Despite their tendency to put their family’s financial needs ahead of their own, women still lag far behind men when it comes to protecting their loved ones with life insurance. And more than half have no coverage at all.
A 2021 study by nonprofit trade groups Life Happens and LIMRA found that just 47 percent of women own life insurance, versus 58 percent of men.1
The reasons, according to the study:
Lower earnings: In 2020, women still earn 84 cents on average for every dollar earned by men, even with similar levels of experience and education, according to the Pew Research Center. The gap is greater still for Black and Hispanic women.2 That makes disposable income, for things like life insurance and retirement savings, more difficult to come by.
That said, there are lots of ways to get the coverage you need at a price you can afford. (Learn more: Buying life insurance on a budget)
Term life insurance, for example, is generally the most affordable option, offering a bigger death benefit for a fixed number of years (often 10 or 20 years until your children are financially independent). The policy only pays out if the policyowner passes away while the policy is in force. By contrast, a permanent insurance policy (like whole life) provides a guaranteed death benefit to your designated beneficiaries over your lifetime, as long as you continue to make premium payments. Such policies also have the potential to accumulate cash value, which can be used while you are alive to help with retirement expenses, college tuition, medical bills, and any other expenses you may incur.3
For a woman looking to determine an optimal coverage level, she shouldn’t merely select a multiple of her income, but rather look to her financial goals, said Kristina Bergman, a financial professional with Coastal Wealth in West Palm Beach, Florida, a MassMutual firm. The MassMutual life insurance calculator may help.
“Focus on the value of the vision, rather than on an income denomination,” said Bergman, noting that she is the breadwinning spouse in her own household while her husband took the role of homemaker. “In the past, it may have been determined that the amount of life insurance needed was 10 times or 20 times the annual earned income. Personally, I would never consider that guidance for my own situation. That would mean my husband didn’t need life insurance! His time, presence, and support raising our son has been just as valuable as my earned income. He has as much or more life insurance coverage than do I.”
Additionally, at some point, a permanent life insurance policy can be paid up, meaning no more premiums would be due. And the death benefit can provide a memorable legacy for your family.
Women’s unpaid work is undervalued: Women, especially those who are full-time caregivers, often fail to appreciate how valuable their contribution is to their family’s financial well-being. Many believe they simply don’t need life insurance coverage because they do not produce an income or bring in far less than their spouse. Not true.
“A woman who is a homemaker makes substantial financial contributions to the family that sometimes go unnoticed until something tragic happens, which is why their coverage is so important,” said Paul Tokarz, partner of WestPoint Capital in Chicago, Illinois.
If the stay-at-home spouse died prematurely, he said, the surviving spouse would be forced to outsource all of the jobs they do around the home — from grocery shopping and meal preparation, to housekeeping, child care, and elder care, if an aging parent is involved. According to Salary.com, the value of a mother’s work by tracking real-time market prices of all of the jobs they perform is roughly $178,000 per year.
Absent life insurance proceeds, the surviving spouse may also be forced to switch to a lower-paying job with better flexibility so that they can be more present for their children.
Thus, said Tokarz, life insurance for the non-working spouse protects the income of the breadwinning spouse, which in turn would enable the entire family to maintain their standard of living if the unthinkable should happen.
Financial literacy lag: The Life Happens and LIMRA study also noted that women tend to lack confidence as financial decision-makers and perform more poorly than their male counterparts on financial literacy tests, which may contribute to the life insurance gender gap.
It doesn’t help that life insurance, as a financial protection product, is widely misunderstood.
Most working women understand that their household relies, at least in part, on their paycheck and that their income should, therefore, be protected by life insurance, but few recognize that the group coverage they may get from their employer is generally not enough. (Learn more: Is group life insurance enough?)
Similarly, single women don’t always appreciate that life insurance proceeds can be used to help pay off their debts (such as auto and student loans), taxes, and funeral expenses, which might otherwise fall to their family members.
And single moms may forget that life insurance proceeds can help provide for ongoing child care and college tuition for their kids, if needed.
Closing the gap
Reduced earnings, underestimating the value of unpaid work, and lower financial literacy rates all play a role in the life insurance gender gap.
Women — regardless of marital or employment status— who hope to protect their loved ones from financial risk should educate themselves on the types and cost of coverage available. It may help to consult a financial professional for guidance.
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1 Life Happens, LIMRA, “Women and the Life Insurance Gender Gap,” March 23, 2021.
2 Pew Research Center, “Gender Pay Gap in U.S. Held Steady in 2020,” May 25, 2021.
3 Borrowing from cash value will reduce the policy's cash value and death benefit, will increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured.