What's The Best Type of Life Insurance for a 40 Year Old?
Our Advice Ages 40 – 49
What’s the Best Type of Life Insurance for a 40 Year Old…and up? Well now, this is a terrific question.
The 40’s are an interesting time both personally and from a life insurance perspective.
Maybe you have kids that are nearing the end of high school – possibly even entering college…
OR maybe you’re just planning for your first child. There are so many variations in families these days.
So let’s dig into the ins and outs of life insurance in your 40’s and to see how you can get the best possible coverage for the lowest rates.
What’s the Best Type of Life Insurance for a 40 Year Old?
Life Insurance Rates Ages 40 - 49
As I mentioned above (and in all of my articles) the older you are the more risk life insurers take on to cover you. Hey, that’s not to say you aren’t in great shape.
In fact, you may even qualify for premium rates. People are taking better care of themselves and the ’40s aren’t what they used to be.
Frankly my friends it’s all just a numbers game. No matter how healthy and active you are – there are only a limited number of years we all have to enjoy life on this planet.
If you think about it in terms of summers the reality truly hits home…
…and no I am not trying to be a downer. It’s just a fact that all of us have to consider. Especially if we have dependents and debt.
Let’s take a look at some rates now to get an idea of how the numbers really work.
Basic Term Life Insurance Rates in Your 40's
Just as a heads up. Please be aware that I’m using a standard health rate for the purpose of this article.
On occasion, I do use preferred rates in examples but for the most part, I avoid it. That’s because the majority of people approved for life insurance receive a standard or average health rate.
How do life insurance rating classes work? Life insurance companies in Canada rate applicants on a scale from low to high in terms of their underwriting risk.
If you have a serious or moderate health issue, you may be rated high risk which means you pay more for your life insurance.
Getting Declined is Rare
In some cases, applicants are outright declined.
Approximately, 80% of consumers who apply for life insurance in Canada are approved at a standard health rates or better. Of that 80%, approximately 40% are approved at preferred or preferred plus rates.
The reason I choose the average rating is to give you an idea of the costs without baiting you with super low premiums you may not qualify for.
Who decides what rating you ultimately receive? The life insurance company does. So, any agent who promises you the lower rates isn’t really in a position to do so.
That doesn’t mean you should give up trying to get the best possible rating! Many of my clients receive Preferred and even Preferred Plus ratings which means they pay even less for their coverage.
I am including quotes for both men and women.
Wawanesa Life Insurance Rates:
Men Standard Rating, 20 Year Term
|40 Year Old Male||$50.85||$99.90|
|41 Year Old Male||$55.35||$108.90|
|42 Year Old Male||$60.75||$118.80|
|43 Year Old Male||$66.15||$129.60|
|44 Year Old Male||$72.45||$142.20|
|45 Year Old Male||$79.20||$154.80|
|46 Year Old Male||$87.75||$171.90|
|47 Year Old Male||$97.65||$191.70|
|48 Year Old Male||$108.00||$211.50|
|49 Year Old Male||$120.15||$235.80|
|50 Year Old Male||$133.20||$261.00|
*Quotes above are for Wawanesa 20 Year Term, monthly, Standard Class, non-smoker. Your rates may differ depending on your unique circumstances. August 2021.
Women, Standard Rating, 20 Year Term
|40 Year Old Female||$38.25||$74.70|
|41 Year Old Female||$41.85||$81.90|
|42 Year Old Female||$45.45||$89.10|
|43 Year Old Female||$49.50||$97.20|
|44 Year Old Female||$53.55||$105.30|
|45 Year Old Female||$58.50||$114.30|
|46 Year Old Female||$64.35||$126.00|
|47 Year Old Female||$70.65||$138.60|
|48 Year Old Female||$77.85||$153.00|
|49 Year Old Female||$85.95||$168.30|
|50 Year Old Female||$94.50||$185.40|
*Quotes above are for Wawanesa 20 Year Term, monthly, Standard Class, non-smoker. Your rates may differ depending on your unique circumstances. August 2021.
The Difference Between Men & Women: Standard Rates
As you can see there is a big difference between what men spend on life insurance and what their female counterparts do…
…on average, men spend 40% more! It’s a simple matter of statistics. For the most part women live longer than men.
In fact, the difference in lifespan has remained stable even throughout monumental shifts in society. Consider Sweden, which offers the most reliable historic records. In 1800, life expectancy at birth was 33 years for women and 31 years for men; today it is 83.5 years and 79.5 years, respectively. In both cases, women live about 5% longer than men.
Rates Seriously Start to Take Off in Your 40's
Now, this is something you need to take note of. Life insurance is a finite product. Which means certain terms are unavailable on specific birthdays.
For example, 30 year term ceases to be available on your 55th birthday. in fact, with some carriers, like Ivari, you’re only eligible for a 30 year term policy if your 50 years old or younger.
There are some life insurance companies that are more lenient than others when it comes to age. In other words, they cover you later in life for less money.
BUT you still need to plan to get affordable coverage to achieve your goals. Let’s take a look at coverage through the years and how it starts to jump up in terms of cost.
Life Insurance Birthdays
For the purposes of this section, I’m going to use men for the example because the numbers provide a starker contrast.
- Life Insurance Ages 40, 41, 42: As you can see life insurance is very affordable for a man at standard non-smoking rates. While prices are rising they are still in the same ballpark. A 40 year old male can get 20 years of coverage for $500K at $47.90 per month from Western Life Insurance and $1 Million in coverage for the same term at $92.88 per month. When you think he is covered until his 60th birthday it’s a pretty sweet deal.
- Life Insurance Age 43: Now you can really feel the change in the underwriters feeling about your longevity. For example, rates go up to $124.54 for $1 Million in coverage. That’s $31.66 per month more than if he applies at 40. Over the life of a 20 year policy, that’s $7,598 more… OUCH!
- Life Insurance Age 44, 45, 46, 47, 48 & 49: Whelp you can see these rates are going up faster and faster. For example, $1 Million coverage at 49 years of age goes up to $230.33 per month. Which means this client spends $32,988 more over his term than the 40 year old. WOW!
- Life Insurance Age 50: This is a big milestone! You now pay substantially more for coverage. Please check out my article about life insurance in your 50’s now.
The Older You Get the More You Pay
Do you see what is happening? The cost of term life insurance is snowballing. Yes indeed. This is because life insurance companies now view you as a greater risk.
If you want dirt cheap rates the earlier you call me the better. The good news is all is not lost. With the right independent life insurance agent, you will find the best possible coverage at the best possible rates.
If you’re reading my blog posts you know just how important your health is when it comes to applying for life insurance.
You pay more as your rating is lowered. So, for example, a 40 year old woman in average health pays $66.22 at Western Life per month for $1 million of coverage for 20 years.
But what if she is in stellar health with a family history of longevity? Equitable Life offers her premiums at $48.55 per month if she achieves preferred plus/elite status!
Which means this client pays $4243.20 less over her term. SWEET!
Something else you should note is I mention 2 life insurance companies. Remember not all life insurance companies are created equal. More about this soon!
So What's the Deal?
Your health is important…
…and the healthier you are, the more you save. BUT please whatever you do, don’t let health concerns allow you to procrastinate.
Protection is the priority especially if you have dependents. The truth is you are likely healthier than you think. I’m not sure why but most people DREAD their physical exam.
You wanna hear some positive news?
They are typically uneventful and most people get through with flying colours. The key to obtaining affordable life insurance is management.
Even if you have high blood pressure or cholesterol if it’s under control and you have a history of treatment the underwriters don’t view you as high risk.
This is the reason you need a great independent agent. We know the ins and outs of the underwriting for the best companies in Canada. Even if you are truly a high-risk applicant we go the extra mile to find the right fit for you.
One Caveat: Smoking!
…things get a little dicier when you smoke. This seriously impacts the premiums you pay. On the bright side you are in control of this situation.
Did you know after 12 months of NOT smoking you’re considered a non-smoker by most life insurance companies? Yep.
My advice? If you’re a smoker don’t put off applying for life insurance. Call Policy Architects and we will find the best fit. Then embark on a smoking cessation program – and be sure to inform your doctor.
It’s important for your medical practitioner to follow your progress and document it. Once you hit the one year mark we can reapply for a better rating.
To give you an idea of just how much smokers pay, check this out! Our 45 year old male client is a smoker. He wants $500K of coverage for 20 years. Sun Life approved him at $241.20 per month. WHOA! If you compare this to his non-smoking counterpart who pays only $76.64 per month that’s an incredible difference of $164.56. Over 20 years, the smoker will pay $39,494.40 MORE for his coverage!
Smoking costs you a lot more than your health!
Selecting the Right Company for YOU
This brings me to one of the main points I like to hammer home. Not all life insurance companies are created equal.
This is true when it comes to their financial stability AND their underwriting practices.
It makes sense if you think about it. To get a market edge many companies opt to take on a niche. This holds true for the life insurance industry.
Each person has their own unique circumstances when it comes to health. This is why it’s so important to find a knowledgable independent agent that is familiar with this ever-changing landscape.
When you call Policy Architects is there is a question about your situation we feel out the underwriters at various companies to see how you may fare BEFORE applying.
We go the extra mile and it pays off in spades!
Policy Architects Saves You Money, Time & Hassle
Doing this sort of legwork saves you time, money and even reduces your chance of being declined.
Picking the right company for your unique situation could literally halve your premiums. If you are paying premiums over thirty years that could mean 10’s of thousands of dollars.
I can honestly say I love my job and the challenge of finding the perfect policy for my clients.
Who Needs Life Insurance at 40 Anyway?
As I mentioned above, the world is ever-changing. So are people’s circumstances.
Clients in their 40’s are in all different situations. In fact, I personally fall out of the “norm” as I had my son at 45. This is definitely a lot older than a lot of my peers.
So let’s take a look at some different situations that require life insurance in your 40’s now!
Income Replacement & Family
So this is what many people think of when they consider purchasing life insurance. Income replacement to cover loved ones in case there is an early demise. Just think about it – when someone dies, their ability to earn money (their paycheque) dies with them.
Let’s say you’re a 45 year old earning $100k per year and you die unexpectedly. Assuming your retirement is age 65 – and that’a a big assumption – that’s 20 years of your earning potential gone. Or two million dollars that your family will never see.
For the most part, this is devastating to families that have dependents, a mortgage and debt. Leaving their family in a terrible financial jam.
I got my first policy when my son was born in my mid 40’s because I started my family late…
…BUT there are other families sending their children to college and university at this point and may not need the same coverage.
Best Type of Life Insurance for a 40 Year Old & Up: Divorce
This is another situation that requires life insurance forethought and I think it surprises a lot of people.
If you have children with someone you’re no longer with, they may request some financial protection just in case you die unexpectedly.
Even if you don’t provide financial support, time is money. If you were to pass away what new costs would your ex have to take on as a result?
All of this is taken into consideration when you separate. A life insurance policy gives you and your ex-spouse some confidence that neither of you will be left with financial problems as a result of sudden death.
What if you have another family? Life insurance can help you create a more equitable situation. For example, maybe you have a business with your eldest child – but now you have a new baby. You can take out a permanent life insurance policy and make your second child a beneficiary to make things fairer.
Do you own a business? Sudden death could be the end of it unless you plan – especially if you’re a key person.
To protect the integrity of your company, partners, employees or even your family’s interest, life insurance may be just the tool for you!
There are all kinds of ways life insurance can be used in business and in fact, this deserves a post on its own, which I’m in the process of writing.
Life insurance can also help you grow your business. Let’s say its a well-established company but you have a vision for growth.
This is awesome but you need a loan to execute your plans. In this case, a bank may require a life insurance policy to cover the loan just in case you pass away unexpectedly. Another great tool for you to use.
Final Expense & Estate Planning
There’s no denying it. Middle age is setting in and many of us start to look at our estate planning and what we want to happen when we leave the earth at this point.
Sure it’s not one of those topics we want to chat with our friends about over a casual dinner – but it’s something that needs to be done.
ESPECIALLY if you have dependents or a partner that needs your financial input.
Whether you’re concerned about estate taxes when you die or a simple burial, a knowledgable independent agent can help you reach your goals.
Your unique circumstances dictate how you approach this coverage. Estate planning and final expense usually involve permanent coverage so it’s especially important to obtain advice from someone who understands this type of insurance. It’s complicated and you could easily be led astray without professional advice.
Children With Disabilities
If you have a child or children who are unable to care for themselves it is VERY important to plan ahead. If you pass away unexpectedly without a plan vulnerable dependents are left without a safety net.
There are all kinds of things you can do to avoid this. Trusts are a very useful tool and in fact, when they’re paired with life insurance coverage they can help you cover this sort of situation.
Planning for children with special needs is a very complicated process that has to be done properly. I highly suggest speaking to a lawyer or an excellent financial planner before contacting Policy Architects about the appropriate coverage.
The thing is if you don’t get GREAT advice you may not hit all of your goals – and there is NO space to make mistakes if you have a child that is utterly dependent on you.
Best Type of Life Insurance for a 40 Year Old & Up
Term or Permanent Coverage?
Life insurance comes in two basic forms:
- Term: This is the most traditional form of coverage. You determine how much money is required to protect your family, select the period of time you’re most vulnerable (the term) and apply to an insurer for a policy. Traditional term policies require a medical exam – and those findings are sent to an underwriter who issues a rating that targets the premiums you pay.
- Permanent: This type of policy covers you until the day you die so if that’s the goal this is the solution for you. The process is similar to term (unless you are considering standard or guaranteed issue) BUT it’s much more expensive because you WILL receive a payout. There is also typically a cash value accumulation feature attached, although this varies by product.
What Works for YOU?
For most people most of the time term is a great choice and it’s the most affordable – especially if you need income replacement. But as you age this starts to change. Term gets far more costly and permanent insurance starts to be more of a contender. In fact, it works a charm for final expense, businesses and children with disabilities.
It’s very important however to speak to a great independent life insurance agent to make sure you get some solid advice before you sign on the dotted line.
How Much Coverage Does a 40 Something Need?
Being uninsured is the worst possible situation, but being underinsured doesn’t fall far behind.
For the most part, people VASTLY underestimate how much money they need to keep up their lifestyle. I think it has a lot to do with being busy. Many of us have to really hustle to make ends meet and if we’re in partnerships chances there is a duel income involved.
Not to say this is always the case, but it is increasingly more common.
This doesn’t leave a whole heck of a lot of time to ponder “what if”. So when people come to see me they are often just thinking about all of these topics for the first time in great detail.
It’s easy to overlook multiple costs and forget about obligations.
10x'ing Your Salary
To help people figure out what they need to keep their family comfortable, most life insurance agents suggest purchasing 10 times your salary for adequate coverage.
While this may seem like a lot of money at first glance, when you do the calculations it really isn’t that much.
My clients Sherry and Glenn are in the early ’40s. They have a 5 year old and a 10 year old. So they have lots of financial obligations to look forward to.
They are a dual-income family but Glenn makes $75K per year and Sherry brings in $40K because she only works part-time. They have a costly mortgage ($500K) because they live in Vancouver and have lots of debt.
In order to protect their kids, they are thinking $500K of coverage for 30 years will do the trick…
OUCH! Hold 'Yer Horses
This is NOT enough coverage.
If they truly want to keep their family comfortable 10 times their salary is the ideal figure. So to protect Sherry, Joe should take out at least $750K of coverage…
BUT even that may not be enough. If Joe dies will Sherry continue to work her part-time job or will she dedicate her time 100% to her family because of the loss? My guess is she will quit. This means you have to add her salary to this equation.
Which brings them to $1,150,000.00 of coverage. It may be even more because they live in the most expensive city in Canada.
As you can see there are a lot of considerations and this small example only just reveals a little bit of what an independent agent considers when they review your case.
Don't Be Caught Underinsured Call Policy Architects Today!
You can absolutely get affordable life insurance in your 40’s. If you’re thinking about getting coverage call us today!
There is no point in putting in off. The longer you wait the more it costs and if you wait too long, sometimes your options are seriously curtailed.
Work with the independent life insurance agents at Policy Architects to make sure you get the best policy for the most affordable rates.