life insurance to protect their families from unpaid debts, such as a mortgage. Sixty-four percent of white respondents believe paying off debts is the primary reason for buying life insurance, versus 37 percent for Black respondents. Of note, the Urban Institute recently reported that 71.9 percent of white Americans own homes, compared to just 41.8 percent of Black Americans.
• Black respondents substantially overestimate the cost of life insurance. Of respondents who do not have life insurance, Black respondents believe the average cost is 30 percent higher ($65 per month) than white respondents ($50 per month). Even with the perceived higher cost, though, 41 percent of Black respondents said they "plan to buy life insurance" versus 19 percent of white respondents. For reference, a healthy 34-year-old woman can buy a 20-year, $250,000 term life insurance policy for as little as $16 per month.

Overall, the survey results show that there are key differences in how Black and white respondents view life insurance. Black individuals appear to value the idea of life insurance more than white individuals and consider coverage to be an important component for building generational wealth. However, Black individuals do not purchase nearly as much coverage and are subsequently more underinsured.

Read the full Life Insurance and Race report.

Survey methodology: Haven Life conducted a quantitative survey between August 17 ? 26, 2020 and collected N=653 completed responses. Respondents were required to be between 18-60 years old and identify as either Black only (N=264) or white only (N=389). The median respondent's age was 34. 

About Haven Life
Haven Life Insurance Agency, LLC is a life insurance startup, backed and wholly owned by MassMutual, that offers a simple online experience for buying high-quality and affordable coverage. Driven by a mission to make life less hard, we're committed to changing life insurance so that it's less time-consuming and far more rewarding.

SOURCE Haven Life