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As Financial Obligations Grow, Women Should Rethink Life Insurance

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Women today are relied upon not only for their families’ comfort but also for their families’ financial security. Dual-income families and those headed by single women increasingly depend on the income of working women, who may also be juggling childcare and eldercare responsibilities.

A study by the National Alliance for Caregiving and the AARP found 61% of caregivers are women, and 41% of female caregivers also work full-time jobs.

With the increasing financial obligations of women, a notable gender gap exists in life insurance coverage. While women are more concerned than men about their families’ financial future in the event of their premature deaths, they have in general less life insurance coverage, according to the sixth annual MetLife Study of Employee Benefits Trends. In fact, working women who have life insurance generally have only twice their household income in coverage compared to men, who have 3 times their household income in coverage. Even 3 times household income is likely to be underinsured when taking into account financial obligations. So the fact that working women often have even less than that is significant.

Employers can help address the underinsured issue. They can assist employees with building a strong personal financial safety net while simultaneously working to achieve their own business objectives, which for most employers include employee retention. Employers are in the position to help close this underinsured gap because women–even more so than men–tend to obtain financial protection products through the workplace, and they desire access to education and advice. Advisors looking to attract and retain this important segment of the workforce may find they can accomplish this by optimizing the inherent value of their benefits programs. Providing additional education about benefits offerings–including life insurance benefits–and access to supplemental coverage could help achieve this.

While 64% of working women are highly concerned about their families’ financial futures in the event of their premature death, nearly half of working women surveyed for the MetLife study had not taken any steps to determine their life insurance needs. The workplace is an optimal place to provide education and guidance.

According to the study, 58% of working women (vs. 47% of working men) are obtaining most of their financial and retirement products through the workplace. More specifically, most women who own life insurance for themselves obtained it at the workplace. Furthermore, 54% of women say that benefits are an important reason they remain with their employer. Employers that provide educational information and access to supplemental coverage can help ensure that women employees and their families have adequate financial protection while simultaneously increasing the perceived value of and satisfaction with their life insurance benefits.

A focused enrollment

Women have an appetite for advice and guidance in the workplace and say they would welcome personalized information about their benefits. In fact, 65% of women (compared with 50% of men) say that receiving personalized benefits information with costs would help them make benefits decisions. Unfortunately, only 43% of women currently feel that their employer’s benefits communications effectively educate them, according to the study.

Offering an enrollment opportunity that focuses solely on life insurance is one way that employers can help make sure employees give appropriate consideration to this important benefit. During a typical open enrollment season, health insurance often trumps other benefits in mindshare. Employees view medical benefits as most important and may neglect to devote proper attention to life insurance as a cornerstone of a sound financial plan.

An off-cycle enrollment for life insurance with personalized information could meet female employees’ desire for more personalized benefits information and help address their concern for the financial security of their families. Off-cycle enrollments can provide a measurable return on investment to employers, since employees’ appreciation and participation can rise when they understand the value of their benefits program. In fact, MetLife has seen that employee participation increases by 10% on average as a result of an employer using a life-insurance-focused enrollment event.

Basic is not enough

Employers often provide the initial building blocks for a strong financial safety net by offering employer-paid basic life insurance coverage. This coverage, however, is often limited to 1 or 2 times an employee’s salary and may be capped at a certain amount. Voluntary supplemental coverage allows employees the opportunity to purchase more appropriate levels of coverage based on their personal needs.

Employees–especially female employees–are looking to purchase voluntary products at work. In fact, 52% of women cite the convenience of buying voluntary benefits through the workplace as an important advantage, the study reports. Offering opportunities for employees to buy supplemental coverage through the workplace, as well as coverage for their spouses, can aid female employees in attaining financial peace of mind.

In addition to providing access to supplemental life insurance coverage through the workplace, employers can help optimize the value of group life benefits (see sidebar).

Group life benefits can be part of the foundation of an employee’s financial plan. Many families of female workers may be at an elevated financial risk considering the many family and financial obligations and the limited life insurance coverage women generally have.

With a few simple steps, employers have the chance to reduce the underinsured gap, while at the same time addressing their goals of increased benefits satisfaction among their female employees and greater employee loyalty. The MetLife study found that 85% of employees who are satisfied with their benefits said they plan to be with their employer 18 months from now, compared to only 50% who were not satisfied with their benefits.


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