Racial Discrimination in Life Insurance

Abstract

This article examines the historical and statistical relationship between race and life insurance. Life insurance can play a central role in households’ financial security. Race has played an important and changing role in the provision of life insurance in the United States, from slave insurance before the Civil War, to “scientific racism” continuing into the 20th century, to policies that do not explicitly mention race in recent decades. In empirical work using new data, the authors confirm earlier work showing that Black individuals have higher life insurance coverage rates than white individuals, controlling for observable characteristics. They find no difference in the likelihood of purchasing coverage—for Black individuals versus white individuals—in states with strong versus weak antidiscrimination laws. They also find that the presence of strong antidiscrimination laws tends to reduce overall life insurance coverage—by about three percentage points. They present some evidence that this finding is due to a generally stronger regulatory stance in the state rather than the specific impact of the antidiscrimination life insurance law. This analysis bears on the presence of discrimination in the current life insurance industry as well as related issues like the financial status of minority households.