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Insurance 101

Why are there life insurance gaps for Black communities?

Insurance 101

Why are there life insurance gaps for Black communities?

Black communities face significant disparities in coverage.

Coverage gaps in life insurance for Black communities can be a complex topic. A 2021 Barometer Study revealed that while 56% of Black Americans own life insurance, 46% of those believe that they require more coverage. So there isn’t a policy gap as much as there is a coverage gap.

But why is there a gap in coverage for Black communities? Honestly, there isn’t just one straight answer. In truth, it’s a mix of historical realities and modern day problems. So let’s start with some historical stuff and then tackle the modern day. At the end, we’ll talk about some of the good news that’s out there.

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  1. Historical factors of coverage gaps
  2. Modern-day effects on coverage gaps
  3. The good news
  4. Conclusion

Historical factors of coverage gaps

Now, these gaps didn’t just happen. They’ve been building for decades. During the post-Civil War era, insurers would often classify Black people as being “high-risk”. For example, insurers would often charge Black people more in premiums and then offer less burial insurance, or they would outright deny them coverage.

These practices would continue well into the 1960s. And it wasn’t just a lack of access to life insurance. Black people were often denied a path to better healthcare, housing, and employment, all of which are looked at during the underwriting process. The adverse effects are still seen today when we look at the gaps in life insurance coverage.

Modern-day effects on coverage gaps

That same 2021 Barometer study showed that nearly three-quarters of Black Americans are more likely to overestimate the cost of life insurance than the general population. This is no doubt an effect of previous harmful policies from the times of segregation. It’s no surprise then that 66% of Black Americans own a life insurance policy solely for burial costs and final expenses

There’s still a lot of work to do for the insurance industry to convey authenticity and reliability to Black communities. But there is hope and positive news. 

Top reasons Black households get life insurance

LIMRA article, “ Black American Life Insurance Ownership Increases,” January 2021.

The good news

Despite these coverage gaps, there are positives to note. For instance, the amount of Black Americans who bought life insurance between 2020 and 2021 increased by three percentage points. COVID-19 has been particularly devastating on Black communities. The inequalities in healthcare have prompted more conversations about what life insurance can do for people and their loved ones. 

Take for instance, wealth transfers. In spite of the racial wealth gap, life insurance death benefits are being seen as vehicles of wealth transfer from one generation to the next. So, while the myths about policy expenses still exist, the role of life insurance for Black communities is definitely seeing a shift. 


As we noted, Black communities continue to face gaps in coverage. One part is due to the realities formed from a segregated society. The other is due to the lingering effects of said segregation. But there’s possibilities before us. Companies like Deloitte Insights are establishing methods for other groups to target underrepresented identity groups. 

On an individual level, one of the most important things for you to do is to keep having conversations. If you or someone you know doesn’t have a life insurance policy, talk to them about it. If a loved one is overestimating the costs, share this link with them. Or take a look at our blog if you need more answers. We have an entire section dedicated to just talking about finances called Money Things.

While the history of life insurance coverage gaps is awful, the future is full of possibilities. It’s up to each of us, together, to make those changes. And all it takes is the courage to make tomorrow a little bit better than today. 

The opinions we expressed in this post are for general informational purposes only and are not intended to provide specific advice or recommendations.