How Life Insurance Might Solve Women’s Estate-Planning Issues

Women are receiving increased recognition for the critical roles they serve in society. This increased recognition leads to greater awareness of women’s financial challenges and the financial industry’s solutions to those challenges.

The 2021 Insurance Barometer Survey revealed that 43% of women believe they would leave their families in a difficult financial situation if they were to die prematurely. This is five percentage points higher than the men who were surveyed. In other words, although the need for planning for both women and their families is there, women are not satisfied they have done an adequate job making sure their goals are met and their families are taken care of.

What are some of women’s unique planning challenges that shape their goals? To begin with, women still face earning power challenges that may make it more critical to plan for retirement and for additional liquidity in the event of their death. Even though women make up roughly 51% of the workforce today, they still only earn about 82.3% compared to their male counterparts’ earnings, the U.S. Department of Labor reports.

Lower earnings add to the difficulty of saving adequately for retirement.  A recent Prudential survey found that only 54% of women have saved for retirement, with an average savings of $115,412, versus 61% of men, with an average savings of $202,859.

But women aren’t only concerned about their financial futures. Women are often responsible for caring for generations of family members. When you add reduced earning power the equation, the result is that, without planning, women may have a serious need to provide financial support for their families, but few resources to fulfill the need.

In fact, in addition to caring for children, 75% of in-home care providers for older people are women, most often daughters, according to the American Association for Long-Term Care Insurance.

And these older people frequently are financially dependent on their female caregivers, so a woman may find herself supporting herself, a spouse or partner, her children, and her aging parents. Planning for the continued care of these dependent family members is crucial should a woman become unable to continue in her role.

And don’t overlook longevity. Women, on average, have longer lifespans than men.  In a brief from 2020, the Centers for Disease Control and Prevention reported the difference in life expectancy for women and men was 5.7 years. For women who are either married to or partnered with a man, this means a greater likelihood that the woman will be widowed later in her life. And for all women, this means, on average, women could need care for more extended periods than men during their later years. The costs associated with those years could substantially deplete the assets women plan to leave their families at death.

So, compared to their male counterparts, women are earning less, caring for more people and living longer, and these challenges can seem daunting to those facing them daily. But with proper planning and risk mitigation, women can ensure they have provided for both their futures and the care of those around them.

Along with working with a team of tax and legal professionals to create and implement these plans, life insurance can help protect families in a tax-advantaged way while also providing income for retirement or benefits for long-term care. For example, a life insurance death benefit can provide liquidity to care for multiple generations of dependent family members. If that policy builds cash value, as the need to care for family members eventually wanes, the owner can use the cash value for additional income in retirement. And some policies can provide funds for long-term care if the need arises. One policy can address all three planning concerns.

By understanding the unique and intensely personal challenges and goals of women, and the lasting impact they have on their family’s success, advisors can help to craft estate plans to meet those targeted needs. This level of planning involves a committed team of professionals working to address all concerns.  Once implemented, planning is indeed power — power created by the knowledge that a woman’s future goals will be met, and she and her family will have the resources they need to live long, full lives.

Carma McCallie, JD, is vice president, advanced sales, with Crump Life Insurance Services. Carma may be contacted at [email protected].

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