Did you know that only 56% of women have life insurance, compared to 66% of men? It wasn’t too many decades ago that the majority of women were stay-at-home moms and men were the primary breadwinners. But times have changed. There are compelling reasons why women need a combination of whole/term life insurance now more than ever before.
Today, women comprise nearly 50% of the workforce, and 60% of households are dependent upon two incomes. Consider the impact, to the majority of households, if one source of income disappeared? Most women have an average death benefit that is 22% less than men which means that even women who have insurance are underinsured, leaving their families at financial risk. Where is that money going to come from when child care and the additional income is gone?
Women In the Workforce
Whether you work full or part-time, your income is critical for your family. Your passing will create hardship for your loved ones. Will they be able to live in the same home, go to the same school? Women need a specially designed life insurance plan to guarantee financial security for a surviving spouse and children.
As we struggle to close the gender pay gap, women should also consider that employer-offered retirement products, like a 401(k), tend to have smaller balances than the portfolios of male employees (if they’re even offered at all). This means working women are less prepared for retirement. What’s more, according to Market Watch, 80% of women have no pension benefits and have lower Social Security benefits than men, but they will live longer. Whole life insurance can offer greater income throughout your retirement, and greater flexibility if you plan to leave the workforce before age 59½.
Female entrepreneurs and business owners can benefit from whole life insurance twofold. Not only can policies be purchased to protect family assets, but they can also be held on key stakeholders in a business. Additionally, the policy loan provision of whole life insurance allows for greater liquidity and financial control. It can eliminate reliance on bank loans and lines of credit to back business purchases and investment opportunities.
The recent COVID-19 crisis reveals the risks of relying on retirement plans for liquid funds or access to money. Even with relaxed penalties that the CARES Act provides, who wants to cash out when their account is 20%-30% at a loss? Doing so makes the loss permanent.
Women at Home
Just because you don’t bring home a paycheck doesn’t mean your passing won’t have a financial impact on your family. When you consider all the services you provide as a stay-at-home mom (cooking, laundry, cleaning, carpool, etc.) and the cost of hiring out those tasks, or the hours your partner would have to cut back to create time to complete these tasks, it’s easy to realize how much value you bring to the family. A specifically designed combination of whole life/term insurance accounts for this value and protects your loved ones.
Even if you’re not a parent yet, the time to purchase whole life insurance is now. Unfortunately, some carriers consider pregnancy (current and former) a pre-existing condition. It can affect your insurance premium. You’ll likely have more favorable premiums if you apply for your insurance policy before starting a family. Whole life insurance premiums don’t increase as you get older, so you’ll likely lock in the lowest rate right now. Why not guarantee the rates at today’s prices than wait for them to go up. Once you obtain your life policy or policies, they can never be lost (as long as you pay the premiums).
Women Without Children
Maybe you don’t plan to have children and aren’t as concerned about leaving a legacy behind in the form of a death benefit paid out to your beneficiary. There are still benefits of whole life insurance that can have a big impact on your financial goals. In fact, the living benefits of your policy has even more to offer than the death benefit.
Living Benefits of Whole Life Insurance for Women
- Financial security: Women report feeling less financially secure than men, partly due to gender inequality and pay gaps, but also because they assume caregiving responsibilities that pull them away from their careers. Even women who don’t have children face the likelihood of caring for a parent or in-law at some point in the future. Women need whole life insurance in order to have access to income, should their future work hours change.
- Ability to borrow against cash value: Borrowing from the bank can subject you to rigorous credit and background checks. Policy loans from cash value life insurance are private and give you greater financial control. Use them to fund your business, pay college tuition, put a downpayment on a home, take a vacation… anything that supports your financial goals.
- Policy riders: Women tend to live longer than men by about five years. When you have your own insurance policy, you can add riders like an Accelerated Death Benefit Rider, which will allow you to access your death benefit while you’re still living. You can use it to fund chronic or terminal medical expenses. With the right policy riders, whole life insurance for women becomes a highly customizable, unique product designed for your specific needs.
- Tax advantages: Women might not make as much as their male counterparts, but they’re taxed the same. This is why the tax advantages of whole life insurance are especially appealing for females, including tax-free policy loans and tax-free retirement income. Money in your policy earns interest and dividends tax-free, the growth of which can be used tax-free. Additionally, whatever death benefit you payout to your beneficiary—be it a person, a trust, or a charity—is also tax-free.
Given that whole life insurance premiums are typically lower for women than for men, whole life insurance is one area of investment and finance where females can have an advantage. For more information on how you can use this proven wealth-building strategy for your unique situation, schedule a completely free consultation with Charlie Nunez, a Circle of Wealth Advisor and Retirement Income Certified Professional.
To Your Success and Health,
Charlie Nunez, RICP
Retirement Income Certified Professional
Register for a complimentary Zoom appt at www.calendly.com/charlienunez