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Study: Life insurance coverage gap hurts women more

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Expanding on a growing body of research focusing on women, a new report identifies a gender gap in financial preparedness.

The study, unveiled by NerdWallet, reveals that nearly half of women who own life insurance (49 percent) would be financially impacted by the death of a spouse. The fallout from a spouse’s loss of earnings would also be greater than that for men.

The nationwide survey polled 2,066 married adults ages 25 and older using SurveyMonkey. The respondents were nearly evenly split between women (50.15 percent) and men (49.85 percent men). Nearly half of those polled (49.2 percent) have children under the age of 18; 50.7 percent of respondents have no children.

Though two-thirds (67 percent) of the respondents say that, while they have life insurance on at least one partner, they remain concerned about paying all the bills if a spouse dies. About one in three couples have no life insurance.

The survey also shows that married women have more worries than married men:

  • 49 percent of women surveyed say their ability to make mortgage payments, save for college tuition and pay bills would be adversely affected by the death of their spouse, compared to 37 percent of men.

  • Women also are less likely to know the terms of their spouse’s life insurance policy (57 percent versus 69 percent of men) and less likely to be able to find family financial documents in an emergency (32 percent versus 21 percent of men).

“The average life expectancy of Americans is at historic highs, and women are leading the way — now outliving men by an average of nearly five years, “ says John Kuo, senior strategy analyst at NerdWallet. “Couples appear ill-prepared to face this reality with sufficient life insurance coverage. This is an area where the longevity gap — which favors women — collides with the pay gap, where men earn more. The result is that women are often more financially vulnerable when their spouse dies.”

The NerdWallet study builds on earlier research highlighting a gender gap in the financial services space. A study released earlier this month by ConsumerAffairs found that just 4 in 10 women in the U.S. own a life insurance policy. And, on average, women have $129,800 of individual life insurance, as compared to $187,100 among men.

The Nerd Wallet study also reports these findings:

  • Only 63 percent of those surveyed know the terms of their spouse’s policy, such as the length and face amount.

  • Parents with children are less likely to know the length and amounts of life insurance policies (58 percent compared with 67 percent of those who are married without children) and are more likely to say they would not know how to access all pertinent financial documents (30 percent compared with 23 percent for those without kids.)

  • Among all the individuals surveyed — with or without life insurance — only 55 percent of those with children know the final wishes of their spouse, such as burial preferences, compared with 73 percent of those without children.

  • More than half (52 percent) of those with life insurance underestimate funeral costs, which typically range from $7,000 to $10,000.

  • 94 percent say they know their spouse’s life insurance beneficiary.

  • 86 percent of those with life insurance know how to make a life insurance claim if necessary.

  • 79 percent of those with life insurance know the name or names of their insurance carriers.

See also:

Why one young agent says she has the best job in the world

Women in insurance and the champions of change