With most women performing a dual job in both the workplace and the home, it is vital more women get adequate protection, says Cheryl Clements
It seems that life assurance is not for women. At least that's what Legal & General's latest Value of a Mum report shows. Too few women have protection and most of those that do have inadequate cover.
Sadly there is nothing new in this finding. Since the survey was first commissioned in 1981 it has regularly found that women tend to be less well insured than men. Yet the survey has consistently highlighted that women do the lion's share of the work around the home.
A fair price
The trouble is that unpaid work has less recognisable value than the work that earns a wage. So while the main breadwinner, usually the man, is protected to a greater or lesser extent, the homemaker is less well covered.
Part of the problem is recognising the volume of work carried out around the home and then placing a value upon it. Only by doing this can families properly understand the implications if mum were to die or was so seriously incapacitated that she couldn't undertake some or all of the chores. Hence families can focus on the financial implications of such a tragedy.
In 1981, Value of a Mum showed that the time spent on average by women doing household chores was worth £204 a week. Today it's worth double that, £407 a week. These figures are of course just averages as families where both partners go out to work will inevitably spend less time on housework than those where one partner stays at home part or full-time. The number and ages of any children and regional variations in wage rates also influence the figures. But they highlight that for most people work around the home is worth far more than they imagine. Women estimate the housework is worth only 65% of its true value and men guess even lower.
Families should consider how they would cope financially if mum died or was unable to do the housework. There are really only two options - pay someone else to do some or all of it, or give up work partially or totally and do it yourself. Either way there is a cost - in wages to a third party or in lost income after giving up work.
This is the opening for discussing suitable protection. A straightforward term assurance or critical illness (CI) policy would provide funds to cover either of these results - paying a cleaner, housekeeper, cook and so on, or covering the bills if the household income dries up.
Conundrum
Another key finding that has come up each time the survey has been conducted every two or three years, is that everyone has too little protection, especially women.
The Life Insurance Market Research Association (LIMRA) recommends people take out life cover for 15 times their annual income less any existing death in service benefits provided by an employer. Based on Value of a Mum that means the average life cover for a mother should be £317,760. You don't have to be a rocket scientist to recognise that few women have anything like this much cover.
For a start most people in the survey believed eight times their income would suffice as life cover and of those who had some cover, 30% didn't know how much and 23% thought they didn't have enough.
While 41% of cover is held on a joint basis, only 8% of women admitted they had life cover on their own life and 6% said they had CI cover.
The conundrum faced by financial advisers is how to raise the subject of death or incapacity with a young couple in the early days of their family life, when it is not high on their agenda. The findings from this survey are one way of gently raising the subject.
Cheryl Clements is director of protection at Legal & General
COVER notes
&149; The average time spent by women performing household chores amounts to a comparable salary of £407 a week.
&149; Only 8% of women have life cover on a single life basis.
&149; According to calculations from LIMRA, the average life cover for a mother should be £317,760.
