Knowledge hub

Closing the gap | The importance of life insurance for Australian women

Back to insights

By Capital Partners Women in Life Transition

Australian women have more employment opportunities and financial literacy knowledge than ever before. Despite this, they continue to lag when it comes to purchasing life insurance as frequently, and as much as men. While there are plenty of explanations for the divide, none have a satisfactory justification. That’s because insurance is essential for everyone. Life insurance in particular is an invaluable risk aversion tool to replace a lost income when a provider of the family passes away or can no longer work. For the next few minutes, we will explain why the disparity exists, why it matters and what women can do to get on the front foot.

The problem with insurance

One theory to explain the insurance disparity between genders is that the traditional method of calculating how much insurance you need is based on how much you earn. Considering that many women still earn less than men, and are more likely to take on childcare responsibilities, many simply believe they do not need as much because they aren’t earning as much as their male counterparts.

But our lives are worth so much more than just our income. If income is indeed the deterrent, Australian women risk undervaluing themselves. For example, stay-at-home mothers are superwomen. They’re often the household’s chef, housekeeper, dietitian, babysitter and teacher to name a few. While the exact amount of life insurance needed is impossible to quantify definitively, every woman, especially mothers who have someone who depends on them, ought to know their worth and have adequate life insurance.

Why we need to talk about insurance

We all deserve to sleep sound at night knowing that if anything were to happen, everything would be okay. Adequate life insurance is one such safeguarding measure. However, traditional insurance calculation measures do not take the value of unpaid work into account. Australian women undertake 72% of all unpaid work. These are things like cleaning, cooking, grocery shopping and looking after the children.  If an Australian woman were to pass away, not only would any income she made need to be replaced, but someone would also need to replace the unpaid work she was responsible for.

In 2019, Salary.com estimated the price of stay-at-home work by tracking the annual salary of the roles a stay-at-home mum performs. The median annual salary for a stay-at-home mum in 2019 was $237, 328 which would mean her life insurance would be between $1 and $2.3 million. Clearly, women deserve to know they’re worth more.

Taking action

We have become much better at acknowledging women’s economic and social achievements, at home and in the workplace. It’s equally as important to ensure these achievements are secured with the right financial protection. You never know what’s around the corner. With life insurance, it’s better to have more and not need it, than to need more and not have it. Our team suggest considering life insurance while you’re healthy, creating a safety net for financial and mental peace of mind.

Where you start is up to you, so long as you do start – to think, act, and acknowledge the importance of adequate insurance. Whether you research and compare various policies online or have a chat with an experienced financial adviser – any small action plan today can have significant payoffs in the future.

It can be daunting to take the first steps, so know that we’re with you should you need a point in the right direction. No one can put a dollar amount on the value of your life, but not having adequate life insurance is a significant oversight. If economic gaps between men and women are slowly decreasing, it’s imperative for insurance cover to keep up. Our team strongly encourages all women to be on the front foot regarding their insurance. Should you need a reassuring voice, we’re always here.

The information provided on this site is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if these strategies and products are right for you.

Ideas & insights

Knowledge Hub

Do you need a financial health check? Here’s how to tell

Wealth Planning • Article

Discover the power of a living legacy in intergenerational wealth planning

Wealth Planning • Article

Preparing for Australia’s great wealth transfer | A roadmap for families

Wealth Planning • Article