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Wednesday, July 19, 2017

4 Reasons Why Latinos Don't Get Life Insurance

So I'm on day five of our 7 day family vacation that included a two-day stay in Los Osos-Morro Bay CA.  Currently typing this post up at my parent's condo in East San Jose.  It's been a few years since last the Gomez family visited the Bay Area.  It's always cool to see how much things have changed.  What's changed about San Jose?  1) More traffic  2) New shops and businesses replaced those that failed during the Great Recession 3) More new home construction everywhere and 4) Home values are even more unaffordable than ever before.  But I'm not here to talk urban sprawl and real estate bubbles.

View from my retired friend's house where we stayed, Los Osos, CA.


I'm here to talk why Latinos don't purchase life insurance.  You see, being here with my parents has given me time to talk face to face with them about their finances.  My dad is open to sharing how hard it is becoming for him to afford the mortgage.  Helping my two Millennial siblings out with car insurance and the occasional bill is part of his problem.  Also, my younger brother lives at home and isn't putting in his fair share.  Now 64 (dad) and 60 (mom), my parents worry about leaving all of us burdened should they die unexpectedly.  And they should, considering neither of them have life insurance!

Farmer's Market in Baywood.

A study conducted by the nonprofit LIFE Foundation and LIMRA in 2013 concluded that only 54% of "Hispanics" owned a life insurance policy.  In contrast, 76% of African Americans and 62% of whites had policies at the time of the survey.  I really doubt much has changed in 4 years.  So we can probably safely say that Latinos still lag in life insurance policy consumption.  The question is...Why?  I have some researched answers taken from Spanish speaking sites as well as thoughts of my own on this.  This one in particular had a lot of great insight.  It said that "Hispanics"...

(For the record...we don't like the word "Hispanic."  We prefer Latino or the gender neutral term Latinx)

Image result for life insurance

1) They don't "get" life insurance.  In other words, if you were to ask some Latinos to tell you what they know about life insurance, many of them would say, "Que es eso?" with a puzzled face.  Clearly there is an education gap that must be closed if consumption of life insurance products are to happen.  They need people to take them through the basics, from what they are to how they can benefit.

2) Cuanto cuesta?  (How much is it?)  Many Latino families, alike all other American families, prioritize other financial expenses (medical bills, retirement savings, etc.) over life insurance.  When I asked my dad why he never got life insurance, he said, "O pago, o como."  Translation: I either pay or I eat.  He said he couldn't find a policy he could afford.  This is a big misconception among Latinos that know about life insurance.  They believe it's costly when under the right situation, term life insurance policies can be bought for under $50 a month.

3) Trust.  Many Latinos, especially first or second generation, still mistrust anyone associated with the financial system.  Remember what happened to Latinos during the Great Recession?  They got burned in droves and many among them lost their homes.  All because they had very little understanding of how subprime home mortgages worked and they were easy prey for lenders.  An interesting finding from the LIFE survey was that 14% of Hispanics purchased life insurance online versus only 7% of whites and 8% of African Americans.  Could it be because they trust what's in writing more than what someone tells them face to face?

4)  Not enough talk of death.  To this day, my parents haven't told me how they want to be put to rest.  I don't know if they want to be buried here in San Jose or back in Mexico where they were born.  Heck, I don't even know if they want to be buried!  They may want cremation.  My point is that many Baby Boomer Latinos don't talk with their generation X or Millennial children about death in general.  Planning for the unexpected is obviously very important and sure, we Latinos are known to be a happy group (fiesta!!) so talking up a depressing topic may not be our style, but we can leave ourselves in serious financial peril if we don't take care of our business after life.

A term life insurance has many benefits.  If you have a policy and you should die unexpectedly, your beneficiaries can use your money to,

A.  Pay off your mortgage.
B.  Cover your burial or death related costs.
C.  Have an inheritance.
D.  Replace your income.  Your wife and kids won't have to deal with all of the bills without you.  

Latinos, we need to do better!  You can't live in America and not have a life insurance policy.  The risk of death any day is real and not being insured can be financially life threatening to your familia.  We're all about the family and working our butts off in life to make sure our kids have what they need, but we are leaving out accounting for one key event.  Do yourself and your family a huge favor, give them peace of mind, and get life insurance.

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