African-American consumers could prove to be the U.S. life insurance industry's stealth growth market.
The average African-American earns less and has less wealth than the national average, but the averages are misleading. Although some African-American households continue to struggle, the 1.7 million African-American households that earned more than $75,000 in 2000 combined for a total of $189 billion annual income, according to the Census Bureau.
The 43,000 African-American households in the Census Bureau's top income category for households with annual incomes over $250,000 brought in an average of $556,965 per year. That compares with an average of just $465,786 for whites in the same category.
Furthermore, African-Americans with annual household incomes over $50,000 have much warmer feelings toward life insurance and related products than the general population, according to 2001 survey commissioned by Ariel Capital Management, Inc. Chicago, and Charles Schwab & Company, San Francisco.
- Seventy-one percent of the African-Americans interviewed owned life insurance compared with 62 percent of the whites.
- Thirty-four percent of the African-Americans owned fixed or variable annuities, compared with 26 percent of the whites.
- Twenty-two percent of the African-Americans said they have the most assets at life insurance companies, compared with 10 percent of the whites.
Kareim Cade, a partner at M.L. Garland Hill, Detroit, an insurance firm that runs worksite marketing, has no complaints about his target market, which consists largely of African-American government workers.
"It's definitely easy to drum up business," Cade says. "There's plenty of money there."
