Closing the Life Insurance Coverage Gap Among Hispanic Americans

Life insurance provides an essential layer of financial security, helping to safeguard the future of your loved ones after your passing. Yet according to a 2022 LIMRA report, 22 million Hispanic Americans do not have sufficient life insurance coverage. The study also found that six in 10 Hispanic Americans do not have any life insurance at all, the lowest ownership level for any race or ethnic group included in the analysis.

The top two reasons for this coverage gap are misconceptions about life insurance costs and competing financial priorities. Seventy-five percent of Hispanic Americans in LIMRA’s study overestimated the cost of life insurance. Contrary to misconceptions, there are affordable life insurance options and practical ways to find and secure cost-effective coverage.

Misconceptions about the cost of life insurance lead many to forgo it altogether. LIMRA found that 75% of Hispanic Americans overestimate the cost of life insurance. In reality, the life insurance options that tend to be more affordable — such as term policies and group plans — are cheaper than most Americans expect.

Besides the misconception that life insurance is expensive, the most cited reason Hispanic Americans lack coverage is competing financial priorities. These include saving for retirement, building emergency funds, supporting extended family and covering daily expenses. Such priorities often overshadow the perceived importance of securing life insurance.

Despite these priorities, nearly half (48%) say they would experience financial distress within six months of losing a primary breadwinner. What's more, Hispanic Americans without adequate coverage may not realize that life insurance has several uses, many of which appear on this list of competing priorities.

For example, life insurance ensures dependents are not left in a difficult situation if the policyholder dies prematurely. The death benefit can cover lost income, pay off debts and manage daily expenses, helping families maintain their standard of living. Additionally, policies with cash value allow access to funds while the policyholder is alive, offering further financial flexibility for costs like retirement or ongoing expenses after a disabling injury.

Life insurance provides essential financial support for individuals and families. Despite popular opinion that investing in a life insurance policy competes with other financial priorities, life insurance is actually a versatile way to help Hispanic Americans address their financial concerns and reduce distress.

With 52% of Hispanic Americans concerned about having enough money for a comfortable retirement, life insurance can be part of a comprehensive retirement plan. Whole life or universal life insurance policies can build cash value over time, providing additional funds for retirement needs. These policies can also serve as an emergency fund, with cash value that can be borrowed against or withdrawn in times of need, helping the 46% of Hispanic Americans concerned about saving for emergencies.

Over 40% of Hispanic Americans have life insurance to replace lost wages. Life insurance can give a family time and options, allowing them to adjust and make rational decisions without immediate financial distress. Additionally, many life insurance policies include riders that provide financial support if the policyholder becomes disabled and unable to work, addressing the concern of 47% of Hispanic Americans who worry about supporting themselves in the event of a disabling illness or injury.

Seven in 10 Hispanic Americans say they primarily own life insurance to cover burial and final expenses. The median cost of a funeral with viewing and burial was $7,848 in 2023. Life insurance helps plan for these expenses, alleviating the financial burden on loved ones during a difficult time.

Life insurance can also provide the necessary funds to pay off debts, such as mortgages, credit card debt and student loans. This is particularly important for the 41% of Hispanic Americans who are concerned about paying their mortgage or rent and the 38% who are worried about credit card debt.

Some life insurance policies offer long-term care riders, providing funds for long-term care services if the policyholder becomes unable to take care of themselves. This addresses the concern of 45% of Hispanic Americans who worry about paying for such services. Life insurance can also include critical illness riders, which provide a lump sum payment upon diagnosis of a serious illness, helping the 35% of Hispanic Americans concerned about paying for medical expenses in case of illness or injury.

Nearly 27% of Hispanic Americans want to leave an inheritance for their heirs. Life insurance can help build generational wealth and ensure loved ones are financially supported after the policyholder's death. Additionally, life insurance can be used to fund a child's schooling or college expenses, which 22% of Hispanic Americans are concerned about, ensuring that children's education is secured even in the absence of the primary earner.

Several resources are specifically designed to help Hispanic Americans gain valuable knowledge and support in navigating life insurance, from organizations offering financial literacy programs to resources that help them understand and obtain life insurance.

1. Consolidated Credit: Consolidated Credit offers free consultations about personal credit card debt and overall financial health. It provides resources and counseling in Spanish, helping Hispanic Americans manage their debt and improve their financial stability, which can make it easier to afford life insurance.
2. Hispanic Heritage Foundation: The Hispanic Heritage Foundation offers a series of free podcasts and videos focused on money management, debt management and building wealth. These resources can help Hispanic Americans understand the role of life insurance in their overall financial plan.
3. Juntos Avanzamos: Juntos Avanzamos is an initiative that works with credit unions to focus on the financial needs of Hispanic Americans and immigrants. Participating credit unions offer financial products and services tailored to the community, including life insurance options and financial education.
4. Latino Community Credit Union: This credit union offers financial products and services tailored to the Hispanic community, including affordable life insurance options. It also provides financial education workshops to help members understand the importance of life insurance and how to incorporate it into their financial plans.
5. Life Happens: Life Happens is a nonprofit organization dedicated to educating consumers about the importance of life insurance and related products. It offers resources in English and Spanish — including calculators, educational videos and personal stories — to help you understand your life insurance needs.
6. MyMoney.gov: This site, backed by the Financial Literacy and Education Commission, offers free budgeting and money management resources. It includes information on saving for life insurance premiums and other financial goals, and resources are available in Spanish.
7. National Association of Insurance Commissioners (NAIC): The NAIC provides a wealth of information about life insurance, including guides and tips on choosing the right policy. It offers resources in Spanish to ensure that Hispanic Americans have access to the information they need to make informed decisions.
8. UnidosUS: UnidosUS provides financial empowerment programs, including workshops, counseling and resources designed to help Hispanic families achieve financial stability and success. Its programs often include education on the benefits of life insurance.