Women disadvantaged in insurance

The risk underinsurance problem is made worse by women undervaluing their contribution to a relationship.

Sherlock Group director Bruce Sherlock said women buy 50 per cent less life insurance through superannuation than their male counterparts.

“Our experience has been that most female members of corporate superannuation schemes choose to be underinsured,” he said.

“They select an average of just two times their annual salary compared to three times for their male co-workers, which is a tragedy for their families.”

Sherlock said he couldn’t understand why women make this choice.

“In my view, it is sensible for all workers to have between six and 10 times their annual income in life insurance covering death, disability and income protection,” he said.

“Women, however, don’t tend to consider how much it would cost to employ someone to replace them in the home, preparing meals, looking after children or elderly parents and generally maintaining the household.

“I would anticipate that paying outsiders to fill such a role would cost more than $75,000 per annum.”

Sherlock argues that if the female half of a relationship dies, then maintaining the family’s standard of living would require the relevant amount of risk insurance.

“The partner of an underinsured sick or deceased woman with children would find themselves in a dire situation,” he said.

“Not only would they be dealing with a dramatic change in their lives, but also they would normally be under incredible financial strain as most Australian families have to rely on the earning capacity of both partners.”

Sherlock said there should be sufficient insurance for both adult members of the relationship to meet family financial obligations and keep the household running.