The gender gap in life insurance

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Key takeaways

The gender disparity between men and women rears its head in multiple facets of daily life, and life insurance is no exception. Data show that by and large, men are more likely to carry a life insurance policy than their female counterparts. Bankrate looked into the issue and found that most of the data point to women undervaluing their household labor as a key reason for not purchasing life insurance. Below, we’ll take a deep dive into how gender roles tie into life insurance and offer strategies that may help bridge the gender gap in life insurance.

How does gender impact life insurance coverage?

According to a 2023 Life Insurance and Market Research Association (LIMRA) study, only 49 percent of women own a life insurance policy. To compare, the same study found that 55 percent of men are life insurance policyholders. Other research from Mutual of Omaha suggests that the gap is even wider: a mere 37 percent of women are life insurance policyholders compared to 50 percent of men.

It is not that women do not need life insurance; in fact, all signs point to the opposite being true. In a survey from Haven Life, 79 percent of women responded that their family’s lives would be substantially worse in the event of their sudden death. If that is the case, why aren’t women purchasing life insurance? There is no one answer, but Bankrate pulled some important statistics that illuminate potential underlying causes.

The difference in how we value our lives

Data suggest that a woman’s job extends beyond the hours of nine to five. Although women now comprise nearly 48 percent of the U.S. labor force, they still shoulder much of the household responsibility within families — in part due to deep-seated societal expectations, pressures and norms.

Even after the COVID-19 pandemic pushed more parents back into their households to work from home, a majority of women claimed that household responsibilities were still mostly on their plates. In fact, 59 percent of women reported that they do more housework than their spouses, compared to just 20 percent of men who claim they do more than their spouses in this realm.

These findings bleed into how men and women see life insurance. Life insurance is meant to replace income if a spouse passes away. Although married men and women’s salaries are growing closer, women continue to undervalue their role in household labor — which has significant monetary value. A stay-at-home mom’s labor is estimated to be equivalent to a salary of about $184,000, up nearly $7,000 from the pre-pandemic median.

Bankrate’s take: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.”

The income gap and life insurance

Life insurance death benefits typically use annual salary as a baseline. Imaginably, the wage gap has a heavy hand in this, as well. While married men’s and women’s salaries are getting closer to equal, there is still a ways to go. According to the Pew Research Center, women earned 84 percent of what men earned in 2020. 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 reality is slightly more complex. Unless the surviving family members can afford an extra $184,000 a year in expenses based on the value contributed by 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?

All labor carries financial value, whether it is inside or outside of the home. 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 housework and childcare that is traditionally unpaid. 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, making life insurance an important purchase.

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 expenses and figuring out 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.

As mentioned, stay-at-home parents contribute roughly $184,000 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

Cultural change seems necessary for this gap to truly close. However, there are things the everyday person can do to help close the life insurance gender gap. While these may seem like simple steps for a complex problem, they are a rational starting point:

The bottom line

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.

Image by: Pixabay

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