Why every woman should review her protection insurance now

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Your contribution to household finances doesn’t end with your salary – so make sure you have the correct cover in place for peace of mind.

The quick read:

  • Women typically insure themselves far less than men, despite the fact that on top of their earnings, their unpaid work, such as caring responsibilities, make their household contribution extremely valuable.
  • While life insurance that pays out upon death is important, you are more likely to suffer a serious illness that prevents you from working, so it’s vital to look at critical illness cover and income protection insurance as well.
  • St. James’s Place Partner can review your protection insurance needs to make sure you’re well covered.

How much is your life worth? It’s not a pleasant thought to consider, but evidence shows women are placing a lower value on their input to household finances than men – and under-insuring themselves.

According to figures from insurance company Zurich, the average amount of life insurance taken out by women is 53% lower than men. For critical illness cover – which pays a lump sum if you suffer a serious illness covered by the policy – the difference is even more staggering, with women typically insuring 90% less than men1.

When we’re talking to married or cohabiting women about why they haven’t insured themselves for as much as their partner, the answer is often the same. “I don’t earn as much,” they say, or, “I only work part time.” The risks for same-sex couples of being under-insured are obviously double, even where earnings might be similar or both people may work full-time.

For those in same sex relationships, it can also be the case that one partner undervalues their contribution, and in relationships with two women, both may find themselves under-insured.

Get covered for whatever life throws at you

Whether she has a partner or not, a woman’s contribution to a smoothly run household is usually far more than the sum of her earnings, particularly if children are involved.

This means that when you are thinking about how much insurance to buy, it’s important to consider not just your financial contribution to the household finances and the money you are putting away for your future, but also all that unpaid work.

If, for example, you couldn’t work or run around after the kids, the dog, maybe even your parents, who else would? Whether it’s childcare, dog walking or tending to older relatives, this unpaid work you do without batting an eyelid might need to be paid for if you weren’t able to do it.

However, it’s not just about the amount of protection insurance you buy, it’s about making sure that you’ve got the right type – so that you’re covered whatever life throws at you.

The different types of insurance

Life insurance is one of the most commonly bought form of protection and often the priority for families. Maybe because it’s offered alongside mortgages, maybe because it’s relatively cheap, or maybe because death scares us.

This cover is important and can provide a lifeline to families if a parent dies – perhaps paying off the mortgage and easing the pressure on the surviving partner, or providing funds to pay the bills.

But death isn’t necessarily what should be worrying us most. The average 40-year-old woman has just a 4% chance of dying before she retires, but the risk of suffering a serious illness is three times as great at 12%, while the risk of being unable to work for a period of two months or more is 36%2.

With the odds of getting ill greater than the odds of dying, it’s worth considering other policies alongside life insurance.

Critical illness cover works a bit like life insurance in so far as it pays out a lump sum, but rather than paying out when you die, it pays out when you are diagnosed with a serious or life-threatening condition covered by the plan.

This could be anything from a cancer diagnosis through to heart disease or multiple sclerosis. You can spend the money as you wish to help support you through a difficult time.

Income protection insurance, on the other hand, is a bit like salary insurance. You don’t have to suffer a specific condition; rather, it pays out a monthly benefit if an illness or accident stops you working. This could be a life-threatening illness such as cancer or heart disease, but would also extend to mental-health problems, back pain and other injuries.

Review your protection needs with an expert

You can arrange these policies yourself – but it’s not always easy to get it right. Indeed, at St. James’s Place, we often see that people recognise the need for protection but don’t act on it because they’re not sure how to.

This is where a regular protection review can really help. Whether you are single, in a relationship, have children or are child free, a St. James’s Place Partner will be able to set up the right package of protection for you. Or, if you already have some cover, they can help you spot any gaps or areas where you could be under-insured.

Arranging protection means facing up to some difficult thoughts and conversations, and you don’t get that same feeling of satisfaction as you might when you’ve decided to up your ISA contributions or a savings plan for your child.

What it can buy you, though, is the peace of mind that if disaster does strike, your finances shouldn’t take too big a hit.

We always say that protection provides the foundation of your financial plan, and once it’s sorted – and your safety net is in place – you’re free to focus on achieving your bigger, more exciting financial goals.

To ensure you have the right protection in place, speak to a St. James’s Place Partner about insurance.

1 Women and protection during coronavirus, Zurich, 22 June 2020
2 Figures from LV= Risk Reality Calculator, based on a 40-year-old, non-smoking woman retiring at age 67

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