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.

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 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 and how much 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 your premium rates. For each year you postpone buying coverage, the cost of insurance rises by 8-10% on average.  

If you already have a policy, your 40’s can be a good time to revisit your coverage. 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 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.  

Factors affecting cost and coverage

Insurers look at your mortality risk to determine the maximum coverage they can offer you and your premium rates. 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 premium costs. For this reason, it is wise to buy 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 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 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 get coverage, they 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 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.

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.

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.

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 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 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 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 might pay $16 a month ($183 per year). For a 20-year term life plan with the same benefit amount, the premium increases to $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.

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.