There are times when it is necessary to state the obvious: men and women are different. But applying this knowledge intelligently may require a bit more thought when the topic is designing or selling insurance products, particularly annuities, in light of current United States demographics.
The difference between men and women has been slyly articulated by reference to legendary dancers Fred Astaire and Ginger Rogers: Rogers did everything Astaire did, but she did it backwards and in high heels. In the context of annuities, these two additional challenges have been equated to women’s greater longevity and fewer assets.
The fact is, when it comes to financial matters, women have more challenges and risks than just dancing backwards in high heels. This is true whether women are young, boomers or seniors, and whether they are in the high net worth, affluent, middle class or marginal sectors.
Women’s challenges and risks vary based upon personal obligations, i.e., whether married, divorced, widowed, parent or sibling. Their obligations vary in intensity, too. For instance, women who are caregivers tend to defer their own health care in favor of their children, spouse, siblings or aging parents. As a result, these women often incur higher health care expenses in later life, say medical experts.
A growing number of annuity companies, often with assistance from academic institutions, have recognized these and other attributes and differences. This has resulted in the emergence of a variety of joint and lifetime guarantee minimum withdrawal and income benefits features in annuities, and spousal continuation features, too.
Such features were not built only for women. But various annuity architects have told me these features were designed with women in mind. The joint life and spousal continuation features address the needs of married women, many of whom tend to survive their husbands, for instance; and the lifetime features address needs of women, who still tend to live longer than men.
The research and analysis by such insurers represents a major breakthrough for potential solutions through product design and services. It’s worth noting that, not infrequently, the senior executives in charge of these initiatives are women.
Women’s unique attributes and differences need to be assessed against the backdrop of social reality—namely, that women are not generally the family “bread-winners.” Furthermore, whether married or single, women traditionally are not expected to be the investment decision-makers. And women are not generally exposed to the economic and financial experience and training that supports investment planning and decision-making.