Its true that every client is unique, but women in general tend to go about buying financial services somewhat differently than men do.

The typical woman lives longer than the typical man, and, if she is married, she is more likely to have a spouse who contributes a substantial percentage of her total household income.

Here is a quick guide to some of the ways that the differences may affect womens financial needs.

1. Women may live longer than they think.

New financial representatives learn that one of the main risks clients face is “living too long.” That risk is especially severe for women: The average life expectancy for a U.S. woman has increased to almost 80, or about 5 years longer than the life expectancy for the average U.S. man.

Womens longer life expectancy means that they face a greater risk of outliving their personal savings and having to depend on Social Security and traditional pension plans.

But the current debate about Social Security reform shows that women dare not depend solely on Social Security, and women are even less likely than men to qualify to receive traditional defined benefit pension income. Women who do collect pension income get only about half as much as men do.

For a married woman, a related consideration is the likelihood that she will outlive her husband and need to support herself for a period of time after his death.

For women, ordinary personal savings, permanent life insurance, individual retirement accounts and tax-deferred annuities are even more important than they are for men.

2. The longer women live, the more reason they have to fear inflation.

The typical woman is a cautious investor who is more interested in preserving principal than in earning a sky-high rate of return. A good financial representative should make sure cautious investors understand what rising prices can do to investors who simply preserve principal, without earning enough to compensate for inflation.

Even the most cautious women should consider diversifying their holdings enough to provide some opportunity for returns to outpace inflation.

3. Even if women live a long time, they could spend some of that time without being able to work or live on their own.

According to the Society of Actuaries Commissioners Disability Table, people have a 44% chance of suffering from a disability lasting at least 90 days between the ages of 35 and 65. In addition, 70% of people who become disabled for at least 90 days remain disabled for an additional 2 years or more.

The probability that a woman will spend time in a nursing home is also high. In the United States today, 1.5 million people over the age of 65 are living in nursing homes. According to the Forum on Aging, 70% of these people are women.

Whenever possible, women should buy disability insurance and long term care insurance.

4. Women do eventually die, and they may not be very well protected against death.

Only a small fraction of the growing earning power of women is protected against death, leaving millions of families exposed to the potential loss of income.

Financial representatives should review their female clients life insurance coverage annually and remind women of the importance of reviewing their coverage in mid-year if there are any material changes in income, work status or family situation that could affect coverage needs.

5. A married woman should think about her husbands disability insurance as well as his life insurance.

A study by LIMRA International, Windsor, Conn., found that many widows started feeling financial pressure months before their husbands died.

Although some husbands died unexpectedly, more died from “long illnesses,” and 37% of the widows surveyed experienced “significantly lower” household income in the year before their husbands deaths. More of the widows42%said they were forced to withdraw money from savings to pay their husbands medical bills.

Disability insurance, life insurance and life insurance policies with accelerated death benefit provisions can help families cope with these sorts of financial hits and fill in the many gaps left by Social Security disability benefits and employer-sponsored disability plans.

6. The greatest estate tax burden often falls on the estate of the second spouse to die.

Statistically, this is more likely to be the woman. An unlimited marital deduction permits spouses to transfer assets to one another without federal gift or estate tax consequences. This tax benefit is offered because these assets will be taxed at the death of the surviving spouse, or the “second-to-die.”

There are several planning tools available to help reduce taxes and other costs that typically fall to the “second-to-die.” A marital deduction trust establishes a separate living trust for each spouse and helps to use both spouses applicable credits, each of which can shelter from federal estate tax up to a certain amount. A second option is survivorship life insurance, which can be used to plan for estate taxes and other costs that cannot be eliminated when the widow or widower dies.

John H. Curry, CLU, ChFC, AEP, MSFS, CSA, is a senior associate at North Florida Financial Corp., Tallahassee, Fla., an agency affiliated with Guardian Life Insurance Company of America, New York. He can be reached at john_curry@glic.com.


Reproduced from National Underwriter Edition, February 18, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.