The biggest financial risk for women?

By Peter Ward, Financial Adviser with St. James’s Place Wealth Management

The need for financial protection is high, yet half of all women aged 25-45 do not have any kind of protection insurance.

International Women’s Day (March 8) celebrates the social, economic, cultural and political achievements of women. The day also marks a call to action for accelerating gender parity. The race is now on for the gender-balanced boardroom, a gender-balanced government and equal pay.

Yet, despite big efforts to address gender inequality, women still tend to earn less than men. They also save less and are more likely to have part-time jobs which pay below the earnings trigger for automatic enrolment into workplace pensions.

Unfortunately, the imbalance in financial resilience between men and women doesn’t stop there. For instance, women are far less likely to prioritise protection insurance.

Figures from Canada Life show that more than half of all women aged between 25 and 45 do not have insurance that could help to protect them against loss of earnings.

The research also shows that half of women at the height of their careers have never considered their families’ protection needs and are not planning to do so.  This is staggering when you consider that women account for nearly half of the UK workforce2, and contribute huge amounts to their household.

When asked to estimate how much their absence would cost their household, 29% believe this would be between £10,000 to £25,000 per year. But a similar proportion believes the total cost could be higher.

Amount (%)
Less than £10,000 per year 20%
£10,000 to £25,000 per year 29%
£25,001 to £50,000 per year 15%
£50,001 to £100,000 per year 5%
£100,001 to £250,000 per year 6%
More than £250,000 1%
I don’t know 24%

Table 1: If you were no longer able to contribute to your household for any reason, how much extra do you think your absence would cost your household?

It’s not clear whether a lack of protection is due to lack of knowledge, affordability or a belief that ‘it won’t happen to me’. Nevertheless, many women are still failing to view – and, more importantly, protect – themselves as key earners.

“With up to £25,000 at stake for UK households, it is alarming to see that so many women have never even considered taking out individual protection insurance, be it life insurance or critical illness cover,” says Natalie Summerson, National Sales Manager at Canada Life.

“Given the emotional strain of a loved one falling ill or passing away, families should not have to also worry about the financial implications of one less person contributing to the household or be forced to rack up debt that could follow them for a lifetime.”

Whatever your plans for the future, careful financial planning can make a real difference to your life and those you care about.  Providing a lump sum upon death, illness or disability, or an income if you were unable to work, could be the best way of protecting your family’s standard of living should the worst happen.

Even if you are a stay-at-home parent who is married to a high earner, your contribution to the family still has a monetary value that would need to be replaced if you died or fell ill. So, it’s worth prioritising insurance no matter what your situation. A financial adviser can talk you through your options and offer solutions tailored to your specific needs.

 

1,3 www.canadalife.co.uk, March 2018

2 UK labour market: February 2018

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation, and reliefs from taxation can change at any time and are generally dependent on individual circumstances.

Peter Ward is a Financial Adviser who helps individuals in various stages of life and with widely differing financial backgrounds, by providing highly personalised, face-to-face financial advice. He provides holistic financial advice, and is particularly passionate about pension planning, as for most people “their retirement will be the longest holiday of their life, and so they owe it to themselves to plan for it as best they can”. Peter has two young children, so understands the financial pressures that come with parenthood, and the care required to balance today’s needs with those of tomorrow.

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