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Tuesday, May 30, 2023

Using Life Insurance To Build Generational Wealth

KD Hall

By KD Hall

It was a year of harsh realities. In 2020, people lost loved ones, shuttered businesses and had jobs eliminated because of the COVID-19 pandemic.

It tested patience and strained sanity.

But 2020 also created the chance to look at financial literacy through a new lens. Designer shoes were never my thing – as far as unnecessary millennial spending goes – but I do love an expensive steak at a fancy restaurant.

The fear of a COVID tragedy within my family forced me to ask: What if I die and leave my husband? Our two daughters? What if my husband dies? I had to look at my spending habits. Do I have a plan beyond my savings account? What should I do with my extra money, if it isn’t going toward those steaks I love so much?

Maybe you already have the answers. But, for some of us, 2020 was eye-opening, full of life-and-death realities. We all had to slow down and reconsider our plans. When my husband and I purchased our private life-insurance policies, it made me think about my childhood.

My father contributed significantly to help pay for the final arrangements of loved ones on several occasions. As a young girl in Detroit, I didn’t understand the financial burden that caused. For a father of six, this was not easy to do, but he always said he wouldn’t hesitate to do it all over again. It was a burden worth bearing.

His mother and two brothers died young ­– in my eyes. It created an emotional strain, compounded by the desire to provide proper funerals.

Through that experience, my dad shared a valuable lesson on the importance of life insurance. He made sure I understood why, historically, Blacks did not have life insurance. He urged me not to judge, but to educate myself about why so many Blacks did not have life insurance. He talked about why he and my mother made education a priority for all of their children.

He was born less than 100 years after slavery was abolished, and he explained the impact of Jim Crow. The financial woes those laws created worked to prevent Black people from getting life-insurance policies.

There was a race riot in Detroit in 1943, which created scenes where, in some cases, police helped White people beat Black folks to death, scenarios we still see today.

The barriers to financial stability were so overwhelming – generational wealth wasn’t even a consideration – because the focus was on civil rights.

For me, having a life-insurance policy is not an option – it’s a necessity. It ensures your final arrangements are covered and creates a financial asset, a tax-free instrument to transfer generational wealth.

The tragedy of the pandemic brought this into focus for me as I think about the future for my growing family.

I scheduled a meeting with an outstanding financial advisor. He explained the value of life-insurance coverage, making sure we had enough in place for all our needs. He explained the importance of a stable foundation as younger adults because, as your health depreciates, so do your coverage options.

Many people undervalue themselves when estimating how much insurance they need. It became apparent to me the strengths and weaknesses of different companies, and I began to understand that policies can work as financial assets.

Meeting with an advisor opened my eyes.

Many people equate life insurance with death, but during this meeting, we barely talked about it. My family is covered for $3 million, just in case something should happen to me or my husband. Our focus, though, is building generational wealth, ways we can leverage our life insurance as an asset right now.

This could be considered a taboo topic for some, but what if your death created wealth for your family? Can you imagine having a solid life-insurance policy tied to your family’s legacy and the potential wealth that would create in just a few generations? A child can secure the financial stability of their grandchildren the way their grandparents planned for their future. It’s a powerful cycle.

No one asked my dad these questions but, if we, as a people, thought like this, we could cut into the wealth disparity in one or two generations.

Life insurance is a complicated topic. NOT ALL LIFE INSURANCE CONTRACTS ARE THE SAME. So, find an advisor. Pinpoint your needs. Take the first step. Secure your foundation. Your family’s financial future depends on it.

Editor’s Note: The information expressed in this editorial are shared for the sole purpose of inspiring readers to explore and research options to establish generational wealth. KD Hall is NOT a licensed life insurance broker, nor does she claim to be an expert in the field of insurance. Therefore, the views expressed should only be considered as information only. Please consult a licensed insurance broker when determining if life insurance is a wise investment for you and your family.

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