The gender pay gap contributes to underinsurance in women

Women are more vulnerable to life’s curve balls. They still get paid less than men, have fewer promotion opportunities than men and, to compound their vulnerability, are less likely to have life and disability cover.

More than a third of women (35%) cite income as their greatest asset (versus 22% of men), yet only 16% have income protection compared to 20% of men. This comes from Sanlam Individual Life’s recent survey of over 900 South Africans, which highlighted the insurance gap between the genders. Women earn up to 35% less than men for work of equal value, impacting their ability to guard against life’s curve balls.

Karen Bongers, product actuary at Sanlam Individual Life, says: “According to the United Association of South Africa, following the pandemic, the projected time to close the gender gap has gone from 99.5 to 135.6 years. In a country where 38% of households are headed by women, this has major ramifications. The pay gap contributes to women struggling, more than men, to protect themselves against the unexpected, through adequate cover and savings.”

Here are some findings from the Sanlam survey:

● Should a woman lose her income, she is less likely to be able to cover her bond or rent – even for a month. Only 26% of women had sufficient risk cover in place to continue paying their bond or rent long-term and 29% would not be able to pay it at all. The picture is quite different for men however, with 39% having sufficient cover to pay their bond or rent long-term and only 14% completely unable to cover it. Men remain better positioned to pay these costs than women. In a country of women-headed households, this is concerning.

● Most women (44%) without income protection perceive the product as too expensive, which may point to the earning gap between the genders.

THE TYPES OF COVER WOMEN SHOULD CONSIDER

When considering what types of risk cover women need, Bongers says death cover is pivotal for women who are sole breadwinners, such as single mothers.

“It’s also very important in dual-income households where the family relies on both incomes. In addition, lump-sum disability cover and income protection cover provide critical financial protection to anyone rendered unable to work due to illness or injury, including single women with no dependents. Finally, severe illness cover is an important consideration for protection against the financial implications of a major illness.”

Bongers also cites Sanlam Individual Life’s 2021 claims statistics for additional insights into the cover especially pertinent to women.

● 66% of severe illness claims from women were for cancer. It is therefore important for women to consider whether their policies have comprehensive cover for cancer, including cover for early cancer and mastectomies.

● C-section and pregnancy complications are common reasons for claims under Sanlam’s Sickness benefit. Women who intend to have children should check whether their income protection covers these incidents.

How you can plan for ‘what ifs’ when money is tight

Bongers says: “The right choices aren’t always the easy ones. Choose them anyway, when at all possible. Investing in these products now could save you from serious financial stress should the unexpected occur. Ask yourself ‘who will pay for my family’s monthly expenses should I be unable to work?’ Consider a scenario where the loss of income is temporary and one where it’s permanent. Sit down with your monthly budget to see if there are any non-essential outflows you can redirect to a life insurance premium. If you cannot fully cover your risk needs, try to cover as much as you can.

“Prioritise based on what’s most essential – for many people, this is cover that will replace an income should they be unable to work. It’s also useful to know that some life insurers have different products at varying price points. Remember to ask how premiums will increase over time – options that have much cheaper premiums upfront could increase exponentially, which could mean affordability issues later.”

Bongers says a trusted financial planner can help you set up a realistic financial roadmap that meets your risk cover needs. “Tough money conversations today can prevent even tougher times in the future. Thinking about the future now provides peace of mind in the present.”