Are You Covered?

I have always been skeptical of life insurance.  When I think about the amount of money our grandparents would pay to the insurance man weekly, it would make me angry.  I would think about how the insurance companies would take advantage of the old and poorly educated.  It would make me angry to think about how our grandparents would scrape up their nickels and dimes to pay for 30 or more years on a death benefit of anywhere between 1 and 5 thousand dollars.  I would get angry thinking of how they would pay for these policies as if they were savings accounts they would never see the benefit for.  The insurance industry has been around for hundreds of years in the United States and is a sustainable business model.  The question is why are African American’s so loyal to life insurance?

The number of Americans who own individual life insurance policies is at the lowest point in 50 years.  Limera and the nonprofit Life Foundation conducted a study and found African Americans are more likely to own a life insurance policy than whites and Hispanics.  One of the main reasons for this is the deep desire to avoid burdening others with burial expenses and it will leave an inheritance to their loved ones.  Many times, the money left can be life changing for a family.

So what type of insurance is right for you and your family?  That all depends.  There are three basic types of insurance.  Term which is a temporary type of insurance.  It is cheaper than the others and is good for a set period.  Term insurance typically last no longer than 20 years.  Next are whole life policies. They usually last to age 100.  They are usually flat rate policies where the owner pays the same rate every year.  Finally, there is the flexible premium or universal life policies.  The cost of insurance increases yearly so the premiums should increase too.  There are many different options available with these policies.  You can borrow and do a partial surrender on these policies as needed.   Please be sure you understand how these policies work before you purchase one.  Many times, there are surrender charges and other fees if or when you choose to take advantage of these options.

We must change the way we see these policies.   Employer paid policies are good and we should take advantage of them.  However, they will not make the needed impact on our families that we desire.  For years, our community has looked at these policies to pay for a funeral and burial.  Let’s now look and focus on using life insurance as a wealth building tool.  Insurance can be used to create an estate for our children and grandchildren once we die.  Which policy is right for you?  Please consult someone trusted in the insurance industry.

If you have questions on how to do better and capitalize on insurance options, please feel free to contact me or you can follow me on Twitter @tcsheff.  #Resist #Wordsactionchange

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