Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 25, 1993 TAG: 9307250031
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
SOURCE: By CHARLES M. SENNOTT NEW YORK DAILY NEWS
DATELINE: NEW YORK LENGTH: Medium
From Brownsville in Brooklyn to the South Bronx, increasing numbers of parents are taking out life insurance on their sons and daughters.
The policies, traditionally viewed as college savings plans or safeguards against unforeseen illness, have become logical but gruesome calculations of risk in neighborhoods where each day young people are gunned down, stabbed, run over by cars and found dead of drug overdoses.
"I worry about my kids every day," said Barbara Tanner, who took out more life insurance on her two children this month after she attended the funeral of a nephew who was shot to death.
"You never know when it is going to happen. The way these kids are dying young, it's all you can do," she said.
Interviews with industry experts, insurance agents and the people buying policies indicate that the insurance business is capitalizing on the worst fears of parents who hear gunshots nightly and pray that the bullets don't find their kids.
The trend, which industry officials say is occurring nationwide, appears to be based on several factors:
Statistical reality: Homicide is the leading cause of death among black teen-age males, according to the National Center for Health Statistics.
Supply and demand: Parents who have always been aware of the dangers their kids face - from automatic weapons to AIDS - are seeking out insurance carriers and in some cases being courted by agencies that are targeting areas with high death rates.
Tanner, 38, who lives in the Tompkins Houses in Bedford-Stuyvesant in Brooklyn, boosted the insurance on her children from $1,000 to $10,000. The funeral of her sister's 18-year-old son marked the third nephew she had seen shot to death in six years. Her sister's $15,000 life insurance policy on her son helped pay for the $5,000 funeral cost.
The trend is documented by carriers like Golden Eagle Insurance in Brooklyn, which serves a predominantly poor clientele. The company reports a steady rise in sales since the mid-1980s and has sold 10 percent more life insurance policies this year than in 1992.
The companies say they provide an important service to the poor that many companies intentionally avoid because of the difficulty collecting payments and the dangers agents face in going into poor areas.
Agents for Prudential, Metropolitan Life and other carriers also say customers are responding to the statistical reality of increased homicide rates by insuring their children.
John Calagna, a spokesman for the state Insurance Department, which monitors the industry, points out that companies that focus on poor areas see a higher profit margin in those areas. He said most poor people buy small, term policies - between $1,000 and $10,000 - which are paid through monthly plans that end up costing more than the yearly plans marketed in more affluent communities.
Poor clients, he added, also see their policies more frequently lapse because of non-payment. That means the carriers do not have to pay out as often in the event of death.
One agent, Stephen Weiss, who works for the Manhattan-based Herman Liss Agency, said he sponsored a "promotion" this year in Harlem, the South Bronx, East New York and Bedford-Stuyvesant.
The February-to-June telephone campaign netted 300 new or increased policies - an amount that Weiss said equaled the number of total policies he sold during all of last year.
Weiss said he contacted hundreds of clients and "conversationally told them about the cost of burial, the reality of the streets, and about the need to increase policies."
"I don't mention the murder stats to clients. You don't have to. They know what they are. They see them," said Weiss. "It's a very good market. . . . As long as they keep knocking out kids and other kids carry Uzis, there is absolutely a market."
Calagna described Weiss' approach as "insensitive and outrageous" and an example of the kind of behavior that "gives the whole industry a bad name."
by CNB