From Beg and Borrow to Bury to Black Wealth Creation: The Real Power of Insurance

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By Eugene Mitchell | word in black

OPINION (WIB) – The concept was simple, but the challenges were many – repositioning life insurance to create millions of dollars individually for Black families and billions collectively for the Black community.

Ever since John Merrick established the black-owned North Carolina Mutual Life Insurance Company in 1898, the black community has generally viewed life insurance as funeral insurance—solely to cover the cost of funerals. Initially designed as a benefit for struggling black families, these funeral policies became a cash cow for large white-owned companies when they took over the industrial insurance or “funeral policy” market.

These funeral policies were purchased for a few dollars a week, and the premiums were collected by a door-to-door agent. However, many of these policies paid no more than $1,000 each, even though the insured had paid significantly more into the policy. The lack of money subsequently received by the families forced some to scramble and sometimes beg and borrow the remaining funds to pay for the funeral. This same situation has played out for countless black families for many years, and a general sense of distrust from the black community and dissatisfaction with life insurance companies and their stated benefits of products that they provide were created.

This resulting division and disconnection from the black community has been cited as a major contributing factor to the racial wealth gap in America today.

In contrast, the white community has a much different perspective, as many white families have purchased life insurance as a financial tool to replace income, obtain investment guarantees and tax benefits, and bequeath financial gifts to generations. future and to the organizations they love. The life insurance industry pays out tens of billions of dollars each year in inheritance, creating generational wealth for white families. This resulting division and disconnection from the black community has been cited as a major contributing factor to the racial wealth gap in America today.

Seeking to change this disparity and potentially close America’s growing racial wealth gap in a single generation, a movement led by black agents was born at New York Life Insurance Company in 2011. Built around a unifying vision, that turned into a mission, then a movement, these enlightened changemakers sought to insure 200,000 black families with at least $250,000 in life insurance, to collectively create $50 billion in protection and income non-taxable futures ($200,000 X $250,000 = $50 billion) .

Called the $50 billion empowerment plan, a key part of repositioning the life insurance product for the black community was to pass on its use — like a traditional auto or home insurance policy. This meant it had to be purchased with the intention of protecting the “true replacement value” of the insured item – in this case, the parents and leaders of our hard-working black families.

As part of the effort, black agents discussed the concept of what a “black life” is worth. Not by material possessions, or their job title, but by the future income that individual would generate from the work they did.

For example, a father earning $50,000 a year for the next 20 years was considered a million dollar asset to his family ($50,000 X 20 = $1 million). And if he were to die unexpectedly from an accident or illness like COVID-19, his life insurance policy would replace his lost income and could be invested or used to support his family. family. With this proceeds from the policy, his family could pay off the mortgage on the house, complete his wife’s retirement and even pay for his children’s school fees, etc.

With more than $1 billion being handed over to Black families while some of those insured people have passed away, the vision of wealth creation has clearly come to fruition.

After 6 1/2 years, New York Life agents have passed the milestone of $50 billion in life insurance placed and maintained for black families. Many tributes and recognitions were held for the accomplishment, including articles written in the black press stating that 50 years after the Civil Rights Act was passed, this group of 1,500 black agents had now created 50 billion dollars of financial protection and future income for our next generation.

As the proud founder and former manager of this $50 billion plan, I am very excited about the results and community impact we have witnessed over the past 10 years since the campaign’s launch. With more than $1 billion being handed over to Black families while some of those insured people have passed away, the vision of wealth creation has clearly come to fruition. In fact, we have created many millionaire black families, where many of them had little wealth before. And it wasn’t by chance, or because of a winning lottery ticket, but because someone in those families sat down with one of our agents to put together a financial plan to create a legacy and a legacy for those they love.

My leadership team and I now have a new mission to help even more Black families follow the strategies of the Wealth Campaign to create financial stability, economic opportunity, and multigenerational wealth. We are recruiting more Black agents and financial advisors from across the insurance industry to expand and amplify the successes of our former campaign with us.

With a new goal of creating $500 billion for Black families, we continue to reposition and leverage the power of life insurance to create wealth, transform Black communities and close the racial wealth gap.

Eugene Mitchell is the founder and director of the E. Mitchell Consulting Group for Financial Literacy and Financial Services. He is also a published speaker and author with over 20 years of success harnessing “diversity, inclusion and engagement” best practices that benefit insurance agents, businesses and the community.

Support for this Sacramento OBSERVER article was provided to Word In Black (WIB) by the Chan Zuckerberg Initiative. WIB is a collaboration of 10 black-owned media that includes print and digital partners.

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