Insurance professional and Mexican American Monica Rangel works hard to educate the Hispanic community about life insurance.
The founder and CEO of Efficient Financial and Insurance Solutions in Brea, Calif., regularly helps members of her local community get life insurance coverage. Here are the biggest misconceptions she encounters from her Hispanic clients.
1. We can rely on loans or help from family if anything happens.
Monica says this is one of the most frequent myths she hears in the Hispanic community. Many clients like to think that their children will take care of them or that extended family members will come forward in times of need; any money needed beyond that could be covered by loans. But as she says, “Your kids are not your retirement plan.”
We know we can rely on our families for support as we navigate life. However, if you were to die, your family’s world would shift on its axis—emotionally and financially. A time of grief is not the time to crowdsource funeral funds or endure added stress from money troubles.
Life insurance may be a solution that fits your budget so that doesn’t happen.
2. Life insurance will be a free ride for my kids.
For many of Monica’s clients, it’s important to them that their children learn how to earn things. When “nothing is free” in life, they want to teach their kids how to work hard and get what they need.
According to recent data from the 2022 Insurance Barometer Study by Life Happens and LIMRA, Hispanic Americans have a slightly higher likelihood than other race and ethnic groups to say that they value hard work and don’t feel that anyone should get richer from their life insurance policy (35 percent).
Your parents taught you hard work, and that’s what you’re teaching your children. But life insurance isn’t about leaving your kids a financial windfall. It’s about practicing—and teaching—the principles of personal financial responsibility.
As Monica puts it, “Isn’t it our job as parents to help our kids learn to be better than us? We came here for a better life, the ‘American Dream.’ We immigrated to this country to give our kids better opportunities. Why aren’t we using our knowledge we’ve learned here to create a financial step up? Why wouldn’t we give them a tool, like life insurance, to help them?”
Preparing for the future with life insurance is a lesson in goal setting, budgeting and discipline that can help your loved ones to be OK financially—that’s a valuable lesson to pass on.
3. I’m going to “jinx” myself if I get life insurance.
Monica says some of her Hispanic clients fear that getting life insurance will tempt fate. They think something bad will happen to them as a result of getting coverage.
“The image I have in my head is the grim reaper,” she laughs. “I promise the grim reaper doesn’t follow me around! If that really happened, life insurance companies would be out of business.”
Overall, only a quarter of Americans are comfortable talking about end-of-life planning, but Hispanics report they’re even less at ease when it comes to those conversations, according to the same Barometer Study.
We get it, talking about death isn’t on the top of your to-do list. Just like those annual doctor appointments or finally getting the car serviced… it’s easier to put it off. But tomorrow is never guaranteed. The more familiar you are with life insurance, the easier it becomes to have those tough conversations. For more tips on talking about life insurance with your loved ones, check out this article.
4. I’m only going to leave this earth with a handful of dirt. I might as well “live it up” while I can.
Monica shares that many of her Hispanic clients feel that life is about living it to the fullest. “It’s very much a cultural thing to think of living in the day-to-day. Even in Spanish songs, there’s a common theme of ‘you’re only going to take dirt with you when you die,’ so you might as well live it up while you can.” She says this contributes to a culture of living paycheck to paycheck.
This sentiment is supported by the Barometer Study, which shows that paying monthly bills is a top-five financial concern for Hispanic Americans, but not for other ethnic groups. This relatively high level of concern among Hispanic respondents (46%) suggests many members of this group aren’t able to address competing financial priorities.
It’s understandable… bills, rent or mortgage, car payments, childcare, food, gas. The list goes on. But what would happen to your family financially if you died? If you’re gone, so is your income, but their bills and expenses stay the same. If money is tight, life insurance picks up the financial burden for your family when you’re no longer there to do it.
What Monica tells her clients is, “It’s ok to live it up, but why don’t you pay yourself first? Live it up today, but also, let’s create a strategy so you can live it up tomorrow too.”
5. I’m going to lose all the money I’ve put into the policy and not get anything back.
Monica says her clients often misunderstand life insurance and view it like other types of insurance where you make payments “just in case,” but don’t necessarily receive anything in return.
She is quick to educate clients about the different types of life insurance. While it’s possible that your beneficiaries wouldn’t receive a death benefit with term insurance if you died after the term ended, with permanent insurance you’ll have lifelong protection for as long as you pay the premiums. This means your beneficiaries will receive a payout when you die (based on the claims-paying ability of the insurer), whether that happens to be next month or 40 years from now.
Another way that permanent insurance dispels this myth is through what is known as living benefits. These policies can build cash value over time that you can use while you’re still alive to pay for anything you wish, like a down payment on a home, income for your retirement and more (accessing the cash value will decrease the death benefit).