When women under-insure their true value


THE results of Royal London’s five-year analysis of the life insurance market is in. The period covered was 2016 to 2020.
The primary finding shows some continuing worrying trends in the insurance marketplace. According to the report, women appear to be underinsured by 64% when it comes to life insurance and 26% underinsured when it comes to serious illness cover
Karen Gallagher, Interim Head of Proposition at Royal London, explained: “These figures reveal significant discrepancies between the amount of financial protection men and women put in place for themselves, which can have significant ramifications for people down the line.
“In the last five years, the amount of Life Cover taken out by men is almost two-thirds higher (64%), on average, than the amount of cover taken out by women. The average sum assured on a life insurance policy (Term Assurance) is €177,409 for women and €291,162 for men.”
One positive outcome from the report , if it can be called that, is the gap has remained consistent in the past two years while in 2017 the gap was almost 83%.
Why are men more likely to insure their lives for a higher amount than women? The report reasons it may mirror gender stereotypes and/or the gender pay gap. For instance 98% of women more than men are stay-at-home parents and the role of the stay at home parent continues to be undervalued.
When people were asked to put a monetary value on the work of the stay at home parent the average figure suggested was €29,000 a year whereas when proper analysis is completed the figures is in the region of €49,000 a year.
People do not realise that so called “unpaid role” is very expensive to replace from current income flows and especially if the surviving spouse has to return to the workforce entailing added expenses including childcare.
According to the Royal London data, over the last five years, the average sum that people insure themselves for has remained relatively stable, the average amount for Term Assurance being €234,285. This might seem like a significant sum but for a family with monthly outgoings of €2,500, this amount would only last approximately eight years.
Another way of looking at it is that it would provide over €29,000 per annum for approximately eight years, which is below the average annual income of €40,283 particularly where there are very young dependents or if the family continue to have ongoing rental/mortgage payments.
According to the Royal London data, when it comes to serious illness cover the average over the five year period was €69,645 .
According to Karen Gallagher: “It’s positive that so many people are insured against serious illnesses.” While €70,000 might seem like a lot, as with Life Cover, people should ask themselves how far will this amount really go when they factor in all the day-to-day costs of running a home, and possibly the costs of dependents over a number of years.
Again, women underinsure themselves by approximately 26% less than men for Specified Serious Illness Cover, again suggesting the financial input of the stay at home parent is undervalued as with the lifecover scenario.
With the introduction of the Gender Pay Gap Information Bill in 2019, transparency is being provided on the gender pay gap and incentivises employers measures to narrow the gap.
But at the family level the report encourages us to consider the financial cost of replacing both partners’ contribution to the family even if one is a stay-at-home parent or not the primary earner.
Talk to your Financial Broker who will help you put plans in place to meet your unique set of circumstances and be aware if cover is offered without a thorough Factfind being completed with a follow up needs analysis report.
Maybe, over the Christmas period when you have some free time, allocate a period to reviewing your current plans and policies and make a new years resolution to provide properly for the family in the event of the unexpected.

john@ellisfinancial. 086 8362633.

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