Equal insurance for Equal risk
She received less pay than a man for work of equal value, was more likely to work in care industries or subordinate roles, and would have been expected to leave employment once she married to focus on the care of her husband, children and home. Even in Australia, women working in the federal public service had to resign when they married right up until 1966*.
Fast forward to 2011 and dual-income households are now the norm. Today almost 4.8 million women are in some form of paid employment, with a labour force participation rate of 58 per cent. More than 30 per cent of Australia’s small business operators are women. Women hold 36 per cent of senior executive positions and make up more than half of the Australian public service workforce, while in Federal Parliament the position of Prime Minister is now held by a woman, for the first time in parliamentary history†.
* Women – Towards Equality, 2008, Department of Foreign Affairs and Trade, www.dfat.gov.au/facts/women.html. † Ibid.
Yet while women’s presence and influence in the workforce has dramatically increased in the past 50 years, women have not acted to protect themselves and their earning capacity in the same way as their partners, husbands and brothers.
Women’s income still vulnerable
Logic suggests that women are no less likely to suffer from illness and injury than men, yet they still don’t exercise the option to cover themselves with insurance.
Despite the increased presence of women in the workforce, they typically spend less time in the workforce than their male counterparts. This is partly explained by taking maternity leave, but women are also more likely to retire early and they’re often the ones who take time off work to look after children or elderly relatives.
Less time in the workforce means women accrue less savings, less superannuation and are less able to recover from financial setbacks than their male counterparts. Women also live longer than men on average, so these setbacks can leave women more financially vulnerable over a longer period of time.
Lack of awareness and understanding
Research has demonstrated disturbingly low levels of awareness and understanding among Australians when it comes to life insurance. The Investment and Financial Services Association (IFSA) found that cost is one of the biggest barriers to people taking out life insurance, with over 80 per cent of people saying it is ‘too expensive’, yet at the same time 61 per cent over-estimating the cost. In fact, the monthly premium for a 35 year old female non-smoker applying for $500,000 of life cover is generally as low as $25*.
Australians are not averse to insurance in general: 83 per cent insure their car, but only 31 per cent insure their ability to earn an income†. This is a chronic state of underinsurance, considering Australian Bureau of Statistics reports that more than three in four Australians will be diagnosed with a serious illness in their working life‡, while one third of women and a quarter of men will suffer cancer during their lifetime§.
What types of insurance should women consider?
• Income protection typically covers up to 75 per cent of your income if you can’t work temporarily due to illness or injury.
• Business expenses insurance is vital if you are self-employed or run a business. Should you become ill or incapacitated, you will be able to cover your fixed business expenses, which could include the cost of finding a temporary replacement to carry out your work duties if needed.
• Trauma insurance can help protect you from the costs associated with diseases like cancer, whether you are in the workforce or not. It can pay a lump sum on diagnosis to help cover the costs associated with treatment.
• Life and/or Total and Permanent Disability (TPD) insurance can provide a lump sum to you or your beneficiaries if you die or are seriously disabled. This can be vital if you have a family or a mortgage which relies on your income. Even if your time is spent at home looking after your family, your death or disability may require hiring a nanny or housekeeper to provide the care and services you previously performed.
* Industry Facts Page, LiveWise, IFSA, www.lifewise.org.au.
§ Cancer in Australia: An Overview 2008, Australian Institute of Health and Welfare, December 2008
How to make insurance more affordable
There are several different strategies that may reduce the cost of premiums and it is worth talking to us before you take out insurance to find out whether they apply to your circumstances. For example, income protection and business expenses insurance premiums are often tax deductible.
You may also be able to reduce the effective cost of life and TPD insurance by linking your policy to your super and using your pre-tax salary to pay premiums (however, there may be some restrictions to your benefit in this scenario).
Get the cover you need
Try putting a value on everything you do – not just at work, but at home too. Consider what it would mean financially if you were off your feet for a while. Now consider the cost of any necessary treatment, rehabilitation, or modifications to your house. It could easily run into tens of thousands of dollars. Many of the comprehensive insurance products available these days can provide cover when you need it most.
To help you get the right cover that’s structured to suit your needs, please make an appointment with our office today.
The risk of illness
• 1.4 million Australians have a disability associated with a cardiovascular condition.
• 1 stroke event occurs every12 minutes in Australia.
• More than 6 million Australians are affected by a musculoskeletal condition.
• One in four Australian women and one in three men will be diagnosed with cancer by the time they are 75.
• The number of new cancer cases diagnosed in Australia is projected to rise to 115,400 a year by 2011.**
• By 2031, it is projected that 3.3 million Australians will develop type 2 diabetes††, the most common form of the illness.
Unfortunately, disease and illness are increasingly common as we enjoy longer lives.
To protect yourself – and the ones you love – make sure you’re covered with the right level of insurance.
Australia’s Health 2008 (Australian Institute of Health & Welfare)
** Australia’s Health 2006 (Australian Institute of Health & Welfare) and
Australian Cancer Research Foundation.
†† Diabetes Australia
For more information on how Momentum Wealth can assist you with your Risk Insurance needs, contact Justin McManus . Justin McManus is a representative of AXA Financial Planning Limited, ABN 21 0005 799 977 AFSL 234663. This information has been prepared without taking account of your objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your objectives, financial situation and needs.