Millennials—the generation born roughly between 1980 and 2000—face a set of unique financial challenges. Saving for big life milestones, like buying a home or retirement, often test young people’s budgets and fiscal knowhow. But millennial women may have an even more challenging financial road ahead of them.
In addition to the typical money issues facing young people, women are also more likely to be underinsured than men. Across Australia and New Zealand, the gap between the amount of life insurance people have and what they may actually need is estimated at $1.37 trillion and $1.95 billion, respectively. The gender imbalance in life insurance purchases contributes to these numbers, but may also put women, their partners and their families at risk for financial hardship.
The debt gap
In general, young single adults may be less likely to feel they need life insurance than older adults. They may feel invincible, or simply feel that insurance is more appropriate for married couples. However, millennial women may be even more prone to underinsurance than their male counterparts. Differences in university enrolment and general debt might be widening the insurance gap between men and women.
University enrolments in Australia and New Zealand are higher amongst women, and women in both countries more likely to complete a degree than men. As a result, young women may also be more likely to hold student loan debt. Women generally hold more credit card debt than their male counterparts, as well. One survey found that 63% of women aged 18-24 held some credit card debt, whilst only 36% of men the same age did.
This debt burden could factor in the decision-making process when taking out life insurance cover. Price is often cited as a reason for why people are underinsured or not insured at all. Millennial women who hold debts may be particularly sensitive to life insurance costs, preferring to put as much of their income as possible towards eliminating their debt.
However, these young women could benefit from life insurance. Debts are generally passed to next of kin when the debtholder dies. A life insurance policy could help a woman’s partner or parents pay off outstanding loans or bills if they were to pass away, rather than place them in debt themselves. Many policies pay out the benefit upon the diagnosis of a terminal illness or if the insured suffers a serious accident. Funds could help women avoid further financial hardship in these cases, especially if they are unable to work for a period afterward.
Undervaluing of ‘women’s work’
Another factor that may be affecting how millennial women view life insurance is society’s general view of work done by women. This encompasses not just the gender pay gap experienced by many career women, but also the undervaluing of stay-at-home mothers.
Recent figures place Australia’s gender pay gap at just over 15% and New Zealand’s at 9.4%. There are many factors contributing to this discrepancy in pay, with bias in hiring and pay decisions playing a part. This bias may shape women’s general perception of their insurance need. There seems to be limited cultural support for women seeking life insurance— it’s still largely viewed as a product for men, particularly those who are primary breadwinners.
Millennial career women aren’t the only ones seeing their financial worth undervalued. “Stay-at-home mums” may also be unlikely to seek life insurance, because of how society views unpaid caregiving and housework. Whilst the average “mum salary” has been estimated at over $133,000 AUD per annum, both men and women tend to grossly undervalue the work stay-at-home mums do. As a result, couples often overlook insuring the family’s primary caregiver. This is often because they neglect to consider the cost of hiring outside help if she were no longer around or able to do these household jobs.
Why seek life insurance?
Life insurance could be an important part of anyone’s financial plan, but millennial women might be in a particularly good position to purchase it.
Many factors, including age and general health, can affect life insurance premiums. Younger people are generally healthier and less likely to have pre-existing medical conditions. This could help them save money in the long run and make it easier to get a policy with no or few health exclusions.
The safety net of life insurance could help millennial women protect themselves, a partner or their family. Taking a proactive approach to their finances may be a wise decision, one that sets women up for a brighter financial future.