Women Lack Life Insurance

Women comprise almost half the U.S. labor force, and their contributions to family finances are more important than ever.1 A record 40% of households with children under age 18 include mothers who are either the sole or primary breadwinner. In 1960, only about 11% of women carried this level of financial responsibility.2

About 37% of “breadwinner moms” are married women who earn a higher income than their husbands. The other 63% are single mothers.3 Of course, many working women might not earn more than their spouses but still make a contribution to the family’s finances.

Stay-at-home moms also contribute to family stability, even if they don’t bring home a paycheck. Based on wages that would be paid for common household tasks, the annual “value of mom” in 2013 was $59,862.4

Coverage Gap

Despite the growing importance of their financial contributions, women are less likely than men to have life insurance (see chart). And those who do have insurance often have lower coverage amounts — an average of $169,000 for married mothers versus $215,000 for married dads.5 Considering that life insurance should replace a worker’s lost income for as many years as necessary for the family, these averages may be below what many men and women with children could require.

The most cost-efficient way to obtain coverage is typically term life insurance, which may be less expensive than you think. One study found that consumers tend to overestimate the cost of life insurance by almost three times the actual cost.6

As the name suggests, term life insurance pays a death benefit if the insured dies within the covered time period, which could range from one to 30 years. Premiums may adjust each year or remain fixed for the full term, depending on the policy. Unlike work-based coverage, which could be lost if you change employers, an individual policy will stay in force throughout the specified term as long as the premiums are paid.

In addition to premiums, there are other expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving
life insurance, it would be prudent to make sure that you are insurable.

A century ago, women were not even able to buy life insurance.7 Fortunately, times have changed. Whether you’re the breadwinner, a co-provider, or a stay-at-home parent, be sure that you have enough coverage to protect your family in the event you are no longer there to provide for them.

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JON TEN HAAGEN, CFP, RPC
Your Investment Portfolio Repairman
Founder and CEO
Ten Haagen Financial Group
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Huntington, NY 11743
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jonlth@tenhaagen.com
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1) U.S. Bureau of Labor Statistics, 2013
2–3) Pew Research Center, 2013
4) Journal of Financial Planning, June 2013
5) AdvisorOne.com, January 9, 2013
6) LIFE Foundation, 2012
7) Insurance Information Institute, 2013

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2014 Emerald Connect, LLC