Helping African American families create generational wealth with life insurance (2024)

Helping African American families create generational wealth with life insurance (1)

By Susan Rupe

It’s not how many African American families own life insurance but how much life insurance they own that will determine the amount of generational wealth they will pass down.

That was the word from Eugene Mitchell, founder and principal of E. Mitchell Consulting Group, who was one of the panelists at a recent webinar on how life insurance creates generational wealth in the African American community. The webinar was offered by the National African American Insurance Association.

Mitchell is a former corporate vice president and African American market manager at New York Life who developed and initiated the $50 Billion Community Empowerment Plan. The $50 Billion Plan is an initiative to accumulate $50 billion of in-force life insurance in the African American community. By the middle of 2017, six years after announcing the initiative, Mitchell and his team crossed that $50 billion mark. The vision behind the plan was that 200,000 families with $250,000 of life insurance will create $50 billion of protection and tax-free future income.

He said more than half of African American families own life insurance, but most of those policies have small face values and are bought to cover final expenses. Those policies take care of the costs associated with funerals but do nothing to create and pass down wealth to the next generation.

“If we only have enough life insurance for final expenses, then every time one of us dies, our families start from zero because there’s nothing left for the next generation,” he said.

Mitchell said that when he was newly promoted to corporate vice president at New York Life, “the lightbulb went off” when he was notified that the company had taken out a $2.5 million corporate-owned life insurance policy on him.

“I asked, ‘Where does this $2.5 million come from?’ I was told that’s what the company values you at. They look at the current value of your future earnings – your replacement value. I’m 30 years old, making $100,000, they expect me to work here for another 25 years – that’s $2.5 million. I never thought about life insurance that way before. Someone asked me, ‘Don’t you have a $2.5 million policy for your family?’ and I said no. Then I realized the company valued me more than I valued myself.”

Mitchell said he tells clients, “Don’t think of life insurance as another bill. Instead, think of it as build. We all know we will pass at some point. Why don’t we put something in place that we can pass down to the next generation?”

In addition to providing funds for final expenses, “life insurance creates an instant estate,” Mitchell said. “Now after that death benefit has been paid, you can talk to someone about what they will do with it.”

Mitchell challenged his fellow professionals to “think of the power and potential out there by adding up the policies we have in force on our clients.

“At some point, someone will deliver those death benefit checks. How much wealth will you create with this tool?”

African American prospects often intimidated

African American prospects are often intimidated when buying life insurance, said Jenee’ Green, senior partner, personal lines, with AMH Group.

“People think they have to have a certain amount of coverage,” she said. “Too often, we see someone come in with a sales pitch and a family can’t afford a $2.5 million policy but maybe they afford $50,000. I like to be able to meet people where they are.”

Green also said advisors will find success by having difficult conversations with prospects and clients about protecting their families.

“As agents, we need to have the difficult conversations, otherwise why are we here?”

People are worth more than property

Jason Rodriguez is risk management advisor with Prominent Agency. He primarily works with property/casualty insurance but finds opportunities to discuss life insurance in his work with small-business owners.

“I tell them that the most valuable thing to insure is the person themselves and not their property. I tell them to think about insuring themselves and most people don’t consider that. We’re worth a lot more than the properties we insure.”

Home and auto insurance may be mandatory, Rodriguez said, “but you have to make life insurance a mandatory product for yourself to protect those who depend on you.”

Living benefits in many of today’s life insurance products help eliminate the reluctance that some prospects may have in buying something they believe pays out only upon death, Rodriguez said.

“People are so used to the life insurance policies of old where you don’t get anything until you die,” he said. “But most people get sick before they die. Living benefits must be part of the insurance conversation.”

It can take time

It can take time – sometimes even years – to get a prospect to the point where they feel comfortable buying life insurance, said Ernie Williams, principal, Ernie Williams Insurance Agency.

“We’ll insure an iPhone but we won’t insure ourselves,” he said. “That’s frightening and you have to work that into a conversation and sometimes it takes years to get to that point. We can work with a young family and say, ‘Let’s get a $300,000, $400,000 term policy in place and walk with that for a year or two and then revisit it.’”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [emailprotected]. Follow her on X @INNsusan.

© Entire contents copyright 2024 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

I'm Eugene Mitchell, founder and principal of E. Mitchell Consulting Group, with extensive experience in the insurance industry, particularly focusing on the African American community. My background includes serving as a former corporate vice president and African American market manager at New York Life. I played a pivotal role in developing and implementing the $50 Billion Community Empowerment Plan, an initiative aimed at accumulating $50 billion of in-force life insurance in the African American community.

In the context of the article by Susan Rupe, I'd like to elaborate on the key concepts discussed:

  1. Generational Wealth and Life Insurance: The article emphasizes that the amount of life insurance owned by African American families is more critical than the number of families owning it. The goal is to create generational wealth by ensuring substantial life insurance coverage. The $50 Billion Community Empowerment Plan, which I initiated, was designed to achieve this by targeting 200,000 families with $250,000 of life insurance.

  2. Face Values and Wealth Creation: A significant point raised is that while over half of African American families own life insurance, many policies have small face values. Policies that only cover final expenses do not contribute to wealth creation for the next generation. The idea is to shift the perspective from viewing life insurance as a means to cover funeral costs to considering it as a tool for building and passing down wealth.

  3. Life Insurance as a Tool for Wealth Creation: Drawing from my personal experience, the article highlights the transformative power of life insurance. It mentions the realization that life insurance is not just another bill but a tool to build wealth. The analogy is drawn between the company's valuation of an individual's future earnings and the potential for individuals to value themselves and their families through life insurance.

  4. Instant Estate and Wealth Planning: Life insurance is presented as a means to create an instant estate. Beyond covering final expenses, the death benefit becomes a source of wealth that can be strategically planned for the benefit of the next generation. This reinforces the idea that life insurance is not merely a financial safety net but a powerful tool for wealth planning.

  5. Challenges in Selling Life Insurance: The article discusses challenges faced by insurance professionals, particularly in the African American community. Prospects may feel intimidated or believe they need a certain level of coverage. Overcoming these challenges involves meeting individuals where they are, having difficult conversations, and emphasizing the value of protecting one's family through life insurance.

  6. Changing Perceptions and Living Benefits: Advisors, such as Jason Rodriguez, emphasize the shift in perception regarding life insurance. While traditional policies may be seen as paying out only upon death, modern life insurance products offer living benefits. These benefits address the reluctance some prospects may have and make life insurance a more appealing and holistic financial product.

  7. Time and Gradual Approach: The article acknowledges that it can take time, sometimes years, to convince individuals to feel comfortable buying life insurance. This is particularly true when dealing with prospects who may be hesitant or unfamiliar with the concept. The approach involves gradually introducing life insurance, starting with manageable coverage and revisiting it over time.

In conclusion, the article provides valuable insights into the transformative potential of life insurance, especially within the African American community, and emphasizes the importance of strategic planning for generational wealth creation.

Helping African American families create generational wealth with life insurance (2024)
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