Royal London: Why are Men in Ireland Valued at 65% More than Women?

Year on year women in Ireland appear to be financially undervalued compared to men. This was the primary finding from leading protection specialist, Royal London, after it conducted an analysis of the value of life and specified serious illness cover put in place by men and women over the period 2015 – 2019. It found that there are discrepancies between the sexes when it comes to the amount of their financial protection. Over the 5-year period, the average life insurance cover for men was 65% higher than that of women. The analysis focused on non-mortgage related cover which people typically put in place in order to provide financial security for their dependents.

Sara Murphy, Marketing Lead at Royal London explained,

“We analysed the average amount of cover put in place by our policyholders and the figures show that men insure themselves for greater amounts than women. Mens’ cover is on average 65% higher than womens’. Over the last 5 years, the average sum assured on a life assurance term policy for women was €179,604, whereas the average sum assured on the same type of policy for men was €297,022. Such a big difference makes you wonder, what are the reasons behind why men seem more likely to insure their lives for a higher amount than women?

“Potentially, the gender pay gap could have a part to play. As could the fact that there are more women than men who categorise themselves as a stay-at-home parent, and may not take out sufficient, if any, life cover. The monetary value of stay-at-home parents is generally undervalued. Research we conducted last year estimated the cost of replacing all the tasks carried out by a stay-at-home parent is nearly €44,000, although people tended to think it was much lower*.

“A similar, albeit less pronounced, observation was made when we analysed specified serious illness policies. Over the last 5 years (2015-2019), the average sum assured was 27% higher for a man, at €80.096, compared to €63,036 for a woman.”

Historically, women have been under-provided for financially when it comes things like salary, savings, and pensions. For example, last year the Economic and Social Research Institute (ESRI) published a study reporting that Irish women’s weekly income is €153 less than men in retirement.**  Royal London’s latest analysis shows the same scenario seems to be playing out when it comes to life assurance.

Low Level Life Assurance

According to the Royal London data, the last 5 years have not seen a huge change in the average levels of life cover. Life cover, also known as Term Assurance, pays out a lump sum if you die during the term of the policy.

Ms Murphy went on to comment,

“The average sum insured across the board in the last 5 years was €250,473. Individually, each person’s cover will obviously differ as its purpose is to provide financial security based on personal circumstance. Often it is intended to replace the income of a primary earner in a household should they pass away. The payout can then be used to help maintain the family’s ongoing living costs. This amount of cover works out at just over €31,000 per annum over 8 years (assuming no investment income is earned on the lump sum payout) – which is well below the average annual earning of an individual at €40,283.***”

Changes over time: Life Assurance – Specified Serious Illness

Specified Serious Illness cover pays a guaranteed lump sum on diagnosis of a specific covered illness during the term of the policy – the lump sum paid out in the event of a claim is based on the amount of cover people put in place. According to the Royal London data, the average sum assured overall, in the last 5 years (2015-209), was €71,698, which is less than one third of the average life cover.

According to Ms Murphy,

“Nowadays, thankfully, people are far more likely to recover after suffering from a serious illness, like cancer, stroke or heart attack. The financial implications of having had a serious illness is an important consideration. While €71,698 seems like a substantial sum, it’s important to make sure that the cover people put in pace would meet their long-term and ongoing financial needs if they were to become seriously ill. That’s why we would always advocate that you talk with a Financial Broker, who will help you put plans in place to meet your own personal circumstance. If you would like to review the financial protection you already have or you would like to put protection in place, your local Financial Broker is an ideal starting point.”

ENDS

Sources

* Royal London commissioned survey conducted by iReach, 2019, found that average salary value people would place on the role of a stay-at-home parent was €27,500, while wage figure estimates suggest the actual amount could be nearly €44,000 – https://www.royallondon.ie/press-releases/2019-press-releases/july2019/CostOfStayAtHomeParent/

** Economic and Social Research Institute (ESRI) – Gender, pensions and income in retirement, 2019 – https://www.esri.ie/publications/gender-pensions-and-income-in-retirement

*** Central Statistics Office, Earnings and Labour Costs Annual, 2020 – https://www.cso.ie/en/releasesandpublications/er/elca/earningsandlabourcostsannualdata2019/