Life insurance Updated:
A new study by Aegon has found that for 28% of women, the inability to support themselves or their families financially is their greatest financial fear. And yet, the same research shows that 51% of women have no form of protection against financial curveballs.
This is despite the fact that 46% of women believe it is their sole responsibility to make sure their family has enough income should something unexpected happen, such as an illness or redundancy, or worse. Mothers even put financial security as the second-most important priority for their children, with 29% ranking it just behind their children's health and happiness (56%). For women without children, 42% put their partner as their top priority. This shows that while women greatly value family and financial security, they are not taking the next step and protecting themselves from the unexpected.
Not only are millions (51%) of women not taking out life insurance, income protection or critical illness cover, but additional research by Zurich has found that 41% of women aged 25 to 39 aren't even paying anything into their pension, compared with 30% of their male peers. And of those that are saving into a pension, 16% don't know how much they're putting aside, compared with just 7% of men who say the same. In addition, 15% of women said they are unsure even what type of pension they're saving into.
Emma Huntington, managing director of Zurich FutureYou, pointed out that "if women are unable to start saving sooner, they may have reduced financial freedom in later life." The problem is exacerbated by the fact that women don't tend to earn the same as their male counterparts, with many choosing to work part-time or take a career break to raise children.
What this requires is for women to be more involved with their pension, not less, and to pay in extra when they are working full-time, to make up for later part-time employment. Yet 33% of women do not know what the best way is to save for retirement, compared with 21% of men, showing there is a real gap between what they need and what they know.
While Emma understands that "women in their twenties and thirties are delaying saving until their forties, or even later" because of "the domino effect of lower wages and starting a family, as well as other financial pressures such as rising house prices", she urges women to consider their retirement as early as possible. This could mean seeking out an independent pensions adviser, or simply taking a first step by consulting our guides. Employers can and should play an important part in this: "Workplace engagement and guidance has a key role to play in helping women make the right choices at key life events, whether they are just starting employment or taking time out to raise a family," concluded Emma.
It may be hard to think as far ahead as retirement when you haven't even established a family yet, but that's no excuse not to take out some financial protection in the meantime. Life or income protection can be the difference between being able to keep up your mortgage payments while recovering or grieving and having to deal with ill health (or worse) while being forced to move your family into a smaller home.
As with retirement saving, cost is seen as the main barrier, with the research from Aegon showing that 48% of women think that protection is too expensive, while 20% don't see it as a priority and 19% think it's a waste of money. Instead, 38% of women say they can rely on their savings if they couldn't work for six months, but at the same time 16% of women admitted they didn't have any savings at all, while an equal 16% said their savings would only last for six months and just 13% believe their pot would support them for a year or more, so that doesn't seem like such a viable option.
Aside from savings, 35% of women would rely on their partner's income to manage financially. And yet, 49% rely on two household incomes to meet everyday expenses, so removing one income from that equation could mean a lot of hardship, strain, and financial stress, which is not good for anyone, especially if they are out of work. Given that a life insurance policy can cost as little as £7.01 a month for a 35-year-old non-smoking female according to figures from Aegon, this seems like a small price to pay to avoid the stress and pain that would come with meeting an unexpected challenge unprepared. So why not compare the costs of life insurance (with or without critical illness cover) and income protection using our commitment-free comparison tools to see how much some peace of mind would cost you?
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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