The gender protection gap could hurt women’s financial prosperity. Here’s how

woman drinking tea from a flask after a hike

Research suggests that alongside the gender pay and pension gaps, there is a gender protection gap that leaves women at increased financial risk. Here’s why.

Have you ever laid awake at night wondering what might happen to your loved ones if the unthinkable occurred?

As independent financial planners, we understand the importance of ensuring your finances are protected as much as possible from an unexpected death, illness, or injury.

We work with both men and women who often lack the protection they need, and here to help you shield your wealth from life’s twists and turns and offer you peace of mind in the process.

Importantly, the latest research into financial protection – including life insurance, critical illness cover, and income protection – suggests that women have less cover than men. This disparity contributes to the overall gender wealth gap in the UK, and may be one of the key reasons that women are more vulnerable to financial shocks than their male peers.

In this article, you will discover:

  • The latest data around the gender protection gap
  • The factors that may be contributing towards this disparity
  • How women could be more vulnerable to financial hardship as a result of the overall gender wealth gap in the UK.

Keep reading to learn all you need to know about the UK’s current gender protection gap.

Women are more likely to need time off work due to illness – but they don’t have as much protection as their male peers

According to Royal London research from 2024, published in its Tackling the Gender Pension and Wealth Gap report, women are more likely to need more than two months off work due to illness.

Indeed, the chances of passing away before retirement are very similar for men and women – 4% for men, versus 3% for women. But the likelihood of needing more than two months off work due to illness rises to 37% for women, compared to 26% for men.

Worryingly, the research also found that:

  • Only 16% of female homeowners have income protection in place, compared to 24% of men. Income protection can provide a regular payment equalling up to 60% of your salary, helping you to cover essential expenses if you’re ill.
  • 17% of women said they would have “nothing to fall back on” if they had to stop working due to illness, compared to 11% of men.

While the statistics show that both men and women lack protection on the whole, the gendered disparity reveals that more must be done to protect women’s wealth against financial shocks.

Let’s take a closer look at why the gender protection gap exists, and ways that financial planning could help women shield their finances.

3 significant factors contributing to the gender protection gap

  1. The gender pay gap

Several pieces of research indicate that while the gender pay gap has narrowed in recent years, it still exists and its effect on women’s lives remains evident.

For example, the Royal London report has found that as of April 2023, the gender pay gap stood at 14.3% among all employees, and 7.7% for full-time workers.

This data reflects the fact that women, who often take on the lion’s share of childcare, take up more part-time employment than men. Women also do more unpaid work – of the 4.7 million unpaid carers in the UK, 3 million are women.

Perhaps as a result of the gender pay gap, the gender pension gap (which represents the difference between private pension contributions that men and women make on average) stands at 35%. This might affect women’s retirement options and financial security later in life.

In addition, research published by AJ Bell in 2023 revealed that:

  • 1 in 20 women stop work due to menopause symptoms
  • Nearly half of women have had their financial circumstances affected by caring for those other than her children, such as elderly parents.

And, a study by Legal & General found that on average, women’s income decreases almost twice as much as men’s after divorce. Women see their income drop by 41% post-divorce, whereas men experience a 21% decrease.

As such, it is important to remember that the gender pay gap could be caused by a range of factors, and does not only affect women who have young children at home.

All this could point towards a clear connection between the gender pay gap and the gender protection gap.

Women who rely on their partner’s income due to care responsibilities may not have considered taking out their own individual protection. Plus, without having equal pay to their male peers, women may not feel they are in a financial position to take out protection – even though, contrary to popular belief, protection can cost as little as £5 a month.

  1. A lack of power over household decision-making

Interestingly, the Royal London study found that women have less control over the long-term financial decisions made in their home if they are in a heterosexual cohabiting relationship, civil partnership, or marriage.

For instance, women reported that they are often the key decision-maker for short-term spending, budgeting, and holiday organising. But longer-term aspects of personal finance, such as pensions, protection, and investing, are often left to their male partner.

Pertaining specifically to protection, 33% of men said they make decisions on behalf of the household around life insurance, income protection, and critical illness cover. Only 22% of women said the same.

  1. Lower financial confidence

The way we spend, save, and invest our money often comes down to our mindset – and within this, confidence plays a huge role.

As such, the Royal London report finds that women have lower financial confidence than men, and even that their financial education dwindles compared to their male peers.

The research shows:

  • Only 68% of women had a Level 2 or above maths qualification, compared to 75% of men
  • Across all generations, girls are less likely to have had practical conversations about personal finance with their parents than boys.

Being “locked out” of financial conversations and qualifications more often than boys, young girls may have grown up believing that personal finance is not something they should consider important.

As women, this may manifest as low financial confidence and a feeling that they are not clever enough to understand complex financial topics – when of course, this is not true.

In practical terms, low financial confidence caused by a lack of consistent education could lead to women missing out on important protective measures that may provide relief later in life.

Here at Kellands, we’re committed to closing the advice gap

Financial planning is about more than money – it helps you set up your life in a way that serves you best.

Unfortunately, Royal London’s findings reveal that just 16% of women have sought financial advice, compared to 23% of men. This could come down to several reasons, including:

  • The gender pay, pension, and protection gaps making women feel they are not “qualified” to work with a financial planner or adviser
  • A reluctance to invest, perhaps stemming from lower financial confidence
  • Many women relying solely on their male partner or spouse’s leadership where finances are involved.

As a woman, your individual financial goals are important. If your partner or spouse has already sought financial advice, this does not mean it would be “pointless” for you to do the same.

With regards to pensions, protection, investing, saving, inheritance, and a number of other important topics, working with a Kellands financial planner could help you put your circumstances into perspective.

And, if you feel you may be left vulnerable by the gender pay gap, including your potential lack of financial protection, we can help to design a financial plan that meets your needs.

At Kellands, we will:

  • Talk to you about your goals
  • Review your existing circumstances
  • Model different scenarios for the future using advanced software
  • Create a financial plan that aligns your current situation with your future goals
  • Continue to check in regularly, ensuring that your plan still suits you.

We’re here to help you build a strong financial future.

Email us at hale@kelland.co.uk, or call 0161 929 8838.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

 

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