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Women have significant need for life insurance

Life Insurance and Annuities
by Lisa Jiang
Women have significant need for life insurance
Women have significant need for life insurance

Most polls on the subject show that the average person knows they need more life insurance than they have, but any number of factors constrain them from obtaining it. Unfortunately, in a world already full of gender gaps, yet another reveals itself in this regard: Women may generally have a greater need for life insurance than men.

A big reason for this seems to be the fact that families undervalue the care women provide to children, and the outsized role they often take on in doing so. A recent poll from Haven Life found that in almost 55% of families, women were the primary earner, primary caregiver or both, compared with just over 49% for men. This means that even women who aren't drawing a salary for their childcare efforts may need more life insurance, because the cost of replacing that care can be just as substantial - if not more so - than replacing a lost income.

In all, a little more than 2 in 3 of women polled said they had life insurance, versus almost 4 in 5 men, and the amount of coverage between those two groups was massive. The average man had about $423,000 in life insurance coverage, versus just over $231,000 for women. Even among those who didn't have life insurance, men generally thought they would need about twice as much life insurance as women did (with men guessing around $355,000 and women estimating $175,000).

Interestingly, when specifically asked whether primary caregivers should have life insurance despite a lack of actual salary, women were far more likely than men to say the answer was yes. While the vast majority of respondents regardless of gender thought the answer was yes, 91.5% of women felt this way, versus 81.2% of men.

Women provide more value to households than they may realize.Women provide more value to households than they may realize.

Evaluating what primary caregivers provide
Again, even if primary caregivers don't earn an income, the value of the various services they provide may be far more significant than families realize. Annual estimates from Family.com show as much; the collective duties of a stay-at-home parent - which women are more likely to be than men - would cost a family more than $178,000 if they were to outsource it all. That was up almost 10% from 2018's total, as well as an increase of close to $65,000 in just the last five years.

These tasks include not just child care - which is itself extremely expensive - but also housekeeping, laundry services, shopping for necessities, food preparation, pet care, managing household finances and more.

The Haven Life survey found women were often far more likely than men to say they take the primary role in all these regards. Only managing finances, lawn care and building their careers saw women less likely than men to take on primary duties for the family.

Unfortunately, people often don't think of these services in terms of the cash value of replacing lost capability, and that could put them at a serious disadvantage when it comes to long-term financial planning and success.

Addressing the issue
All of the above comes at a time when women largely report more difficult financial situations, they also say they aren't as involved in long-term household financial planning discussions either, according to an Allianz Life survey conducted earlier this year. In 2019, just 38% of women say they're the primary earner in their homes, down from 60% as recently as 2013, and just 42% say they have more earning power.

Meanwhile, 60% say they're increasingly left out of big financial decisions, and 57% want to take on a bigger role in this regard. Interestingly, though, millennial women and those who are divorced seem to be two groups for which things are going well financially.

For instance, 35% of millennial women indicated they have asked for a promotion or raise at work, versus 24% of Gen Xers and just 19% of boomers. Likewise, 53% noted they have greater earning power than they used to, once again comparing favorably with Gen X and boomers (42% and 34%, respectively). They were also far more likely (46% to 29% and 37%) to say they're prepared to invest in their futures.

And today, 65% of divorced women say they're in better shape financially than they used to be, up from just 50% who felt the same way in the 2016 version of this survey. Perhaps not surprisingly, those who have been divorced for at least a decade were more likely to have a good understanding of their various financial products, to make and meet their own personal financial goals and to save for the long-term.

Where life insurance comes in
Despite some of those positives, though, a separate Allianz Life survey found women tended to have a less nuanced understanding of life insurance overall than men. For instance, just 27% of women knew life insurance benefits are not taxable, while 38% of men knew that. Moreover, women were less likely than men to realize they could use cash value from a life insurance policy to supplement their retirement income or cover other financial costs.

With all this in mind, more may need to be done to specifically target women for life insurance education and outreach so they fully understand the value they provide to families, no matter what roles they take.



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