How Much Does Life Insurance Cost For a 40 Year Old (Ages 40-49)?

If you are considering getting life insurance in your 40’s, you may be wondering— is it too late? Is it too expensive? Is it even necessary?

If you have someone in your life that depends on you financially, you probably need life insurance. Life insurance is more expensive in your 40’s than it was when you were in your 20’s, but that does not mean you need to break the bank. Depending on your health and family history, many affordable options will be available for life insurance.

If you are on a tight budget, term life insurance is a great option. It is far more affordable than whole life insurance. A term life plan can also be a better option for those who are looking for a life insurance with coverage until they retire, or their mortgage is paid off. Whole life insurance, by contrast, can be a good option for parents who want to leave an inheritance for their children.

Keep reading to find out why life insurance should be a part of your long-term financial plan and if you can afford it.

Why should I get life insurance as a 40-year-old?

It is never too soon or late to purchase life insurance coverage. If you are in your 40’s and someone depends on you for their financial well-being, you should strongly consider putting a life insurance plan in place. That could be your spouse, children, parents, or people who work for you.

There are various other reasons to buy life insurance as well, such as:

• Covering end-of-life expenses or funeral costs
• Taking care of your debt, like a mortgage, so that the balance does not fall on your surviving family
• Preserving the value of your estate
• Leaving an inheritance for your heirs

What type of life insurance and how much of that life insurance you should carry depends on your health, financial situation, and long-term goals. However, if you believe you need life insurance, do not delay. Age is one of the most important factors that determine the premium rates of your life insurance. For each year you postpone buying coverage, the cost of life insurance rises by 8-10% on average.  

If you already have a policy, your 40’s can be a good time to revisit your life insurance coverage as life insurance needs generally change as we age. Perhaps you have purchased a bigger home and need more covergae than what is offered by the existing policy. Maybe your income has increased substantially since you bought the previous life insurance policy, and you now require a bigger nest egg to ensure your family will be able to maintain their current lifestyle after you are gone.  

What's the difference between term and whole life insurance for someone in their 40s?

Choosing between term life insurance and its counterpart whole life insurance is like deciding between renting a house and buying one. Term life insurance is like renting; it provides coverage for a specific period (the term), and it's generally more affordable. It's a good fit if you're looking for coverage to protect your family during your working years.

Whole life insurance, on the other hand, is like buying a house. It offers lifelong coverage and includes a cash value component that grows over time. It's more expensive but can be a part of your long-term financial strategy. For someone in their 40s, the choice depends on your financial goals, budget, and how you want to protect your family's future.

Factors affecting cost and coverage

Insurers look at your mortality risk to determine the maximum coverage they can offer you and your premium rates in your life insurance. Therefore, when you apply for a policy, the carrier will look at all factors that can affect your life expectancy. These include:  

Age

Your date of birth can significantly impact your life insurance premium costs. For this reason, it is wise to buy a life insurance policy for your needs and coverage as early as possible. The longer you wait, the more you will have to pay based solely on age.  

Death Benefit Amount

All other things being equal, the higher the death benefit amount, the greater the cost. So, a life insurance plan with a death benefit of $100,000 would be more affordable than the same type of policy having a face value of $200,000.

Type of Life Insurance Policy

Term life insurance policies come with an expiry date while whole life policies last as long as you do and also build in cash value. Given this, it is not surprising that the whole-life policies cost as much as six to 10 times more than term life insurance.  

Health

When you apply, the life insurance company typically reviews your health and wellbeing through a process called underwriting. It involves undergoing a simple paramedical test and answering a few health questions.

Insurers reserve the best rates for healthy applicants. While people with an underlying illness usually still get insurance coverage, but pay higher premiums.

In some instances, the insurer may approve you for a lower amount than you have applied for. Common health conditions that can push your premiums up include diabetes, high BMI, and high blood pressure.

Tobacco Use

Smoking is not good for your health or wealth. Tobacco use puts you at a greater risk of developing serious medical conditions, like heart attack and stroke. Brace yourself for significantly higher life insurance premiums if you smoke. Depending on your health, you could pay as much as two to five times more than a non-smoker of the same age, for the same life insurance premiums.

Family History

Many diseases tend to run in families. If you have got a family history of certain illnesses, like diabetes and cancer, the insurer may bump up your rates of your life insurance.

Your Gender

When it comes to life insurance, men get the short end of the stick. Since they have a shorter lifespan than women on average, they receive higher premium rates.

Occupation & Lifestyle

What you do for a living matters, as do your hobbies. A dangerous job or hobby (like mining or skydiving) can raise your cost of life insurance. In the worst-case scenario, the insurer may deny coverage altogether.  

Should I add riders to my policy?

Life insurance riders are extra features that you can add to your policy for a fee. Some of these add-ons make your coverage more comprehensive; others add benefits originally not present in your base policy, but all of them will increase your life insurance cost.

So, should you add riders to your policy?

It depends on your situation. Riders allow you to customize a policy according to your unique needs. If the base policy does not accommodate all your needs, adding certain riders can give you more robust protection.

Some of the more common riders that you may want to consider are:

• Waiver of premium for disability insurance rider

With this rider in place, the insurer waives your future premiums if you incur a disability and cannot work. This way you will be able to maintain coverage even if a severe illness or injury prevents you from working.

The insurer keeps the policy in force up to a certain age. Generally speaking, the limit is 65 years, but it may vary by provider. Also, each carrier has its own definition of disability, so make sure you understand the situations in which this rider will kick in before you sign up for it.

• Critical illness rider

This rider helps ease the financial burden on your family if you develop a terminal illness. If you are diagnosed with an illness covered by the policy, you receive a portion of your life insurance as a death benefit. You can use the tax-free payout to pay for medical and other expenses. If you die, your beneficiary will receive the remaining death benefit.

• Long-term care rider

Long-term care rider allows you to tap into your policy’s death benefit while still alive. The insurer issues a part of your benefit to help you pay for a nursing home or other long-term care services. To get access to the LTC coverage from a rider, you must demonstrate you cannot perform at least two of the six basic activities of daily living.

• Return of premium rider

If you add a return of premium rider to your term life insurance policy, the insurer will refund all the premiums paid if you survive the policy term. The payout is issued at the end of the policy term and not subject to tax.

• Child insurance rider

With this rider, you can add life insurance coverage for all your children aged between 14 days to 17 years — including legally adopted children and stepchildren — to your policy. Your future children will be automatically covered.

How much does life insurance cost?

So, how much does life insurance for adults’ cost?

Here are some examples of how much you might pay for coverage in your 40’s. Please remember that every insurer and life insurance company calculates premium rates differently and every applicant is unique. Therefore, these ‘generic’ quotes might not be accurate for you. If you want to find out the true cost, the best way is to compare quotes from different providers.

For a 10-year term life policy with a $100,000 benefit, a non-smoking, 40-year-old male, their potential life insurance cost might pay around $16 a month ($183 per year). For a 20-year term life plan with the same benefit amount, that potential life insurance cost might be slightly higher with the premium increaseing to around $21 a month ($252 per year).

Premiums for females are generally 10-15% lower than those for males. Smokers, on the other hand, pay anywhere between two to five times the non-smoker rates.

How does the length of the term affect life insurance costs for someone in their 40s?

A longer lease term generally means lower monthly payments, right?

In the world of term life insurance, it's a bit different. The longer the term you choose, the higher your premiums might be. This is because the insurance company is taking on a longer commitment to insure you.

For someone in their 40s, choosing a 10-year term might be less expensive monthly than a 20 or 30-year term. However, think about what you need. It's like choosing between a short-term rental for a vacation or a long-term lease for stability.

What tips can help reduce life insurance costs for someone in their 40s?

Here are a couple of strategies to keep in your back pocket:

• Shop around:

Don't settle for the first life insurance quote you get. You've got to try a few quotes before you find the best fit at the best price. Different life insurance company's can offer many different rates, premiums, as well as coverages. Its important to find the right company to give you all the benefits at a rate you think is fair.

• Consider term life insurance:

This is often less expensive than whole life insurance. It's like renting a home versus buying; it's cheaper in the short term and still meets your needs.

• Lead a healthy lifestyle:

Quit smoking, eat well, and exercise. It's not just good for your health; it's also good for your wallet when it comes to insurance costs.

• Buy only what you need:

You want it to fit your needs perfectly without unnecessary extras that drive up the cost. If there are premiums to your life insurance that would only drive up your costs, consider a different life insurance.‍

• Annual payments:

Paying your premium annually instead of monthly can often save you money. It's like buying in bulk; insurers may offer a discount for paying all at once.

• ‍Lock in rates early:

The younger and healthier you are when you get life insurance, the lower your rates will be. Even in your 40s, locking in a rate now can save you money compared to waiting a few years.‍

• Healthy lifestyle changes:

Improving your health can lead to lower premiums. It's like lowering your car insurance rates by taking a defensive driving course. Insurers often reward healthy habits with lower costs.‍

• Review your coverage needs:

Don't overbuy. Ensure your coverage matches your actual needs. Different life insurance companies have different policies on this, but generally it's like avoiding paying for cable channels you never watch.

How does an independent agent or broker fit into the process?

Working with an independent agent or broker is like having a personal shopping assistant for insurance.

They can compare policies from multiple insurers to find the best rates and coverage for your specific needs. They're knowledgeable about the ins and outs of various policies and can answer any questions you have.

Plus, they can help you navigate the application process and make it as smooth as possible. For someone in their 40s looking into life insurance, an independent agent can be a valuable resource in finding the right coverage at the right price.

Conclusion  

Life insurance for 40-year-olds is not as costly as many think. While many factors determine the cost of life insurance, healthy applicants pay less than those who smoke or have an underlying illness. For most people in their 40’s, term life may prove sufficient.

However, whole life insurance, significantly more expensive than term life, may be a good option for people with unique needs. Dundas Life works with top Canadian life insurers and can help you find the right coverage at an affordable price.

Life insurance can offer peace of mind, knowing that you've taken steps to protect and provide for those you care about, no matter what life throws your way.

FAQ

How does inflation impact life insurance for someone in their 40s?

Over time, the value of money decreases, meaning what seems like a substantial coverage amount now might not stretch as far in the future.

When choosing your life insurance policy and coverage amount, consider how inflation might impact your family's future financial needs; anticipating that the journey might take longer than expected.

Some policies offer riders that adjust your death benefit to account for inflation, ensuring that your coverage keeps pace with the cost of living.

How do future financial goals affect life insurance choices for someone in their 40s?

Your 40s are often a time of significant financial planning, from saving for retirement to helping your kids with college expenses, which life insurance will help with.

Life insurance plays a crucial role in securing these financial goals. It's like laying down a protective foundation for your financial house, ensuring that unexpected events don't derail your plans.

When choosing a policy, consider how it fits into your broader financial strategy. For example, a term life policy might cover the years you're paying off your mortgage, while a whole life policy can contribute to your estate planning.

Can life insurance policies for those in their 40s have cash value?

Yes, but typically only whole life or other permanent life insurance policies include a cash value component. You can borrow against the cash value or even surrender the policy for its cash value if you no longer need the coverage.

For someone in their 40s, this feature can be attractive as part of a broader financial strategy, providing a potential source of funds for future needs or opportunities.

How does a change in marital status affect life insurance in your 40s?

If you get married, you might want to increase your coverage to ensure your spouse is financially protected. Conversely, if you divorce, you may need to adjust your beneficiary designations or even reduce your coverage if you no longer have the same financial obligations.

It's important to review and possibly update your life insurance policy to reflect these significant life changes regarldless if its term life insurance or whole life insurance.

What's the impact of a career change on life insurance for someone in their 40s?

Changing careers in your 40s might come with changes in income, benefits, and life insurance needs.

If your new career comes with a higher income, you might want to increase your coverage to match your new financial situation. Conversely, if your new job includes a robust employee life insurance benefit, you might adjust your personal policy accordingly.

It's crucial to assess how a career change affects your financial picture and adjust your life insurance premiums and coverage to ensure it remains aligned with your needs and goals.