Why should women consider life insurance or income protection?
According to a survey by Lonergan research conducted in 2011, 83 percent of women say that their death will place a huge financial burden on their family. Furthermore, a 2017 survey1 by finder.com.au found that one in four Australian women wouldn't be able survive on their sick leave and savings if they were suddenly forced out of work. This is a stark contrast to one in six men.
Taking out Life insurance can ensure that your family will not be in financial trouble if you are no longer around to provide for them. Income protection can help you with the costs of living if you are forced out of work due to injury or illness.
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Contents of this guide
Australian Women are at Risk of Underinsurance
finder's research indicates that women are significantly less likely to protect their income in comparison to men. We analysed 7,000 income protection quotes on the finder.com.au engine and found that only 31% of quotes were taken out by women (vs 69% taken out by men).
Similarly, a survey of 1150 Australian women conducted by Westpac showed that 6 out of 10 women did not have life insurance, with 5 out of 10 stating their partners does not have it either2.
Women now contribute a great portion of combined household income to their families. These families could experience great financial hardship if this steady income was suddenly taken away.
Furthermore, the study showed that almost seven out of ten women (68%) who did not have life insurance, were not interested in taking out life insurance at all. It is vital as a women that you do not underestimate your value to the household both in terms of financial contribution and the role you play within the household.
The Lonergan study showed that two-thirds of the women surveyed were in charge of household administration. If you spend time taking care of the kids, then a permanent nanny may need to be hired, or your partner may need to take time off work in the event of your death. While it is an unpleasant thought, it is important for women to consider their own situation and how their family may be impacted on if they were to pass away.
1 finder survey August 2017
2Source: Ruby Connection, November 2012
Benefits of Women’s Life Insurance
There are many benefits that come with having life insurance cover for women. Some of these benefits include:
- Peace of mind and financial security for loved ones: With life insurance cover in place you will be able to enjoy the peace of mind that your family has financial security in the unfortunate event of your demise. This means that in the event of your death they will not be left to deal with financial anxiety in addition to dealing with their grief.
- Selection of Beneficiary: The policyholder is able to select up to 5 beneficiaries, who will get the insured amount after the policyholder passes away. Policyholders can choose both friends and family members to be the policy beneficiaries. This selection can be adjusted at any time.
- A Choice of Plans: The vast number of life insurance providers and products on the Australian market means that you have a greater chance of finding an affordable policy with all of the necessary benefits and features for your situation. You may also choose different types of life insurance to accommodate for your specific needs.
- A Wide Range of Optional Benefits: Most policy providers understand that everyone’s needs are different, and hence they provide a wide range of optional benefits that can be bought for a higher premium rate. Some providers even provide additional benefits at no extra cost.
Different Types of Life Insurance Plans that are Available for Women
- Term Life Cover: Offers a lump sum payment to your beneficiaries in the event of your death or if you are diagnosed with terminal illness (less than 12 months to live).
- Income Protection: Provides a regular benefit of up to 75% of your income if you become unable to work due to serious illness or injury.
- Total and Permanent Disability Insurance: Pays a lump sum amount if you are unable to work due to disablement which is deemed total and permanent.
- Trauma Insurance: Provides a lump sum payment if you suffer a trauma condition as defined by your insurance policy. Common Trauma conditions that are often covered include cancer, heart attacks, open heart surgery, brain tumours and stroke.
Life Insurance Cover for Women in All Stages of Life
You may be wondering, do I really need Life insurance? Is Life insurance for me?
Young women may not have dependents, only a few small loans, a relatively low income and very few other financial commitments. It may seem as if life insurance will not be necessary here, but what happens if you become ill or are hospitalised and are unable to work for a long period of time? Will your parents or friends be able to support you? In this instance, it can be worth considering Income Protection Insurance.
Middle age women are generally experiencing an increase in income, possibly have taken out a mortgage and are in the process of repaying it and they may have started a family. Here the need for life insurance is most prevalent, as you have people who are dependent on you and you have large debts to be repaid.
Women whom are in their 40’s and 50’s could be at the peak of their employment in terms of income, they may have paid off or almost completely paid off a mortgage and have children whom are entering university or becoming financially independent. Here life insurance policies are to help with a secure retirement, and to pay off any last debts or fees for your children. Life insurance policies may be taken out to ensure that you and your family are able to continue to live a comfortable lifestyle. It can also be worth considering Trauma Insurance Policies to ensure their is cover in place should you suffer a critical condition.
How Much Life Insurance Coverage is Adequate for Women?
Everyone’s situation is different and you should reflect on your own circumstances and needs before purchasing life insurance coverage. Some of the things that you should consider when deciding on how much coverage you should take out:
- The cost of feeding, clothing and educating your kids if they are still dependent on you.
- The possibility of someone in your family facing a reduced income due to time spent on looking after your kids.
- Whether childcare will be necessary, and the costs associated with that.
- How much you still owe on long financial commitments such as a mortgage, car loans, credit card debts etc.
- The loss of your own income and how your family will make up for that to pay for bills, accommodation costs, food and essential day to day payments.
- Funeral expenses can be expensive and you may need to factor this into your calculations.
- Whether or not you’d like to leave money for your kids to help with payments towards a house or car when they are older.
Tips for Women in Comparing Life Insurance Quotes
- Shop around: Comparing the different features and benefits between life insurance policies and providers is important as you want to ensure you get the best value for money. With so many insurance companies on the market, and even more insurance policies, you need to do your research to find the best rate and quality of cover.
- Protect the future of your children: Some companies offer specialised Child Cover options on standard policies that you may want to consider. This is usually in the form of a lump sum payment if your child suffers a traumatic event or passes away.
- Check for Exclusions and Restrictions: Ensure you know of all the exclusions and restrictions on the life insurance plan that you choose to take out. This will help you understand what exactly is and is not covered, and choose a policy that is right for your needs.
- Find the correct level of coverage for your needs: Think about what level of coverage will leave you family financially secure and use this information to compare the levels of coverage offered with various insurance companies. This will ensure that you are not under-insured or a self-assessment calculator can help you determine this amount.
- Ask about different payment structures: You may have the options to choose what type of payment structure you prefer, for example Stepped vs Level premiums. It is important to consider your own situation and how your finances my change into the future. Stepped plans that start off low and increase over time can be more suitable for people with less disposable income in the early stages of their policy.
- Consider a Joint Insurance Policy: There may be discounts available on joint life insurance policies that cover both you and your partner. Joint policies are also worth considering because it offers protection to your family if anything were to happen to either you or your partner.
- Direct is not always the best: Dealing directly with one insurance provider is not always optimal as you are not presented with a range of policies from different providers, so it may not be the best deal available. Many financial advisers and online comparison websites even offer discounts on the level of premium that you pay and policies that may not be directly available from a provider.
Applying for Women’s Life Insurance Plan
Life insurance should be at least considered by all women. It doesn't matter if you are a stay-at-home mum or a young career women with no children - some form of life insurance could be beneficial to you or your family. Perhaps you would like to protect your family in the event of your death or terminal illness. Or maybe you are unable to work anymore due to injury or illness and would like the peace of mind that you will be able to continue to financially support your lifestyle. Before you do apply for an insurance policy though, make sure you do some research and comparison of each of the different companies and the policies offered by each to ensure you are not under-insured and getting the best value for money.