Women not only need this coverage as much as men – they need more of it
By Steven Johnson
Mr. Johnson is Assistant Vice President, Product Development for Colonial Life & Accident Insurance Company. Connect with him by e-mail: SDJohnson@ColonialLife.com
Maybe life insurance, not death, should be called the great equalizer. I say this because all men and women eventually die — but they don’t die equally protected. Though women make up nearly half the workforce (an all-time high), 43 percent of women have no life insurance coverage at all.1 And women who do own life insurance have only 69 percent of the average coverage of men.2 Life insurance could be the equalizer women need to adequately protect their families when they die.
Women need life insurance as much as men
Why don’t women buy life insurance or buy enough of it? They certainly need life insurance for all the same reasons as men: covering the cost of final expenses, paying off debt, providing for household needs, leaving a legacy for family members and helping with retirement.
More women serve as head of household today, giving them increased personal and financial responsibility for others. A record 40 percent of all households with children under age 18 include mothers who are either the sole or primary source of income for their families. These “breadwinner Moms” are comprised of two distinctive groups: 5.1 million (37 percent) married mothers with a higher income than their husbands and 8.6 million (63 percent) single mothers.3 Both groups have a legitimate need for life insurance.
In addition, women are more likely to provide support for their aging parents. Estimates of family or informal caregivers who are female range from 59 percent to 75 percent.4 These responsibilities come on top of their job as mother. Without life insurance, female caregivers could find it difficult to protect the loved ones they’d leave behind. Even nonworking women have a need for life insurance when you consider the need to replace their valuable contributions to the family, such as child care, transportation and household maintenance. Yet, even though women need life insurance just as much as men, they’re less likely to purchase this important coverage.
Why women are less likely to purchase life insurance
Let’s take a closer look at some of the reasons women don’t buy life insurance and the opportunity we have as insurance professionals to help women get the protection they need.
Cost
According to LIMRA, cost is the biggest barrier to purchasing life insurance – for both men and women. People tend to overestimate how much life insurance costs, even though most everyone admits they need it. When consumers were given the actual cost of a life insurance policy and asked how this information influenced their likelihood to purchase, one-third of them said they’d be more likely to buy.5 Obviously, giving your clients more information about life insurance, including its cost, can help influence purchasing behavior.
Some women may not see their incomes as a family necessity
Society tends to place greater value on men’s salaries, often viewing women’s income as secondary. Consequently, women may not feel the need to protect their income, even though seven in 10 households are dual-income, and nearly a third of all wives earn more money than their husbands.6 Women need to be reminded of the importance of their salary to the household and the financial hardship their families could face should they die without adequate insurance.
Some women believe purchasing is difficult
One study showed that 67 percent of women believe choosing the right insurance product is a complicated process, compared to 59 percent of men.7 Insurance, with all its unfamiliar terms and types of coverage, can indeed be confusing. Simplify the enrollment process by eliminating jargon, communicating clearly and taking the time to answer any questions women might have.
Women don’t know how much coverage they need
Getting the proper amount of coverage rates as the most important factor when buying life insurance, according to LIMRA.8 But figuring out how much coverage to buy can be difficult. A common rule of thumb is to purchase a policy worth seven to 10 times a person’s income, but women aren’t purchasing anywhere near this amount. They average just $85,116 of group life coverage (compared to men at $110,300) and $124,183 of individual life coverage (compared to men at $175,983).9 Careful review of a woman’s financial situation and goals can help determine how much life insurance is appropriate.
Knowledge is the key
Misconceptions and misunderstanding abound when it comes to life insurance. Helping your female clients understand the need for life insurance and how much coverage they need can make you a valuable partner. Also, paying attention to milestones that can trigger the need for life insurance, such as getting married, having children and buying a house, can help you spot buying opportunities for women. Sometimes, simply approaching the subject of life insurance is all that’s needed. Many people say the reason they haven’t bought more insurance is because no one has approached them about it.
Don’t be afraid to talk about cost
Tell your clients the actual price of a life insurance plan that fits their needs, and they may be pleasantly surprised. But, most of all, don’t overlook the importance of talking about life insurance as part of their overall benefits package. Take a holistic approach to their benefits needs. Emphasize the importance of life, health, disability and other types of supplemental coverage that work together to offer financial protection for women and their families.
Consider the value of personal benefits counseling
The majority of consumers prefer to buy life insurance face-to-face10, and personal benefits counseling offers many advantages. Post-enrollment surveys by Colonial Life show that 98 percent of employees who participated in a one-to-one counseling session felt it was important. And 97 percent of employees say the sessions improved their understanding of their benefits.11
Employers support benefits counseling, too. Almost 60 percent of employers believe one-to-one benefits counseling sessions can strongly improve employees’ understanding of their benefits and their coverage needs. In fact, 55 percent of employers rely solely on this type of benefits communication and enrollment method.12 And when employees better understand the need for life insurance and their other benefits, participation rates improve.
Consider partnering with an outside vendor if your clients don’t have the resources in-house for a robust benefits education program. Some benefits providers offer personal benefits counseling at no charge as part of their enrollment services. Choose a partner wisely, because communicating a company’s entire benefits package is an important job. And not all vendors are created equally.
Equal opportunity awaits you
Women don’t have the life insurance they need to protect themselves and their families. Yet their incomes and contributions to their families are just as important as men’s. You have an opportunity to level the playing field. Make sure women have the information they need to make smart benefits choices that can safeguard their future.
Endnotes
1. Press Release, “Women Underestimate Their Family Contributions by Lacking Sufficient Life Insurance,” Insurance Information Institute, March 13, 2013.
2. LIMRA, Person-Level Trends in Life Insurance Ownership, 2011.
3. Wang, Wendy, Parker, Kim and Taylor, Paul. “Breadwinner Moms,” PewResearch Social and Demographic Trends, 29 May 2013, pewsocialtrends.org.
4. Fact Sheet: Women and Caregiving: Facts and Figures, Family Caregiver Alliance, 2003.
5. LIMRA, 2013 Insurance Barometer Study.
6. LIMRA, 2012 Life Insurance Awareness Month flyer.
7. MetLife, Protecting a Diverse Workforce—Steps to Address the Life Insurance Gap: Women as a Key Segment, 2011.
8. LIMRA, 2013 Insurance Barometer Study.
9. LIMRA, Person-Level Trends in Life Insurance Ownership, 2011.
10. LIMRA, 2013 Insurance Barometer Study.
11. Colonial Life Post-Enrollment Survey, January 2013.
12. Colonial Life, Life Insurance and Disability Insurance Survey, October 2011.