Women and the Life Insurance Gender Gap

by | March 23, 2021 | Life Insurance

Women’s History Month is a time to reflect on women’s many contributions to American life. It’s also a time to gauge how far women have come in achieving true equality. 

Many people are aware of the gender pay gap of women earning on average only 82 cents to every dollar earned by men. Another troubling financial reality people are less aware of is the life insurance gender gap.

Initial findings from the 2021 Insurance Barometer Study, by Life Happens and LIMRA, show that just 47% of women have life insurance, versus 58% of men. That’s a big difference. But many women may have an inkling that this disparity isn’t good: 32% of those with no life insurance say they need coverage, and 11% of those with coverage admit they need more. 

Reasons Behind the Life Insurance Gender Gap

  • Women’s lower earnings lead to less coverage. Life insurance coverage limits are often a multiple of your annual earnings. According to the Bureau of Labor Statistics, men earn an average of $55,744 while women earn an average of $46,488. Using a common multiplier of 10 (with 10 times your salary being a general rule of thumb for how much life insurance you might need) would mean the average woman could end up with $925,600 less coverage than an average man.
  • Women’s unpaid labor is undervalued. More than one in four mothers stays at home with her children. And many other moms work reduced schedules to accommodate the needs of their families. While these women may not earn large paychecks (or any paycheck at all), the value of their unpaid labor is immense. Salary.com pegs the value of childcare, housekeeping and more that stay at home moms provide to be worth $178,201 a year.

    This reality is further compounded if a breadwinning spouse or partner gets life insurance through work. While life insurance from your employer is almost never enough, it is an important starting point for many families. Life insurance through a job usually only covers the worker.
  • Women lack financial literacy. A study by FINRA revealed that women answered only 48% of financial literacy test questions correctly. Meanwhile, men answered 58% correctly. A lack of confidence in their financial know-how may keep many women from getting the life insurance they truly need.

Closing the Life Insurance Gender Gap

There’s a growing awareness about the outsize contributions women make toward the care of their families. This unpaid labor is not cheap to replace, which makes life insurance for women a necessity.

Women can help close the life insurance gender gap by taking stock of their life insurance needs using the Life Insurance Needs Calculator, exploring life insurance basics on this site, and talking to an insurance professional about coverage. Check out our helpful information on how to choose a qualified insurance professional. Then use our Agent Locator to find one in your area. (You may be surprised by how many are women!)

Amanda Austin

Amanda Austin

Amanda Austin is a freelance writer who has worked in the insurance industry. She lives in Erie, Penn., and holds the CPCU, AINS, and AIS designations.

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