Whole Life Insurance: The Financial Foundation Asian Americans Are Seeking?
Asian Americans tend to be wealthy savers focused on leaving a legacy for their families. Here’s how you can tap this ideal market for life insurance.
Completion of the 2010 census set off much discussion about the growth of minority segments of the U.S. population. While the Hispanic segment is cited as the largest, agents should not lose sight of the Asian-American population, which the U.S. Census reports is the group that grew faster than any other between 2000 and 2010.
Those numbers point to an interesting fact about recent sales at New York Life: agents working in Asian markets accounted for nearly 20% of our whole life insurance sales in 2011. Also, while determining exactly which ethic groups buy our products is not a perfect science, we estimate that for one-third of our sales force — now totaling some 12,500 agents — Asian Americans form at least 50% of their client base.
These statistics may be surprising until you learn more about the clients themselves. According to the U.S. Census Bureau, the median household income for Asian Americans in 2009 was $68,780 — well above that year’s national average of $52,000. Meanwhile, during the five-year period between 2002 and 2007, the number of businesses owned by Asian Americans increased 40%, to 1.5 million.
What’s more, according to the U.S. Census, the population growth for Asian Americans over the past decade came in at 46%, the fastest of any major ethnic group. The 2010 American Community Survey reveals that occupations for this market segment are as follows: management, business, science and arts (48.1%); sales and office occupations (21.8%); service (17.2%); and other occupations (12.9%).
A compelling profile
There are many ways Asian Americans pursue the American dream. Initially, some came to the United States to pursue higher education and eventually developed professional careers. Others embraced their entrepreneurial spirit and successfully started their own businesses, despite language and/or cultural barriers. Some began by establishing businesses within their community and then expanded them into other regions.
Often, first-generation Asian Americans created wealth and accumulated assets through hard work coupled with a natural propensity to save what they earned. However, many were uncertain about how to safeguard wealth and preferred a conservative way to protect and further grow what they had accumulated. Like the rest of us, they’ve seen the risks of investing in the stock market and real estate in recent years.
Based on our experience with first-generation Asian Americans, there’s also a lot of truth to the observation that many are committed to sacrificing everything, especially luxury goods, and doing whatever it takes to provide better educational opportunities and living standards for their children. Leaving a legacy for the next generation is a very high priority for Asian Americans.
The second generation of Asian Americans also offers a compelling profile, having held onto many of the values treasured by their parents. These traits make Asian American prospects ones to seek:
• Entrepreneurial at heart. Skilled at starting and expanding businesses.
• Banking on the future. Industrious savers of what they’ve earned.
• College-bound. Recognize the value of higher education, which often translates into future prosperity.
• Supportive of family values. Strong belief in the family and the protection life insurance offers.
• Loyal. Find a good product and stick with it.
• Forge relationships. Just the kind of attribute that a good life insurance agent can reinforce.
Propensity for whole life insurance
Financial statistics, as well as the long-held values of this community, provide a clearer picture of why permanent life insurance with cash value accumulation is a natural fit with the financial goals of Asian Americans. The desire to leave a legacy reliant on financial vehicles proven to be safe havens for families’ wealth and a source of supplemental retirement income1, if needed, plays directly to the strengths of permanent life insurance.
Right now, federal estate taxes apply to amounts over a certain lifetime exemption. Of course, some states also have state estate taxes. Generally, a tax-free death benefit and tax-deferred cash value accumulation make permanent life insurance a compelling solution for many of the wealthiest Americans, Asian or otherwise.
Reaching this community
Asian Americans generally understand whole life products and the ability to use them as a way of building a legacy and to help accumulate wealth for the future.2 So the question is, how do you get in front of this important segment of the population? Success in this market depends on three important components:
• In the Asian-American market, it is very important to share a cultural background with prospective clients. When approaching this community, it helps to have a thorough understanding of the special needs inherent in a culture so different from that experienced by the average American.
• In addition, it’s a good idea to have printed materials about the company, its financial strength and the products it offers in such languages as Chinese, Korean and Vietnamese. That’s the best way to reach out to first-generation Asian Americans.
• Lastly, you need to establish yourself as a trustworthy resource. That can be accomplished simply by being more visible on a consistent basis in the community — for example, by organizing community presentations, visiting with business owners, volunteering and supporting community events. Or set up booths at local festivals and kiosks in shopping areas that cater to Asian-American residents.
The bottom line is that while many people in the United States stand to benefit from life insurance, the Asian-American community seems particularly receptive to what life insurers can offer, especially permanent life insurance with its cash value.
However, as with all segments of society, it is up to sales and marketing people to take the initiative and demonstrate the importance of the services they provide. Making that connection will prove rewarding to insurers and clients alike.
By Hsiao-Wei “Sheila” Chen From the June 01, 2012 issue of Life Insurance Selling • Hsiao-Wei “Sheila” Chen is corporate vice president, Market Management, at New York Life Insurance Company.
1. You can access your cash value via policy loans which will accrue interest and reduce cash value and death benefits.
2. Guarantees are based upon the claims-paying ability of the issuing company.