The protection gap

The changing face of the protection market – women taking the lead

To celebrate International Women’s Day we bring you some interesting facts within the protection market.

We’re all familiar with the gender pay gap relating to salary and even pension – but what about when it comes to life insurance and protection?

The gender protection gap

At a time when the proportion of female breadwinners is steadily rising, the protection gap between genders is growing in a variety of ways.

According to research carried out by the Office for National Statistics (ONS) on behalf of Royal London, the percentage of households in which the female partner earns more than the male partner has steadily risen from 19.8 per cent in 2004 to 23.3 per cent in 2019 – an 18 per cent rise.

The increase in the number of women who are either the main breadwinner or earning the same as their male partner has the potential for significant consequences including:

  • The division of caring responsibilities for children and adult relatives
  • How joint finances are managed – and who makes the decisions
  • The gender pay gap and pension gap

According to Zurich, Research from LifeSearch in 2019 found that only 6% of women have income protection, compared to 10% of men, and, for critical illness insurance, 10% of women and 13% of men have cover.

And, even though the sexes are more evenly matched for life insurance (30% of women and 31% of men), women are taking out much lower levels of cover. With life insurance, the average amount taken out by women through Iress is 53% lower than for men, whilst with critical illness insurance, it’s a whopping 90% lower.

Roles traditionally defined by gender could explain why income protection appeals more to men than women. But with women increasingly taking on the role of main breadwinner, creating more equality in these statistics is essential. There still seems to be a perception that a women’s income is less important when couples discuss protection. The result of this is whilst both are likely to have life insurance protection, only the male partner will take out income protection.

Income protection insurance can help should you become ill and be unable to work for an extended period or suffer a disability. The two biggest reasons for claims on income protection policies are back issues and mental health – both gender-neutral conditions.

It’s crucial for the message that life insurance and protection policies aren’t just for the breadwinner or just for covering the mortgage is made clear and accessible to all.

Stay-at-home mums – and dads – often fall through the protection gap. Those that don’t return to employment after taking maternity/paternity leave lose any entitlement to death in service, income protection and critical illness benefits that might have been provided by their employer. Whilst existing policies may still provide sufficient cover for mortgage commitments, there is the much wider issue of protection for the family – particularly if something happens to the primary carer. Life insurance for mums and dads to protect the family is crucial.

Research conducted by YouGov on behalf of Royal London, showed that male partners are more likely to say that financial tasks such as car, home and life insurance, alongside mortgages, pensions, investments and credit cards are their responsibility.

Furthermore, according to the ONS report on families and the labour market, UK: 2019,

  • Almost 3 in 10 mothers (28.5%) with a child aged 14 years and under said they had reduced their working hours because of childcare reasons. This compared with 1 in 20 fathers (4.8%).
  • In April to June 2019, 3 in 4 mothers with dependent children (75.1%) were in work in the UK. This compared with 92.6% of fathers with dependent children.

This highlights a further area where a gap in protection can often exist. Where women return to work on reduced hours and salary, benefits provided by their employer such as death in service and income protection will also be reduced. This could have a significant impact on the family and is often overlooked when reviewing finances.

Throughout a woman’s life, there are key trigger points where the need for cover comes sharply into focus. The Chartered Insurance Institute (CII) recognised this, identifying ‘six moments that matter’ as part of its Insuring Women’s Futures initiative. These ‘moments’, which include entering the workplace, starting and ending a relationship, and motherhood, are all points where the need for protection can potentially change significantly and are highlighted in their Financial WellBeing Guide (Jane Portas –  Insuring Women’s Futures).

And, although the CII’s work took place long before the Coronavirus pandemic swept around the world, a health crisis of this scale could also be seen as a trigger to talk protection. By making protection part of the financial planning conversation, it will help women get the peace of mind and reassurance that it brings.

As a final point for consideration. The Financial Lives 2020 survey – the impact of coronavirus makes some interesting reading. In particular, the difference between insurance and protection products held, showed that more people insure their pets than have critical illness cover on their own lives.

The research from Zurich concluded that women say their need for protection changes as they get older or someone they know dies or suffers a serious illness. The key message was that there is a general lack of understanding of the protection options available – and why it’s so important.

At FOCUS, we believe that life insurance is about protecting your loved ones and your lifestyle – the things that matter most.
Don’t fall foul of statistics – talk to us and let us help you fill the gaps in your protection arrangements.

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      Entries close 31 March 2021.


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