Life Insurance for Hispanics – Why do so Many Hispanics Lack Life Insurance?

According to a recent study (2010) carried out by the Prudential Insurance Company of America (http://research.prudential.com/documents/rp/RP_The_Life_Insurance_Coverage_Gap.pdf), less than 60% of North Americans possess life insurance, which is the lowest percentage since the 1960’s. 54% of Hispanics (residing in the U.S.) have life insurance, whilst 62% of whites and 76% blacks have invested in life insurance.

Typical Life Insurance Amounts For Hispanics:

$20,000 $30,000 $40,000
$50,000 $75,000 $100,000
$250,000 $200,000 $300,000
$400,000 $500,000 Other Amount

 

The Tomas Rivera Institute conducted studies on the lowly sate of Hispanics owning insurance, and one of the participants – a 21 year old – explained it such, “When money is tight and you have other things going on, insurance is hardly your top priority.” The question should be asked then, how important is life insurance to Hispanic people residing in the U.S.?

  1. Some people do not require life insurance. If you are young and do not have children (or parents) to support, then there’s no real need for life insurance. This is even more the case if you do not have debts and you have enough money to cover your own funeral.
  2. How much are you worth? Imagine a family of five reliant on a single breadwinner in the household. The household income is $50,000 per year. Should the sole breadwinner pass away at the age of only 40, then over the next 30 year period, the loss to the household amounts to $1.5 million US dollars.
  3. Families – it goes further still. It’s been established that if you have a family that depend upon you and you are the main breadwinner then you need life insurance. However, this does not just go for the spouse or partner who works a daily job. It also applies to the person who stays at home to bring up the kids and take care of all the other household chores and more besides. The cost to replace someone who will carry out household chores, take care of home budgeting, manage the childcare issues every day and night, etc. will be significant.
  4. Living together but no children? In this instance, should both people living together feel that they are comfortable on a single income should the other pass away, then there is no real requirement for life insurance, other than perhaps to cover the cost of the funeral. However, maybe one of the partners living together brings in significantly more income than the other, or perhaps the decision is made that should one partner pass away the other should be better off financially than living on the single income. In which case, a life insurance policy is possibly a necessity.
  5. How much will your job pay you? Many people in full time employment make the assumption that they are already covered by a life insurance policy which is a part of the over-all benefits package. Nevertheless, even though many companies will and do provide some coverage, the payout will only equate to between $10,000 and $25,000. That’s enough to cover funeral expenses but not a whole lot more besides. What about death taxes? What about the lost income? And what about any outstanding debts and any other costs which may be unexpected? Who’s going to cover those costs?


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