How serious is the underinsurance problem? MetLife’s 8th Annual Study of Employee Benefits Trends found that married men with minor children have, on average, five times their annual household income in life insurance coverage — if they have coverage. Married women with minor children have, on average, only three times their annual household income in coverage. This gender gap is noteworthy because men and women express equal concern about the financial impact of their premature death on their families — yet women are more likely to be underinsured than men.
Financial planners say it’s common for married women to assume that their spouse’s income and savings will do the heavy lifting. However, many women overlook some important expenses that life insurance can help cover. For example, the death of a working mother may not only terminate an income source but also a family’s source of health insurance, tuition assistance and other financial benefits.
Consider the Value of Women’s Household Contributions
The loss of a working woman means more than the loss of her income and benefits. Penn Mutual Life Insurance Company surveyed families in 2011 to determine the dollar value of the tasks male and female parents perform. As other studies have found, even among couples where both partners work, women are likely to bear a heavier burden of the childcare and household responsibilities. Penn Mutual found that men spent an average of five hours per week doing household tasks, while women spent an average of 17 hours per week on the same tasks…more than three times what men spend.
Penn Mutual calculated the economic value of household chores couples perform, including housekeeping, laundry, food preparation/cleanup/cooking/serving, traveling for and driving children, and miscellaneous/animal caretaker tasks. Men were likely to overestimate the value of their household contributions by $30,000 or more, while more than half (52 percent) of women underestimated their worth by at least $10,000; 36 percent of women undervalued their worth by at least $30,000. In fact, Penn Mutual found the average married woman of minor children performs household and childcare tasks worth an average of $44,913 per year—significantly more than the 2015 median annual earnings for all full-time wage earners, as determined by the Bureau of Labor Statistics.
Consider Women’s Longer Lifespans
In addition, women are more likely than men to spend part of their retirement alone, making it even more important for them to have their own life insurance and annuity plans. Women have longer life expectancies—80 years vs. an average of 75 years for men. The fact that women tend to be younger than their male spouses further increases the likelihood of a woman becoming a widow.
Fortunately, there are some easy ways to help your female employees fill the life insurance gap. If your employer-paid plan offers only minimal coverage, such as two or three times annual salary, you can offer employees supplemental policies to add additional limits. Even individuals with pre-existing health conditions can often obtain a minimum amount of coverage, usually $25,000 to $50,000, if your group meets participation requirements.
Many employees need help to understand the importance of life insurance in their overall financial plan—along with help in determining how much insurance they need. We can help your employees by tailoring a program to their needs, at no cost to you.