Financial independence for women through life insurance & income protection insurance

Driven by changes in our society and the removal of traditional stereotypical gender roles, Australian women are forging their own financial futures in their quest for financial independence and security. Are you?

Financial protection is equally as important for women as it is for men. This is reflected in the statistics:

• 40% of the workforce is female (1)
• 54% of university graduates are women (1)
• women buy 80% of consumer products (1)
• women own 40% of small businesses and are starting small businesses at a rate of over three times that of men (9% versus 2.6%) (2)
• single women aged 25 to 35 are the fastest growing wealth demographic (2)
• the gap between male and female salaries is closing faster in Australia than in any other country (2)
• there has been a 50% increase in single women home owners in the last decade(2)

Regardless of their life stage, all women need personal insurance
 

Women in a dual income family
The prevalence of double income families has increased significantly in recent years, with women quickly gaining equal status as breadwinners. These families depend heavily on both incomes, which creates a pressing need for women to adequately insure their income earning potential – to maintain security for themselves, the family home, education and living standards, as well as medical expenses.

Single parent families
Single parent families are prevalent in today’s society. Yet single women heading up these households typically do not possess adequate personal insurance. This is despite the fact that they have major financial responsibilities. A single parent, often the sole breadwinner, is responsible for the support and care of herself and her children. Her need for life insurance, critical illness and income protection insurance is therefore as crucial, if not more, than in dual-parent households.

Full-time home managers
Are you the CEO of Domestic Affairs? While the social landscape is becoming more diverse, there are still a large proportion of women who choose to become full-time home managers. In many cases, the financial implications are equally shared as they are in dual income families.

The amount of skill, time and effort involved in managing a home and a family must ultimately be replaced if the home manager is no longer there to perform the role. This might involve a greater financial cost than you think. Studies have put the value at tens of thousands of dollars a year, creating significant financial exposure if this risk is not insured.

Single women
Whether you are ‘single-never married’ or ‘divorced-no-kids at-home’, there are still major financial responsibilities that rely on your income. You may have a mortgage, personal loans and/or credit cards which would need to be reconciled should anything happen to you. In addition, there is the possibility of ongoing medical and living expenses if through injury or illness you were unable to generate an income.

Senior women
Many seniors believe that term life insurance is not required once they have retired because mortgages, education fees and other significant expenses are generally a thing of the past. There may however, still be family members who require financial support in the event of your death. Life insurance can be a vital part of an estate plan because, unlike many other assets, life insurance proceeds are not subject to probate, and are immediately available to your beneficiaries, generally free of income tax.

Grace’s Story

Grace’s story shows how moving through different life stages requires a move in the corresponding need for personal insurance types.

At 20 Grace was single and had established a full-time job as a hairdresser

• her father had just died and left her the proceeds of a $100,000 life policy which she used as a down payment on an apartment with a mortgage of $200,000
• she instigated an income protection policy which would pay up to 75% of gross earned income in the event that she was unable to work due to illness or injury
• she instigated a critical illness policy with built in death and total and permanent disability (TPD) cover for $250,000 which would provide money to pay off her mortgage, cover medical expenses and cover funeral and miscellaneous expenses if required

At 30 Grace was married and had given birth to her first child

• she took one year’s maternity leave and continued paying her income protection premiums as she intended to return to work within 12 months
• she and her husband sold their individual properties and jointly owned a property with a mortgage of $350,000
• Grace increased her life cover to $500,000 to cover the mortgage and provide a lump sum contingency fund of $150,000 for possible medical expenses, as well as providing her husband with the choice of employing child and home help, or to reduce his working hours in the event of her suffering an illness or injury
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At 40 Grace had three healthy children

• her mortgage had reduced to $250,000
• she had not returned to work and had cancelled her income protection policy
• Grace and her husband had decided on private education for their children
• Grace increased her critical illness, death and TPD cover to $700,000. This protected the mortgage, provided a $100,000 education fund for each of their children and maintained a medical lump sum contingency fund of $150,000

At 50 Grace had returned to full-time work

• she was earning $60,000 per year and had instigated a new income protection policy
• Grace had divorced her husband, moved house and reduced her mortgage to $50,000
• her critical illness, death and TPD cover was now $800,000. This provided mortgage protection, a reduced education fund of $50,000 for each child, and a lump sum to fully replace her income for 10 years which would go to a sister who had agreed to raise the children in the event of her death

At 60 Grace had retired

• her mortgage was paid off
• all of Grace’s children were independent
• even though her liabilities had reduced, she decided to keep $300,000 of her critical illness, death and TPD insurance to assist her in the event of a major illness or injury, or to create a $100,000 ‘instant inheritance’ for each of her three children in the event of her death

Get help with your Life Insurance & Income Protection Insurance today

If you need help in choosing the right life insurance and income protection policy for you, contact xLife. We compare over 500 policies and options, request FREE Life Insurance Quotes or income protection quote today.

Source:

• ‘Gender Games: Doing Business With The Opposite Sex’ by Candy Tymson
• Australian Bureau of Statistics 2006

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October 2009