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In January, we looked at how life insurance can help close the racial wealth gap in the Black community. Similarly, the Hispanic community has suffered disparities in health treatment from the coronavirus pandemic. Recently, a nurse accused ICE of forced sterilizations of immigrant women in custody.
The contributions of Hispanic-Americans like Cesar Chavez and Dolores Huerte changed how companies treated labor unions and were big wins for all American workers. Yet, the Hispanic community still lags behind in the wealth gap.
We understand that the Hispanic community in the United States is not a monolith. According to the Insurance Information Institute Hispanic Initiatives, Hispanics are not homogenous in country of origin, but have shared traits, values, and beliefs regarding language, family, and entrepreneurial nature.
Insider spoke to Silvia Tergas, a financial planner with Prudential, about how life insurance plays a role in financial wellness in the Hispanic community.
According to Hispanic Market Advisors, 44% of Hispanics have no life insurance coverage, compared with 37% of the non-Hispanic population. The main reasons are the cost of the insurance and the lack of knowledge about insurance. And of those with life insurance, 49% believe that they do not have enough coverage.
According to Tergas, many Hispanic families have negative experiences with financial professionals, especially if financial ruin was the reason they left other countries. She said lack of education and an overarching mistrust are barriers for the community and its approach to financial services like insurance.
What helps build trust? Tergas said brand recognition is important, as well as a strong relationship with an individual. Financial advisors in the Hispanic community need to make it more personal, connecting their clients to the goals that matter to them.
Insurance supports your plans — and the unexpected
Tergas says financial planning is an action verb that requires a person to ask: “Where am I going to be in 5, 10, 35 years?” It requires an understanding that the decisions you make today will impact you down the road. She acknowledges that most people haven’t thought this way because the focus has been survival mode, not next steps.
What are your goals for your career, family, and other individuals you are responsible for — even if you don’t have kids? Tergas uses the phrase “put the mask on yourself before assisting others.” You can’t help your family if you are not financially secure yourself.
Tergas recommends using a small percentage of your income toward disability insurance and life insurance to insure your number one-asset: the ability to generate income in future. That doesn’t mean you have to work into old age if you don’t want to — you can set your own course by careful financial planning for the future.
“Financial planning begins and ends with the client’s need for life insurance,” said Tergas, “and at end of day, life insurance is risk management.” She said based on your cash flow and potential resources, you should balance the need for permanent life insurance, which is more expensive than term life insurance.
A large permanent life insurance policy might not be the best option if you just want a death benefit for your family or other beneficiaries. In that case, term life insurance makes more sense.
Permanent life insurance isn’t just a death benefit; it’s for legacy planning and income replacement — in other words, financial wealth during your life. You can add riders to permanent life insurance for additional coverage, including chronic illness and long-term care. There are also potential tax advantages to permanent life insurance’s cash value after you cover the baseline goals of debt reduction and retirement.
If you can’t afford a permanent life insurance policy, Tergas recommends get a term life…