Men v women: Who pays more when it comes to insurance?


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It's bad enough that women face a gender pay gap approaching 14%. But the $255 average weekly pay difference between women and men can be eaten up by the so-called pink tax.

It refers to the higher prices women can pay for some products and services, especially personal care items.

However, gender-based price discrepancy isn't limited to toiletries. When it comes to insurance, women can face higher premiums. But on some types of cover, it is women who pocket the savings rather than men.

women v men who pays more in insurance

Life cover 

Life insurance is one area where women can pay lower premiums. And there's a simple reason: women generally live longer.

According to the Australian Bureau of Statistics, women have a life expectancy of 85.3 years, while the average for men is 81.2. A difference in premiums isn't just about longevity, though. Super industry body ASFA says men on average have higher death rates than women across a broad range of ages. For life insurance companies, that matters. And it can translate into lower premiums for women because they are less likely to make a claim.

As a guide, through insurance company NobleOak, $1 million worth of life cover for a 37-year-old woman (non-smoker) can come with an annual premium of $367. The premium for a man the same age may be around $506 - a difference of $139. And the premium gap can widen with age.

A 50-year-old woman can pay an annual premium of around $1013 for the same $1 million cover, compared with $1343 for a 50-year-old man 
- a saving of $330.

The life expectancy gap can make it more affordable for women to take out life cover today. But that may not always be the case in the future. The life expectancy gap between the genders is closing - surprisingly rapidly. In 1990, women outlived men, on average, by seven years compared with four years today. This could see life cover premiums become more standard between men and women over time.

The gender price gap is less clear when it comes to life insurance through super. In 2020, the Australian Securities and Investments Commission (ASIC) examined the annual premiums for default life cover bundled with total and permanent disability (TPD) insurance across 20 MySuper funds.

There was no hard-and-fast result about women paying less for life cover. Some funds charged identical premiums for both men and women. With others, however, such as CareSuper, women were distinctly ahead, with a 40-year-old paying an annual premium of $529 compared to $617 for a man the same age.

cost of insurance for women

Closing the gap

One area where women do fall behind on the life cover front is engagement with insurance inside super. Research by MetLife found only one in two women knows how much cover they have in place through their fund, compared with three in four men.

That said, men and women tend to be equally in the dark about the premiums they're paying for insurance through super. And close to six out of 10 of both genders aren't aware that it's possible to alter the level of personal insurance held through super.

The simplest way to know for sure how much cover you have is to check your latest super statement or contact your fund. Compare this figure with how much you need - the MoneySmart website includes a handy calculator - then contact your fund to increase your cover or consider organising insurance outside super.

The sticking point for women hoping to boost their life cover through super is that it means paying an increased premium - money that comes out of retirement savings. That's a problem because women typically enter retirement with almost one-third less money than men. Adding to insurance cover could widen the gap.

The key is to compare the costs of cover both in  and out of super and, importantly, know how much protection your policy is buying. ASIC found some policies through MySuper can come with annual premiums as low as $40, but if a claim was made, the payout would be just $40,000.

Income protection 

This can be an area where women pay more than men. This type of cover provides a regular payment usually equivalent to about 70% of your wage or salary if you can't work for a time because of illness or injury. How much more women pay varies between providers and, again, whether cover is organised in or out of super.

For example, through MLC the monthly premium for a 35-year-old woman (non-smoker) in a clerical role earning $60,000 annually can be $31, compared with $23 for a man of the same age and occupation - a difference of about $96 annually. Through AAMI, the same woman may pay $68 monthly compared with $50 for a man - a price difference of $216 over a year.

But this premium gap isn't driven by any sort of gender bias. Statistically, women are more likely to claim on income cover and remain off work for longer. Data from the Financial Services Council shows accidents are the leading cause of claims among men (38%) versus 28% for women. It's a different story for mental health, which underpins one in five (22%) claims by women compared with just 10% by men.

Moreover, it's generally accepted across the insurance industry that the complexities of the female body - in particular, a significantly more complicated reproductive system - increase the risk of illness and time off work for women. While this increases premiums, it also highlights the value of women insuring their income.

Premiums for income protection insurance purchased outside super are normally tax deductible. This can halve the cost for a high income earner. But many women may already have cover through their super fund.

According to ASIC, 3.4 million MySuper accounts include income insurance. With other types of accounts, income cover can either be the default option, or you may need to opt in and pay extra. Your fund can explain what you have - what you're covered for and how much it will cost to add income insurance.

insurance super

Downside of reforms

In late 2021, new rules came into effect regarding income protection insurance.

APRA, the financial regulator, introduced the reforms as a way of stemming the tide of claims, which saw the insurance industry cop losses measured in billions of dollars over the previous five years. Nonetheless, the changes have the potential to disadvantage women.

Under the new rules, income insurance benefits are capped at 90% of earnings at the time of claim for six months, then limited to 70% of earnings after the initial six months. The way "income" is calculated has also changed, being based on earnings over the 12 months before a claim. Previously, the highest 12 months' worth of earnings in the preceding two to three years were often used to determine the highest rolling average.

This development can leave women short-changed. Let's say, for example, Sue takes a year's maternity leave after the birth of her baby.

She is injured in an accident just days before she is due to return to work, and needs several months to recuperate. As Sue's earnings have been zero for the past 12 months, she's unlikely to receive a payout even though she has income insurance in place. This risk is a pitfall for women thinking about starting a family.

Health cover 

Almost six out of 10 Aussie women have private health cover in place. And it's an area where your needs rather than gender will determine the premium.

Anthony Fleming, life and health insurance expert at Compare the Market, says some types of insurance are "risk rated" whereas others, such as health cover, are "community rated".

"Health insurance is 'community rated', which means everyone in the same state will pay the same price for the same policy regardless of their age or gender," he says. "However, women may be more likely to purchase 'gold' policies because they include maternity and fertility services."

Of course, not every woman wants or needs maternity or fertility services. "If you're not happy with the cost of your cover, it may be worth shopping around to see if you could get similar cover for less, or a policy that may be better suited to your needs," says Fleming. "You may be able to cut costs by excluding certain features and benefits that you're not using."

health insurance costs men v women

What about car cover?

When it comes to car insurance, we often hear blanket statements about women paying less than men. That's not always the case.

While women share the road almost equally with men, making up 52% of users, they are less likely to be involved in a serious accident. As a guide, in NSW 7415 men were admitted to hospital as a result of a serious road crash in 2020 - more than double the 3560 women taken to hospital in the same year.

This isn't about women being "better" drivers than men. It can also be a function of driving patterns and road use. Budget Direct found 60% of women "rarely" drive on congested roads, compared with 48% of men. This can be related to occupation as transport (including taxis and couriers) is a male-dominated industry.

So, do women pay less for car cover? That depends on your insurance company. Money compared premiums for comprehensive cover across four main providers - GIO, QBE, AAMI and Allianz - and found that, yes, there can be variations in premiums between men and women - sometimes higher, sometimes lower. But the difference was marginal, amounting to the price of a takeaway coffee in most cases.

Interestingly, comprehensive cover with 1st for Women Insurance costs the same regardless of gender.

The key takeaway is that for some types of cover women can pay more. For other types, it is men who have to dig deeper into their wallet.

What really matters is that you have sufficient cover for your needs. That involves shopping around to compare premiums, but also taking a look under the hood of a policy to know exactly what protection you're buying, and what the payout will be if you need to make a claim.

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A former Chartered Accountant, Nicola Field has been a regular contributor to Money for 20 years, and writes on personal finance issues for some of Australia's largest financial institutions. She is the author of Investing in Your Child's Future and Baby or Bust, and has collaborated with Paul Clitheroe on a variety of projects including radio scripts, newspaper columns, and several books.