ProtectionAug 29 2019

How to increase protection take-up for women

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How to increase protection take-up for women

By looking at click-through rates from online portal The Exchange for January to June in each of the past three years, technology company Iress found that while there was little difference in the number of policies taken out by men and women, there was a significant difference in the level of cover they took out.

Undercover investigation

The difference for life and critical illness was 50 per cent, with men taking out an average of £104,710, while women took out £68,916. This nudged up to 53 per cent for life insurance, with men taking out £130,980 compared with £85,522 for women.

The largest difference – 90 per cent – was for critical illness insurance, where men took out £10,986 of cover, while women only arranged £5,790 of insurance.

Dave Miller, executive general manager (commercial) at Iress, admits he was taken aback by the findings. “I was quite surprised by the size of the difference,” he says. 

“We know the gender pay gap has some bearing but we did not expect to see women taking out so much less cover than men. We know men are underinsured, but the level of cover among women is a serious problem.”

To illustrate the extent of underinsurance among both men and women, in view of the fact that protecting a mortgage is a common reason to take out cover, compare the level of life insurance against the average house price – £229,431 for May 2019, according to the government’s UK House Price Index. This leaves men with a shortfall of £98,451 and women with one of £143,909.

Gap analysis

A variety of reasons have contributed to the difference in cover levels. Kathryn Knowles, managing director of Cura Financial Services, believes that society puts a lower value on women as a result of gender stereotyping.

“Women have traditionally stayed at home to look after the family rather than earn a salary, so the value of their contribution has been ignored,” Ms Knowles says. 

“If they were seriously ill or died, there are huge financial implications. Without protection to pick up the cost of a nanny, the father might be forced to reduce his hours or give up work altogether.” 

The gender pay gap is another contributing factor. In 2018, this was 8.6 per cent among full-time employees, down from 9.1 per cent the previous year and a significant reduction on 20 years ago when it stood at 27.3 per cent. However, add in part-time positions, which are typically lower paid and more likely to be filled by women, and the 2018 gender pay gap increases to 17.9 per cent.

Encouragingly, there are some signs that as the pay gap narrows, so does the difference in cover levels. Analysis of the past two years’ click-through rates from The Exchange shows a modest improvement. Looking at the first halves of 2018 and 2019, the difference between the cover taken out by men and women decreased by 8 per cent for life insurance and by 11 per cent for life and critical illness cover. 

The insurance industry may also need to take some of the blame. Rose St Louis, head of strategic partnerships at Zurich Insurance, says the sector can come across as very male-oriented. 

“As a consumer, I am not interested in a product if all I see are advertisements full of men,” she explains. “If there are no women, I think it is not for me.”  

Protection profile

Whatever the reason for the difference, looking at insurers’ claims statistics shows that, although the types of illness and causes of death vary between the sexes, the need for protection is broadly the same. As an example, in 2018 some 44 per cent of Aegon’s critical illness claims and 41 per cent of its income protection claims were made by women. 

The difference is more marked for life insurance, where the risk of death before age 65 is higher among men than women. Sixty-nine per cent of Aegon’s life insurance claims in 2018 were for men, with women only accounting for 31 per cent.

Drilling down into the causes shows that the most common condition for life insurance claims, excluding terminal illness, was cancer. This accounted for 53 per cent of claims made by women on Aviva’s policies. 

Cancer also dominated women’s claims on critical illness insurance, accounting for 71 per cent of the claims Aviva paid in 2018. Its statistics also show that the number of critical illness claims peaks for women between the ages of 40 and 49, with 44 per cent of claims made by women from this age group, whereas the peak for men was between the ages of 50 and 59.

Raising awareness

Given the need for women to take out protection, the industry needs to get smarter at targeting them. For Nick Erskine, head of intermediary sales at AIG Life, the six moments that matter – which were identified as part of the Chartered Insurance Institute’s Insuring Women’s Futures initiative – provide a great framework.

These are pivotal points in life where risks can change. They include entering and re-entering the workplace; starting and ending a relationship; motherhood and caring; and ill-health and dying. “Whether a client is male or female, these are key points when financial and protection needs can change,” Mr Erskine says. 

“Taking out a mortgage is the main driver for protection sales, but these six moments give advisers an opportunity to revisit their clients and discuss their needs.”

Annual protection statements can help to kick-start this dialogue. A growing number of insurers, including AIG, Royal London and Scottish Widows, send out details each year to advisers and policyholders outlining what cover they have in place. As well as acting as a reminder, this is a useful medium for flagging up the key moments when protection needs can change.

Cash flow modelling is another useful tool to highlight the need for women to take out protection. Ms St Louis explains: “Talking about death and serious illness might not be the easiest conversation when a young couple are arranging a mortgage on their first home, but show them how the loss of an income might affect their plans and it is an easy conversation starter.”

Product flexibility

Having products that adapt as life changes is also particularly important for women. Guaranteed insurability options enable benefits to be increased in the event of key changes such as childbirth and marriage, but Mr Erskine says policyholders may also need to flex cover down. 

“More women are choosing to delay starting a family and pursuing a career first,” he says. “To accommodate this we allow our income protection policyholders to reduce cover to up to £20,000 of a houseperson’s benefit a year if they take a career break.”

Life insurance policies have also become more flexible in recognition of changing lifestyles. Rather than force advisers to talk about the possibility of divorce as a reason to avoid a joint life policy, Guardian and Royal London now offer dual life policies enabling both parties to have their own cover, without the potential offence that can be caused by suggesting two separate policies. 

The industry also needs to do more to promote the female side of protection. Ms Knowles says that initiatives such as Insuring Women’s Futures and awards for women in the industry are helping, but she encourages advisers to do more. 

“Get female faces out there on social media and encourage women to talk about their finances and protection,” she says. “Engaging more with women will empower them to get the cover they need.”

Equality of cover may be some way off, but by raising awareness of needs and developing increasingly flexible products, more women will have the peace of mind that protection brings.