Women pay more for income protection insurance

Women are paying more than men for income protection. Why and is it worth it?

416

It might be surprising to learn that when it comes to income protection, women pay more than men to protect themselves against income loss during illness or injury.

According to new research from CANSTAR, females pay an average of 32 per cent more than males for income protection insurance when they buy a policy directly from the insurer.

For example, a 27 year-old, non-smoking, male chef with an income protection benefit of $3,125 per month will pay an average monthly premium of $53.

Meanwhile, the same policy for a female chef of the same age is 26 per cent higher at $67 per month.

Income protection insurance is designed to provide a monthly benefit, usually 75 per cent of a person’s regular salary, to help pay their expenses while they are not working due to illness or injury.

It makes sense to have income protection, since figures from the Australian Bureau of Statistics show that 61 per cent of the 531,800 Australians who experienced a work-related injury or illness in 2013-2014 had to take time off work.

Why do women pay more for income protection?

The cost of income protection is influenced by a number of factors, including age, gender, smoking status, and occupation.

But what about young women who don’t smoke, and work a desk job with no manual handling risks?

Why are they paying more than men working at the next desk over?

The insurers in the research tell us this gender gap is based on past claims data.

Statistically, women pay more because they are more likely to make a claim, and more likely to continue claiming benefits for longer than men who claim.

Insurers say that females more frequently make claims related to:

• Pregnancy and birth-related problems

• Musculoskeletal problems

• Mental illness and the nervous system

• Genito-urinary tract

• Cancer – because cancers that target women often strike during working years, while cancers that target men more often strike during retirement years.

All of this adds up to the fact that the average woman may have more complex health issues, and may take longer to recover than the average man who makes a claim.

On average, a female will be on claim for 158 days, compared to 118 days for a male.

Why the cost is worth it

The cost for monthly insurance premiums can seem intimidating, but there are good reasons why it’s worth adjusting your budget so you can afford the cover you need.

When you’re off work due to illness or injury, the bills don’t stop coming.

If you’ve used up all of your leave, and you’re not eligible for workers’ compensation or government benefits, you can find yourself in a serious financial situation.

You can buy income protection insurance through your financial adviser (Advised Income Protection Insurance) or directly from the provider themselves (Direct Income Protection Insurance).

No matter which approach you take, the key is to make sure you know what you’re covered for.

In this article

Join the Conversation