Do women need life insurance?

Posted in: Finance Last updated: 04 Jul 2014

Last year, The Institute of Public Policy Research reported that 2.2 million working mothers are now the family’s chief breadwinner – an increase of 83% over the past 15 years [1].

The same report points to the growing number of single women primarily responsible for providing for their children financially. But despite more women taking the lead on financial income, there’s a real gap in their insurance take-up. In 2013, Friends Life group uncovered the fact that nearly two-thirds of women have never held a life cover policy [2]. It’s a completely different picture for men, with almost two-thirds of them having an insurance policy in place. This is surprising when we compare it to research from the Association of British Insurers, which states that 53% of women worry about how they would cope with an unexpected event [3]. This gets us wondering, why women are not considering life cover.

In 2011, 91% of the 2 million single households were run by a woman, according to the Office for National Statistics [4]. This is worrying when you consider the high number of women under-insured, and begs the question as to whether these children will be left in a vulnerable position if tragedy were to strike. Even in a two-parent family, not having life insurance could have serious implications.

Having enough cover

Even if you are in the minority and have cover, there is another consideration in all of this. Because insurance is often a distress purchase i.e. a necessity, we don’t really consider the true cost of living when we decide on a figure to insure. For sure we cover the big things, like the mortgage, debts or car loans, but how many of us can say that we’ve factored in enough so our partners can maintain their current lifestyle or our children can fulfil the aspirations we have for them such as attending university or living independently?

Whilst we go about our lives in blissful ignorance (or is that avoidance) of the subject, maybe it’s time to take stock of what we have, and what our loved ones might lose if something unexpected were to happen to us. Here’s a breakdown of why life insurance should be a consideration for women irrespective of their circumstances.

Working women

If you’re a working woman (or man), your earnings will significantly influence the way your family leads their lifestyle. Life insurance can help to cover the daily basics such as food, bills, clothes and savings if something were to happen. The proceeds can also be used towards funeral expenses or to help with the string of costs that come with death. Let’s not forget that inheritance tax is charged at 40% on everything in your estate over £325,000. The last thing you want is to leave your family in a position where they have to sell important assets such as the family home to pay for these duties.

Single women

Often life insurance is overlooked by single women (and men) with no children. Whilst we might be forgiven for thinking this status provides a level of self-containment if we are no longer around, it’s important to remember that dependents don’t just mean offspring – many people today are taking care of ageing parents or supporting younger relatives who are struggling financially. Even if you’ve already named your family members in your will, debts are removed from your estate first – which could potentially deplete what’s left. Life insurance can act as a safety net by providing another stream of income for them.

Single mums

If you’re a single parent you’ll have your hands full. You’ll be the one shouldering most, if not all, the responsibilities of raising and protecting your family. As long as you stay healthy and can work, your children’s needs will be fulfilled – but what if something happened to you? This is where life insurance comes in. Life cover can help to replace lost income so that your children can be looked after. Leaving survivors with money to properly support your offspring can also help to ensure they have all the opportunities you desire for them.

Family caregiver

Many people are faced with the responsibility of caring for elderly parents at some point or another. If you’re caring for a family member, have you ever considered what would happen if you were no longer around? Would another relative step in or would help be needed from elsewhere? The cost of health care, medical costs and transport all mount up. With annual care home bills currently sitting at around £36,000, there’s no sign of this slowing down – and very few have factored this into their financial plans. Unfortunately these financial responsibilities won’t disappear after your death and someone will need to pick up the costs. A life insurance policy can ensure continuity of care by providing survivors with the funds to foot the bill.

It’s important to remember that with more financial responsibilities than ever before, life cover protection for women is equally as important as it is for men.

1 IPPR (August, 2014), “Who’s breadwinning? Working mothers and the new face of family support” [online]. Available from www.ippr.org
2 Friend Life Group (September, 2013), “Just under two thirds of women have never taken out life cover” [online]. Available from www.friendslifegroup.com
3 Association of British Insurers (June, 2009), “Uncovered and exposed in the recession one in four people cancel their home insurance” [online]. Available from www.abi.org.uk
4 Office for National Statistics (2011), “Families and Households, 2001 to 2011″ [online]. Available from www.ons.gov.uk.

Note: Whilst we take care to ensure Hub content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decisions. OneFamily do not provide advice so it may be worth speaking to an independent financial adviser about your own circumstances.