Life insurance gender gap grows

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New research on life insurance ownership rates presents producers with an opportunity to help improve coverage for women when tailoring communications about the importance of this product line.

Just 56% of American women have life insurance coverage, compared with 62% of men, according to LIMRA’s Life Insurance Ownership in Focus, U.S. Person-Level Trends: 2016. While the amount of coverage women purchased spiked nearly 21% since 2010, researchers say it’s still inadequate relative to men at $160,782 vs. $206,357.

James Scanlon, research director for LIMRA Insurance Research, was surprised that the ownership gap between men and women widened to a six-point differential from a four-point margin in 2010. “There’s no singular reason that drives this gap,” he says, adding that the group life ownership rate is 39% for men vs. 34% for women.

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One barrier is that women worry about being able to afford coverage, though LIMRA suggests that financial professionals can help dispel this concern. “There is a misconception about the cost of life insurance,” Scanlon says. “Most people simply believe it costs two to three times as much as it actually does.” In addition, he notes that there’s enough flexibility with this product that a life insurance agent can tailor a policy to fit every individual’s budget.

Reasons for the disparity

Other workplace and retirement research from LIMRA shows that women tend to gravitate toward jobs or careers in education or the nonprofit sector whose benefits aren’t as generous as men. These results reflect gaps not just with life insurance, but also retirement savings and other benefit products at both the individual and group level.

Another issue worth considering is the potential for life insurance to get lost in the shuffle. For instance, a new LIMRA Secure Retirement study warns about the so-called benefits wallet approach wherein each employee is given a certain amount of money each year toward the benefits they want. With nearly 90% of workers ranking health care coverage and retirement savings plans in their top five most important benefits, LIMRA researchers are concerned that they “might ignore life insurance, disability insurance and other valuable benefits.”

The fact that fewer women have life insurance coverage or are under-insured “leaves many American families at risk if they should die prematurely,” according to Scanlon. Aside from financial considerations, he references how households also would be vulnerable without women helping raise children or manage households. “If the other partner is not in a position to do that after the loss of a life or premature death, and there is no income to replace those services, then that spells big trouble for the household,” he adds.

Noting that face-to-face communication is the most effective means of imparting key messages, Scanlon says consumers are more responsive to tools that allow them to compare their coverage to peer groups. He also cites mounting interest in buying life insurance through the workplace, which can help engage buyers with distributors or agents to make more informed decisions.

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Life insurance Voluntary benefits Employee benefits Gender issues LIMRA