Why women need life insurance too

According to a Life Insurance and Market Research Association study, about 56 percent of women carry life insurance policies compared to 62 percent of men. 1 What’s more, this gap has grown over the past few years. 2

Accounting for the numbers.

What is responsible for the gender-based insurance gap is a matter for debate. Some speculate that women are drawn to jobs with better benefits, particularly once kids come along. That means some life insurance coverage may be provided through the workplace.

In addition, while many couples calculate their insurance needs by assessing how much cash it would take to cover off each member’s earned income, they frequently neglect to account for the myriad of unpaid tasks that women have traditionally taken on in the home.

In fact, people generally begin to think about getting life insurance when children are born. But that is also a time when women’s labour force participation is lowest. Figures from the U.S. show that 43 percent of highly qualified women with children are leaving careers or off-ramping for a period of time. 3

The problem: stay-at-home or part-time working parents often assume they have no need for life insurance coverage because they’re not the one providing a valuable financial contribution to the household. Nothing could be further from the truth.

Examine your assumptions.

Life insurance is intended to be a safety net for your family in case the unimaginable happens. But if you’re relying on workplace coverage to cushion the blow if something happens to you, consider that it may not be extensive. It’s wise to sit down and assess whether it would adequately cover your family’s needs if you weren’t around.

And when you’re doing that calculation, don’t forget to try and assess the cost of all the unpaid work you do. While many couples calculate their insurance needs by determining how much cash it would take to cover off earned income, they frequently neglect to account for unpaid contributions in the home.

Let’s face it – household tasks and child care is work. It may not be filling your bank account or shooting you to the top of the corporate ladder, but it is valuable work nonetheless. And if you didn’t do it, someone else would have to be paid fairly for taking on the task.

So think about it this way: if you had to pay someone to take over the cooking, child care, chauffeuring duties, cleaning and laundry services you perform as a stay-at-home, working or part-time working parent, how much would it cost?

When it comes to working moms, the answer according to Salary.com is that it costs US$143,102 per year to cover off the 92 hours of work put in by stay-at-home moms. Even working moms put in approximately 58 hours of extra work outside of their day jobs, valued at about $67,436. 4

To effectively assess your insurance needs, it’s crucial to recognize your significant contribution to your family. Whether you work full-time or you’re a stay-at-home parent, you provide value to your household.

Although no one will ever replace you, a life insurance policy can at least protect your family’s lifestyle and livelihood and provide a financial buffer that will help them weather a loss.

Read on for some other things that you might want to take into account when applying for a life insurance policy:

  • What debts must be covered? Include mortgage and credit card debt, as well as personal loans.
  • What is your average household budget? Tally expenses for food, rent, utilities, entertainment and children’s educational and extra-curricular activities.
  • What income do you bring in to the household? Even if you’re not the main breadwinner in the family, your income may provide a much-needed boost to the household budget, allowing for little extras that contribute to the family’s comfort and financial stability.
  • What would it cost to replace the necessary household and childcare services you provide? No one can replace a stay-at-home parent, but the pressures on your family would be intensified without help with child care and housework. Even if a family member stopped work temporarily to care for your kids, consider the cost of replacing that person’s income.

1. https://www.benefitnews.com/news/life-insurance-gender-gap-grows

2. https://brokersalliance.com/about-brokers-alliance/news/2017/01/growing-gender-gap-life-insurance

3. https://www.theatlantic.com/sexes/archive/2013/04/why-43-of-women-with-children-leave-their-jobs-and-how-to-get-them-back/275134/

4. https://www.salary.com/2016-mothers-day-infographics


416066 CAN/US/UK (03/18)

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Camilla Cornell

Camilla Cornell is an award winning freelance writer. She writes about all aspects of personal finance, from the real cost of raising kids to budgeting, insurance and retirement planning. Her articles have appeared in The Globe and Mail, Financial Post, MoneySense and Today's Parent, among other publications.