Compared with men, sales of protection to women are appalling. Females have a similar need for cover, so why, asks Graham Harvey, do they fail to buy products?
As a nation we have come a long way achieving gender equality in the past 30 years. Far from a woman's place being in the kitchen, it is now as likely to be in the boardroom. Indeed, 30% of new businesses in the UK are set up by women, and 25% of existing businesses are run by women, according to a report by the Cabinet Office Women's Unit.
Women are more financially independent than ever before, with three quarters of them in employment, compared with two thirds back in 1978. In fact, the Office of National Statistics predicts that by 2030, one-in-four women will be the main breadwinner in their family.
Skewed salaries
Of course there are still areas where more work needs to be done. For example, the average annual earnings of women are not level with men's, at £20,476 compared with £26,297.
Overall, the financial equality of women today has greatly improved since the days of flares and platforms, when it comes to protection insurance, women are still lagging far behind men.
All types of protection - life insurance, critical illness (CI) and income protection (IP) cover - are bought by more men than women. This is markedly so with IP with three quarters of its sales being attributed to men.
Despite IP being available, and often vital for housepersons, virtually none is sold to people who do not work. Figures from Axa show that, in the second half of last year, not one person who was not in salaried employment took out one of its IP policies. This is in spite of the potentially enormous cost for someone - regardless of gender - who cares for their children full-time if they fall ill or even die.
If a full-time parent is no longer able to look after their children, the cost of childcare in the UK is more than £8,000 a year for a child under two, according to the Daycare Trust.
If that parent's role in the family also includes looking after the home, caring for elderly relatives, or carrying out any number of tasks that allow their partner to go out to work full-time, these are all things that someone else may have to be paid to do.
Moreover, if someone becomes ill, their partner may have to take time off or give up work in order to care for them. This could mean the family suddenly has no income other than State benefits, currently set at £84.50 a week for long-term incapacity benefit.
Even the small number of women who take out IP do so for far lower sums assured than men. The typical amount is for just over £11,000 a year, compared with nearly £17,000 a year for men.
This pattern is reflected in other areas of protection: around 46% of CI and life cover is taken out by women for sums assured on average 18% lower than those chosen by men.
Another trend appearing since the 70s is the growing number of people who live alone. According to the Joseph Rowntree Foundation, this has trebled since 1971. In the last census 30% of households contain just one person and half of those people are of working age.
Women living alone are in a more vulnerable financial position than those who cohabit because if they are unable to work there is no second income to support them, meaning their income could drop to virtually nothing.
While some bills such as travel and food are reduced for people living solo, others change only minimally or not at all. Bills such as mortgage payments, utility bills, insurance and council tax take up a bigger chunk of a single person's salary than they would for someone sharing the bills with a partner.
That means if women living alone are suddenly unable to work, any savings would be wiped out far more quickly than if a second income was supporting the household.
Whether women choose to live alone permanently, plan to get married at a later date, or are separated from a partner, they are some of the customers most in need of protection.
Axa has carried out research with YouGov to look into why a lot of women continue to insure themselves as if they were living in the 70s.
Many of those questioned hope to rely on family and friends for financial handouts during hard times (13%), others say they would sell their home and buy in a cheaper area (10%), while some would take out a loan (5%). Whether or not they would be able to get credit if the are unable to work could probably, of course, make some of these solutions unviable.
Protection chasm
In total, nearly half of all working women in the UK do not have any protection in place. That is a total of 8.7 million women - rather than a protection gap, this is more of a chasm.
The survey also reveals that even when women do take out protection, they may not make that decision independently. While 35% make up their own mind, 40% have that decision made for them by, or jointly with, their partner.
However, even if women have not got their own protection in place, many are financially smart enough to make sure they will not end up homeless if something happens to their partner. In the survey 4% of men admit they take out protection because their partner tells them to, and a further 36% say their other half has a hand in the decision. The reasons why women do not take out protection need to be overcome.
A huge 39% of women without insurance say they simply do not think they need it. Of course there are a small number of lucky people who are truly financially independent and do not need protection, but for the majority this is not the case.
The intrusive nature of application forms can also be off-putting, with 65% of women who admit leaving out information on a protection application doing so because they are too embarrassed to reveal personal information.
Making female customers aware of modern data collection methods such as full tele-underwriting can help them feel more comfortable about taking out protection policies. Knowing up front that they do not have to reveal any personal health and lifestyle details to their adviser, particularly if they are with their partner, could sway it as to whether they take out a policy.
Insurers and advisers generally shy away from using the disturbance techniques popular in the life industry 30 years ago. These include real-life horror stories, such as the widow who faces financial destitution when her husband dies, because he does not have protection in place.
But the industry has swung so far the other way that perhaps it needs to make sure it regularly reminds customers of the need for protection to reduce that figure of 39% who do not think they need it.
Harsh reality
Simple statistics like every two minutes someone suffers a heart attack, or that more than a quarter of a million people in the UK are living with disability following a stroke can be effective. How about the fact that if an adviser is in the room with a couple, statistically one of the three of them will get cancer?
With breast cancer being the number one female cancer, CI plans that include cover for total mastectomy are important for female customers to look at as only a handful of policies include this.
Also of particular importance for anyone with dependants is to check that their CI policy includes cover for their children, and at what level as this can vary greatly.
It is clear that everyone in the industry needs to find new ways of engaging with women. Whatever it is doing now is not working well enough and as a result many women have no protection in place.
Women need to be offered the right cover for their needs, with a straightforward application process, to make sure they are not disadvantaged and have adequate protection in place.
- Graham Harvey is managing director of protection at Axa.
