There are dozens of compelling reasons to start thinking life insurance over 40. Your 40s are an interesting time. Everyone is doing something different. Some people have 2 or 3 children and a house in the suburbs with a white picket fence. Others are living the two professionals, no children life. Yet others still are single boasting a tastefully furnished apartment in the city. With any and every life stage, it’s easiest to look at components of what should weigh in on your decision for life insurance.
If you want to skip ahead to rates, scroll down to the middle of the page to find links to rate charts for your age. You can also use the Instant Quote tool on the left (top if you’re on mobile) to see prices from top rated companies.
When Do You Need Life Insurance Over 40?
There are a multitude of reasons why someone might start their life insurance journey in their 40s. Other people might be renewing a term policy they purchased a decade or two ago. Below are the most common reasons someone purchases life insurance over 40.
Your children are most likely still dependent on your income. They might still be minors. Maybe you are helping them through college. Perhaps they are done with school and still live at home. Any way you look at it, dependent are a good reason for life insurance. So you can support them until they’re out on their own. Plus, with young adults living with their parents at a 75 year high, it might be a while.
Debt (Credit Card, Car Payment, etc.)
Not all your debt dies with you. “Unsecured obligations” as the industry calls things like credit card debt will just cease when your estate runs out of money to pay them off. None of the burden gets transferred to your spouse. Except if you live in a “community property state” which are: Arizona, California, Idaho, Louisiana, New Mexico, Texas, Washington and Wisconsin. If you reside in one of these states the lender can collect on any debt you incurred after your marriage.
Other details that can transfer debt after someone passes are co-signing for loans or joint account holders. Although the good news credit card companies do not hold authorized users of a credit card responsible for debt, only joint account holders.
The bank can foreclose on your home if no one continues to pay the mortgage. Life insurance can help with that. So can a family trust if you set one up early or the payments from your retirement account when all the requirements are met for distribution.
How to Save Money on Life Insurance Over 40
The best way to save money on life insurance is to buy early. The second best way is to purchase a term insurance policy. Whole life is great because you know that your beneficiary (the person who the life insurance pays) will receive money upon your passing. On the other hand, it is a much higher premium. It’s a more complicated policy for one which means higher maintenance costs for the insurance company. It also isn’t a gamble for the insurance company. They are guaranteed to pay out, they just don’t know when. So to mitigate that risk, they charge more.
Term insurance on the other hand is a gamble for both you and the insurance company. You probably will survive through the term. Although that depends on the length of the term you purchase and the age at which you do so. But generally, most people survive their term. The insurance company has huge charts (called Morbidity Tables) which they use to calculate the odds of your survival based on your age, gender, and health. The more likely you are to survive your term, the less you pay.
Some people will pass within the term, even though it’s unlikely, and the company needs the money from everyone to pay out those benefits. Plus, they need to pay their employees something too.
Knowing How Much You Need
The other major factor that saves you money is knowing how much life insurance you actually need. You will hear financial advisors throw numbers around like 7x to 10x your income.
We recommend a more accurate approach. A Life Insurance Needs Calculator takes into account specific debts, funeral expenses, and how much you want to leave your family. That way you can rest easy knowing that you have exactly the right amount of insurance and aren’t paying for more than you need.
Term Life Rates for Life Insurance Over 40
We separated each year for more specific information as you or a loved one progress through their 40s. Each page contains a table with rates.
Permanent Life Insurance
We talked a little about permanent life insurance earlier. It is more expensive than term, but guaranteed. If you are risk averse and can easily afford the premiums, this might be a good option for you. Although if you are more worried about term insurance because you feel that you are “paying for something you probably won’t need” it might also be wise to compare a permanent life insurance policy to a term policy with Return of Premium.
The Importance of a Conversion Option for Life Insurance Over 40
The good news is life expectancy in most countries is increasing. If you are in good health now and suspect that you might wanted to extend your coverage for your entire life (aka turn your term policy into a permanent policy) many companies offer plans to do just that. It’s in their best interest to keep you on as a customer, even at a reduced rate, than lose you entirely.
Think of it this way. If Brian purchases a 20 year term policy at 47 because he plans to retire at 67. Then he ends up wanting to work a little extra. Perhaps he is only two more years out from buying the new Maserati he has been dreaming of for the last twenty years. He has worked hard, provided for his family, and put in extra time at the office nights and weekends. Now he deserves a little something in his retirement.
Yet Brian wants to make sure his family will still be covered if he works until 69. He could purchase a 5 year term at 67. That will be a lot more expensive than what he is paying locked in at the rates of a relatively healthy 47 year old. But, if he has a policy with a conversion option. He can just say, “I want to turn this into a whole life policy and keep paying the same premiums I have been.”
You probably aren’t Brian. But whatever your circumstances are, conversion options can come in handy if you are on the fence at all about choosing between a term life and whole life insurance policy. It hedges your bets.
What About Return of Premium?
Return of premium is another rider to consider if you are completely set on a term policy. It does increase the cost. Sometimes more than double what you could pay for a policy without it. The great thing about Return of Premium is that you get back all of the premiums you paid at the end of the term. But with increasing life expediencies, plus men and women staying healthier longer, getting every penny you paid back, can be a nice bonus at the end of a policy.
The Difference Between Independent Agents and Captive Agents
There are two types of insurance agents. Captive agents and independent agents. Captive agents are contractually bound to one insurance company. Independent agents can sell whatever they want, from whomever they want. There are advantages to both for the agent. Captive agents tend to get company product training and assistance setting up their business. Whereas independent agents strike out on their own and forge their own relationships along the way.
This works out best for you in two ways when searching for life insurance over 40. The first is you can use an independent agent to shop the market for you. There are over 800 companies that offer life insurance in the United States alone. That’s a lot of work to put in. Second, if you apply with one company and they make you an offer that is sub-par, an independent agent can easily find you a new company who is more generous. Plus, most of the work is already finished.
How Abrams Insurance Can Help
At Abrams Insurance, we only work with insurance companies who possess strong financial standing. That means an A or better rating. Out of our 80 companies we have built relationships with, we can find the best rates regardless of health circumstances. Each company is different in what it considers more or less hazardous. We shop all of them, and pick the best handful to show you.
We promise that if a company tries to charge you more than is fair in our experience, we will help you find someone more reasonable. You get the benefit of our relationships the underwriters and assurance that we always fight for the absolute lowest rates for the 1000s of families we have assisted. So if you’re looking for life insurance over 40, find your age above or call us 858-703-6178 with any questions.