There are many reasons why a 40-year-old would need life insurance.
In your forties you have just reached a critical threshold, what most doctors would say is the halfway point in your life.
On average men live to be 79 years old and women live to be 82 years old, so your early forties are a critical point to purchase life insurance.
Table of Contents:
- Why You Need Life Insurance in Your 40s
- How Age affects Your Rates
- Term Life Insurance
- Permanent Life Insurance
- Best Companies for 40 Year Olds
Life Insurance for 40 Year Olds
Here are just a few of many reasons why you will want to consider life insurance coverage if you are in your 40s:
1. Breadwinners
In your early forties, you have children to think about in some cases. If you are a parent and your children still live at home, they are dependent upon you and particularly upon your income.
If you were to pass away unexpectedly your children might still need money for many things. If you have very young children you might need to provide income to cover childcare costs.
2. Stay at Home Parents
Even if you are not the primary breadwinner, and you are a stay-at-home parent, you should still consider life insurance at this age to cover the cost of the things you do around the house.
As a stay-at-home parent, you might be the one who provides those childcare services. You are probably the one who gets the children to and from school. If you were to pass away unexpectedly you might need to have money for the services, for a nanny, for a food delivery company, for many different things.
3. Mortgage Payments
You also have to worry about your mortgage. You might have just purchased your first house. You might be a few years into a new mortgage.
But what if you were to pass away? If your income were no longer there, it would fall upon your family to cover that mortgage. Not every family is equipped to cover the cost of an outstanding mortgage.
With life insurance policies you can set up a policy that runs the length of your mortgage so that if at any point between now and the time the mortgage is paid off, your beneficiaries would have the money needed to pay it off.
4. Other Debts
There are of course other debts that you might consider. If you just purchased a new car after receiving a promotion at work, you might be fiscally responsible and only pay 10 to 20% of the total cost so that you can pay the rest of it over the long term and have another line of existing credit while simultaneously paying your bills every month and increasing your credit score.
You might be doing this to combat the dip your credit takes after taking out a mortgage or you might be doing it to improve your score before you take out a mortgage. In either case, if you have outstanding debt for things like a vehicle, this will also follow up on the shoulders of your loved one.
How Age Affects Life Insurance Rates
Let’s see how life insurance companies pass on the risk you pose in the form of premiums.
Example 1:
A 40-year-old male who is a non-smoker and falls into the preferred rating is looking for $500,000 in coverage.
If that person takes out a 20-year Term Policy it might cost an average of $37 per month. In total, over 20 years that person is paying $8,880.
If that person takes out a 30-year term policy it will cost an average of $65 per month. That individual will end up paying $23,400 over the course of the policy.
This means that if that person bought a 20-year Term Policy they would save $14,520.
Example 2:
A 48-year-old male who is a non-smoker and falls into the preferred category is searching for $500,000 in coverage.
If that person takes out a 20-year Term Policy they will pay approximately $77 per month which means they will pay a total of $18,480 over the course of the entire policy.
If that person takes out a 30-year term policy they will pay $139 per month and in the end, they will pay $50,040 over the course of the life insurance policy.
This means that the person could save $31,560 if he purchased a 20-year term over a 30-year term.
As you can see your health and age are very important and you need to make sure that you review all of the different components that could possibly play a role in the premiums you are going to pay.
Is Term Life Insurance Best for Me?
With this comparison what you want to keep in mind is the reason for getting your policy and whether you are getting a Term Policy. Term policies are designed for people who have financial needs with a finite end.
This would be the mortgage, or the auto loan mentioned above. If you are only going to take out a 10-year policy to cover something like this, it is obviously in your best interest to take out a policy sooner rather than later.
However, if you plan to set up something like a Term Policy specifically to cover your financial needs at which point you are going to convert it into a different plan, you might be better off picking a permanent policy now or picking a longer Term Policy like a 30-year policy.
If you get a 30-year policy, the longest amount of time you can, you can lock in that lower rate for a longer amount of time which will offset the increase in cost that comes from taking out a secondary Term Policy at an older age.
An example of this would be a 40-year old taking out a 30-year policy and then once they turn 70 taking out a 10 or 15-year policy. This might be cheaper than a 40-year-old taking out a 10-year policy and then at age 50 taking out a 30-year policy and then at age 80 having to take out another 10-year policy.
Obviously quotes that you get now for different ages like 40 years or 50 years or 60 years old will change subject to your health and your lifestyle have it. If you pick up smoking or you are diagnosed with a heart condition 15 years from now, it will certainly change the costs you are quoted in the future.
Is Permanent Life Insurance Best for Me?
Deciding on term or permanent insurance policies really comes down to what you need your policy for. A permanent policy is better suited for people who will have a permanent financial need in the event that they pass away.
If you have a large estate and you want to provide an inheritance for one child while giving your business to another, permanent policies are best.
If you want to offset the cost of estate taxes or use your life insurance policy as an investment tool, again, permanent policies are best. If, however, you only have very specific and finite financial Insight, a Term Policy is best because you can set up the term you need to cover that financial need.
Best Companies For Life Insurance
Obviously the best life insurance company is going to be based upon your individual needs, however, below are some of the top contenders:
| Company | Policies Offered | A.M. Best |
|---|---|---|
| Banner Life | Term Universal | A+ |
| Lincoln Financial | Term Universal Variable | A+ |
| Mutual of Omaha | Term Universal Whole Indexed Universal | A+ |
| Protective Life | Term Whole Universal Survivorship Variable Child | A+ |
FAQs
How much is life insurance for a 40 year old?
A healthy 40-year-old male could buy a $500,000, 20-year term life insurance policy for $29 per month. A healthy 40-year-old female could buy a $500,000, 20-year term life insurance policy for $24 per month. (rates according to policygenius.com)
How much is life insurance for a 45 year old?
A healthy 45-year-old male could buy a $500,000, 20-year term life insurance policy for $47 per month. A healthy 45-year-old female could buy a $500,000, 20-year term life insurance policy for $37 per month. (rates according to policygenius.com)
Finding the Best Life Insurance Policy as a 40 Year Old
When it comes to finding the best life insurance policy, the options can quickly become overwhelming and confusing.
Before making a decision, we always recommend that you speak with an expert, in order to make sure that you are aware of all your options.
Give our independent life insurance agents a call today to learn more about some of the best life insurance companies on the market, and the policies that they offer for your specific needs and profile.
Or, get started comparing life insurance quotes for 40-year-olds using our quick and easy life insurance quote tool.