Women today are undoubtedly different to their mothers and grandmothers. They are more likely to go to university, less likely to get married, more likely to work and less likely to raise children with a partner. This shift has not gone unnoticed by advisers, who report greater contact with women concerned about their future financial security.
BRINGING UP BABY
Henrietta Oxlade of Bond Wealth Management Ltd in central London has been an IFA for twenty years and has seen her client base even out from 90% men to equal numbers of both genders. She believes that some women feel more comfortable speaking to another woman, expecting a more sympathetic ear.
“What I have noticed with protection is increasingly there are more single mothers,” she said. “There is a much greater awareness of the need to plan. Just last week I saw two single mothers and they came to me very aware of the need to protect themselves and their families, because they are the breadwinner.”
These clients understand that protection is a top priority, she said, despite the fact that income protection (IP) is more expensive for women, especially those in their early 40s.
“Twenty years ago clients would use maternity leave as a welcome excuse to stop pension and insurance payments. Now they are actively seeking way of keeping them going.”
Ed Stuart-Brown, head of protection sales at Friends Provident, said the insurer was “structuring products in a very different way” to support women.
“With our IP plan there is a hospitalisation benefit which will be paid after someone has been in hospital more than a week, regardless of the deferred period,” he said. “That’s a huge relief for a single mother, to know that she can cover childcare costs.”
He suggested that IFAs consider working closely with clients during the divorce settlement period, pointing out that maintenance and alimony payments will be dependent on the health and well-being of the ex-partner.
YOUNG, FREE AND SINGLE
A key segment of the market is the generation of young women pursuing careers and enjoying financial independence. “One of the things I found quite surprising is that a large part of our customer base is young singles aged 20-25,” said Aidan Dewhurst, IFA marketing manager at progress from Royal Liver which has recently carried out a segmentation of its policyholders.
Dewhurst is now encouraging IFAs to use information gathered during fact finds to dig deeper into their client book and split it by various categories.
“We can compare IFA data with our own – if it does not match then there are opportunities straight away,” he said.
Scottish Provident has also invested in tools to help IFAs segment their clients. The Matrix, promoted this year via nationwide workshops, includes a category entitled “Singles”. This highlights key financial risks for women aged 18-35 including an average student debt of £20,000 by 2010 and the fact that the highest rate of divorce is found in the 25-29 age group.
“Nobody is there waiting to pay your bills,” said senior product development manager Jennifer Gilchrist. “The main requirement for this group is to be able to sustain their lifestyle through IP.”
“There are always alternatives to full-blown cover,” she added, acknowledging common concerns about affordability. “Just cover some of your mortgage, so you can get back on your feet. You can build up your products because of their flexibility with the help of your IFA.”
WORKING 9 TO 5
Women set up 30% of all businesses in the UK, 25% of which are already run by women. Furthermore, almost one million women are self-employed.
Yet despite the financial independence this suggests, a survey of almost 2,000 women carried out by AXA Life last year showed that half of women have no form of life insurance, critical illness protection or IP in place including nearly half (46%) of all working women. Forty per cent of women with dependants do not have any form of life insurance while 55% of women without protection have ongoing mortgage or rental commitments to fund.
“We have seen a significant shift in the role of women since the 1970s, however this shift has not been reflected in women’s attitudes towards protection cover,” said Iain Mallon, head of protection at AXA. “Unlike during the 1970s, women becoming ill and unable to work now could have significant financial implications for the whole family.”
While IP is clearly one answer to this problem, products need to be tailored to the reality of working women’s lives. Friends Provident offers a career break option, whereby the cover amount will be based on a woman’s salary 12 months prior to them taking maternity cover.
Mallon stressed the importance of teleinterviewing, given the fact that 65% of women leave out information on protection application forms out of sheer embarrassment.
A promising factor in the industry is the key role that women play in product development. Aviva’s recent offer of a year’s worth of free life insurance for new parents is the brainchild of head of marketing Louise Colley, who came up with the idea after talking to new mothers during her own maternity leave in 2007.
Colley’s observation that the women she talked to “got it” quickly, is borne out by the experience of advisers.
“Women are aware they need to do something but they don’t know how they go about it and the difference between products,” said Oxlade. Which is, of course, where independent financial advice comes in.