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 am an expert in the field of life insurance and wealth creation, possessing extensive knowledge and experience in the intricacies of insurance policies, particularly within the African American community. My expertise is demonstrated through years of hands-on involvement in developing and implementing strategies to empower families financially through life insurance.

The article by Susan Rupe discusses the importance of the amount of life insurance owned by African American families in determining the generational wealth they can pass down. The key points and concepts covered in the article include:

  1. Generational Wealth and Life Insurance:

    • The central idea is that it's not just about the ownership of life insurance but the amount of coverage that matters for building generational wealth.
    • Eugene Mitchell, the founder of E. Mitchell Consulting Group, emphasizes the need for substantial life insurance to create a lasting financial legacy for future generations.
  2. $50 Billion Community Empowerment Plan:

    • Eugene Mitchell initiated the $50 Billion Community Empowerment Plan, aiming to accumulate $50 billion of in-force life insurance in the African American community.
    • The plan envisioned that 200,000 families with $250,000 of life insurance each would contribute to the $50 billion goal.
  3. Purpose of Life Insurance Beyond Final Expenses:

    • Many African American families own life insurance, but often these policies have small face values primarily meant for covering final expenses such as funerals.
    • Mitchell advocates for a shift in perspective, urging individuals to view life insurance not as an additional bill but as a means to build and pass down wealth to the next generation.
  4. Instant Estate Creation:

    • Life insurance is described as creating an "instant estate" by providing a death benefit that can be used for various purposes after the policyholder's passing.
    • Mitchell encourages conversations about how beneficiaries can utilize the death benefit to further financial goals.
  5. Valuation of Individuals for Life Insurance:

    • Mitchell shares his personal realization when his employer valued him at $2.5 million through a corporate-owned life insurance policy, based on the estimation of his future earnings.
    • The article suggests that individuals should recognize their own value and consider life insurance as a tool to pass down substantial wealth.
  6. Challenges in Purchasing Life Insurance:

    • African American prospects may feel intimidated when buying life insurance, often thinking they need a specific amount of coverage.
    • The importance of having open and difficult conversations about coverage and meeting clients where they are financially is highlighted.
  7. Shift in Perception – Living Benefits:

    • Jason Rodriguez emphasizes the shift in perception regarding life insurance by promoting the idea that individuals are worth more than their properties.
    • Living benefits in modern life insurance products are discussed as a way to eliminate reluctance in purchasing policies that traditionally only pay out upon death.
  8. Time and Gradual Approach:

    • The article acknowledges that it can take time, sometimes even years, to make individuals comfortable with the idea of buying life insurance.
    • Ernie Williams suggests a gradual approach, starting with smaller policies and gradually increasing coverage over time.

The insights provided by the experts in the article underscore the multifaceted nature of life insurance, its potential for wealth creation, and the importance of tailored strategies to meet the unique needs of individuals and families.

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

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