The gender gap in life insurance
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Gender disparities exist throughout society and can even appear in the life insurance industry. On average, men carry life insurance policies worth nearly twice as much as their female counterparts, according to a Haven Life survey. To help you navigate your life insurance policy, Bankrate’s insurance editorial team dives into why women may be undervaluing their household contributions and what these gender disparities can mean for you and your life insurance policy.
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Whole life insurance combines life insurance with an investment component.
- Coverage for life
- Tax-deferred savings benefit if premiums are paid
- 3 variations of permanent insurance: whole life, universal life and variable life include investment component
Term life insurance is precisely what the name implies: an insurance policy that is good for a specific term of time.
- Fixed premium over term
- No savings benefits
- Outliving policy or policy cancellation results in no money back
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- Women still disproportionately complete more household tasks than their male counterparts.
- Stay-at-home parents provide housework and childcare that equates to roughly $180,000 in services every year.
- When choosing a life insurance policy, stay-at-home parents may benefit from factoring the monetary value of the services they provide, such as housekeeping, cooking and childcare.
How does gender impact life insurance coverage?
Gender imbalances are still prevalent throughout society, often in places that people may not think to look. For instance, Haven Life reports that while women and men believe their deaths would impact their families equally, women were less likely to have life insurance coverage. In addition, when women did have life insurance, the coverage was for around half the amount that men had.
While this disparity may not be understood in full, statistics have provided some insight into the underlying causes.
The difference in how we value our lives
Gender imbalances are perhaps most visible when looking at gender roles within a household. Women now make up more than 50% of the workforce, according to Time, yet they still shoulder much of the household responsibility within families — in part due to deep-seated societal expectations, pressures and norms.
In the Haven Life survey, 83% of women listed childcare as one of their household roles, compared to only 57% of men. Similarly, 82% of women reported housekeeping as one of their responsibilities, compared with only 52% of men.
These findings bleed into how men and women see life insurance. Life insurance is meant to replace income if a spouse passes away. The Haven Life survey revealed that men with life insurance financially evaluated their lives nearly two times higher than women. Yet, women often perform significantly more housekeeping related tasks, which also have a monetary value that families may not be calculating. In fact, stay-at-home parents provide housework and childcare that equates to roughly $180,000 in services every year.
If one spouse is the main child caregiver or housekeeper, the family may want to factor those services into their overall salary when choosing their level of life insurance coverage. Personal finance expert Laura Adams explains the importance of buying an appropriate amount of life insurance. “Don’t make the mistake of thinking that you don’t need life insurance if you’re a stay-at-home parent,” Adams says. “If you manage childcare, family finances and household chores, your work is valuable and you should have adequate coverage.”
Childcare and household chores are a financially measurable type of work, as they can be measured against the rate at which professionals charge for such work. This means that the loss of someone who takes care of childcare and housework could lead to financial obligations on the surviving parent. As such, it is perfectly reasonable that stay-at-home parents consider taking out a life insurance policy.
The income gap and life insurance
According to the Pew Research Center, women earned 84% of what men earned in 2020. While women are constantly making progress in this area, a 16% difference is significant. The last century has seen a dramatic increase in the ratio of women to men in the workforce. However, as the statistics reported show, wages have not risen in tandem for men and women. With the prevalent wage disparity where women are paid less on the dollar than men, it makes sense that more women tend to value their lives less financially. However, the work done in the home contributes to significant financial savings for families and the contribution should be factored into life insurance policies to provide enough coverage for beneficiaries.
No income should not mean no life insurance
While it may feel intuitive to think that life insurance is only to replace the lost income of a deceased family member, the truth is more complicated. This means that unless the surviving family members can afford an extra $180,000 a year in expenses based on the value contributed from a stay-at-home parent, life insurance for that stay-at-home parent can be a saving grace for those who remain.
When comparing the cost of life insurance to the value, Adams said, “Fortunately, term life insurance is more affordable than you might think. A healthy, 30-year-old can [usually] purchase a 20-year policy for $500,000 of coverage for about $200 per year.” So, even if you aren’t contributing directly to the family income, the work you do at home can be covered for an affordable price.
Why do women need life insurance?
Whether working on your career or taking care of your home and family, the work you do carries financial value. Traditional models of life insurance have used salary as an indicator of how much coverage one should plan for. However, according to the Haven Life CEO, “the [insurance] industry’s conventional wisdom on choosing a plan amount is to multiply your salary by five to 10, which further devalues the impact of a spouse who has a lower salary or who is a stay-at-home parent.”
All of this strongly indicates that the insurance industry standard is shifting toward acknowledging and recognizing the financial value of work that is traditionally unpaid — specifically work which is done in the categories of housework and childcare. Independent of the insurance industry standard, the reality is that the loss of someone who provides housework and childcare will create a significant financial burden on the surviving family members. In cases where setting up money to leave behind is possible, life insurance can be incredibly beneficial in helping take care of surviving loved ones.
How much life insurance should you have?
Considering the changing culture of life insurance evaluation, it can be challenging to determine how much life insurance you should have. The short answer is that you should have enough life insurance to cover the financial hardships that will be seen by your loved ones if you pass away, which can be calculated by going through your household’s expenses and figuring your contribution.
Should both parents have life insurance?
If one spouse’s death would put a financial burden on the other, both spouses may want to purchase life insurance. Even if one parent stays at home, purchasing a life insurance policy could be worth it.
Stay-at-home parents contribute roughly $180,000 worth of work each year. If the stay-at-home parent were to pass away, replacing their household work would cost a significant amount of money. For this reason, most families would likely benefit from having life insurance coverage for both parents.
How we can minimize the life insurance gender gap
Haven Life addressed the statistics revealed in its survey with a series of recommendations for working towards minimizing the life insurance gender gap, listed below. While these may seem like simple steps for a complex problem, they are a rational starting point. However, cultural change seems necessary for this gap to close. Specifically, women and men will need to work toward valuing their lives at a similar financial rate and be provided equivalent pay for work.
Haven Life recommendations
- Understand what causes the life insurance gender gap.
- Consider life insurance coverage for both partners.
- Make sure you have the right amount of coverage for your family.
Not only is the gender gap in life insurance entangled with the myth that stay-at-home work is not financially valuable, but it is tied to the gender pay gap. When women receive less on the dollar than men for similar work, the message can be that they are worth less financially. Despite these disparities and beliefs, the numbers help show that families do benefit from women having life insurance, whether completing traditional work with an income or not.
Frequently asked questions
Should I buy life insurance for my children?
Whether or not you want to purchase life insurance for your children depends on your financial goals and preferences. While child death rates in the U.S. are low, life insurance policies can act as an investment vehicle for your child. Your child could borrow against the policy’s cash value or withdraw funds from the account.
Are life insurance policies cheaper for females?
Yes. On average, life insurance policies are cheaper for females because women tend to have a longer life expectancy than men.
What should stay-at-home parents consider when determining how much life insurance to purchase?
Life insurance is a crucial safety net for your loved ones, whether or not you contribute significantly to the family income. Stay-at-home parents provide housework and childcare that equates to roughly $180,000 in services every year. When determining how much life insurance is needed, stay-at-home parents may want to consider how much childcare, housekeeping, cooking and other services would cost should they pass away.
What is the best life insurance company?
The best life insurance company will vary for everyone based on personal characteristics. One way to find the best life insurance company for you is to speak with an independent insurance agent about your policy needs. Once you’ve nailed down which providers have the policy options you want, you may want to generate life insurance quotes online so that you can compare prices.
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