Research released by the Investment and Financial Services Association in late September highlighted the fact that Australian women with dependent children had significantly less life insurance than their male counterparts.
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Women are the underdogs when it comes to insurance
Research released by the Investment and Financial Services Association in late September highlighted the fact that Australian women with dependent children had significantly less life insurance than their male counterparts.
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Women are the underdogs when it comes to insurance ... continued from above
The IFSA-sponsored research found that 50 per cent of female parents hold
life insurance, compared to 62 per cent of male parents, but their cover
is “most likely to be through their superannuation fund and is therefore
unlikely to be adequate in meeting their family’s needs, unless extra
units of insurance cover are purchased”.
The research represented part of IFSA’s push to address what is perceived
to be a chronic under-insurance problem in Australia, but recent data
compiled by trans-Tasman financial services house Tower suggests the
problem where it related to women goes much deeper.
The bottom line of that research is that, generally speaking, the
insurance industry adopts a very different approach when it comes to
insuring women, and one that tends to explain the findings of the recent
IFSA exercise.
In circumstances where the attitude of insurance companies is largely
determined by their claims experience, the Tower data makes disturbing
reading for those hoping to inject equality into the life insurance
equation.
According to Tower, the most recent Australian study into
disability
income claims drivers was the Report of the Disability Committee,
conducted by The Institute of Actuaries of Australia in 1997, a study that
analysed the combined incidence rates and average claims duration of 17
life insurance companies during 1992 and 1995.
That report confirmed that Australian women had a significantly worse
experience than men, with the overall incidence rates for females being
138 per cent of that for men. In other words, women represented a higher
risk for insurers than their male counterparts.
The Tower analysis of the 1997 study said that when analysed over
different occupations and waiting period categories, female incidence
rates were almost always worse than the corresponding male category.
The study also found longer average claims durations for females.
“In aggregate, the average claim duration for women was 131 days compared
to 110 days for men,” it said. “The data analysed cause of claim and
occupation, and the results demonstrated an experience for females which
was almost always worse than males.”
The problem confronting insurers and, indeed, women is that more recent
exercises undertaken by the same committee suggest that there has been
little improvement over recent years.
Noting these findings, Tower’s analysis said that Australian insurance
companies also referred to their own claims experience and other factors
before determining appropriate disability premium rates.
“We can confidently conclude that the higher premium rates calculated for
female
income protection policies are based on actual facts regarding the
higher costs of insuring females,” it said.
In launching the outcome of its research late last month, IFSA noted that
women often cited the high cost of obtaining appropriate insurance as a
major hurdle to getting coverage, but pointed out that women with
dependent children could get coverage for as little as a dollar a day.
Referring to the research, IFSA chief executive officer Richard Gilbert
said: “Women commonly cited the expense of
life insurance as the primary
reason for not having risk protection cover, with 48 per cent of full-time
working mothers stating that expense was a major barrier to coverage”.
“Clearly, our industry has got to do a better job of dispelling the widely
held belief that life insurance, particularly among women, is too
expensive. Term life cover for up to $700,000 can be bought for around $1
per day,” he said.
Gilbert said only 20 per cent of full-time working women with dependent
children had enough insurance to cover their income for three years or
more, yet the commonly accepted benchmark was 10 times their annual
salary.
“A recent House of Representatives Committee Inquiry into Balancing Work
and Family heard that the hourly rate for nannies looking after children
and assisting in the running of a household ranged between $18 to $26 per
hour,” he said. “Based on these hourly rates, for 50 to 60 hours a week, a
family losing a mother may find that the cost of home help and child care
for very young children is in excess of $75,000 per year – not that you
can ever really put a price on a mum, or a stay-at-home dad for that
matter.”
“Fifty per cent of female parents hold life insurance as compared to 62
per cent of male parents, but cover is most likely to be through their
superannuation fund and is therefore unlikely to be adequate in meeting
their family’s needs, unless extra units of insurance cover are
purchased,” Gilbert said. “I think that when you look at what it can cost
to raise children and run a household in the absence of a mother, a dollar
a day to insure a woman with dependent children is really very
affordable.”
by Mike Taylor
Source: Money Management
Disclaimer:
The information contained above has been provided as a general
service. Any references to specific financial, legal, accounting, or
taxation issues are done so in the context of general information
and should not be relied upon as fact or construed as advice by the
us in any of these areas. You should consult a relevant financial,
legal, tax or accounting professional to assist in your particular
circumstance. |
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