People without life insurance might think that it is too late for them to get on the boat and get insurance. A common misconception is that getting life insurance after 40 is too difficult. But with a little due diligence, you can find the best life insurance in your 40s. It’s never too late to buy life insurance.
There are certain issues that you must address when buying life insurance in your 40s. Buying insurance at an older age will mean higher premiums. But is it worth it? Do you need life insurance in your 40s? After all, the higher cost is the reason why many people avoid applying for life insurance at an older age. But that would be a huge mistake and here is why.
Do You Really Need Life Insurance After 40?
Life insurance at an older age is even more important because your financial responsibilities are much greater than what they were in your twenties. You probably are paying for your kids in high school or college. Even after your kids graduate sometime in the near future, they may still need your financial backing because it will take time for their careers to grow to a point where they are truly independent.
There will also be other payments that you need to address. You may still be making payments on the mortgage. There could be an auto loan to pay off. Student debt often takes years to pay off. A lot of households are burdened with credit card debts. Even day to day expenses are rising fast.
In short, you have far greater financial responsibilities in your 40s. Your household needs you even more to meet all of these massive financial obligations. Just think what would happen to your household if you are no longer there for them at this critical time. It is most certainly unpleasant to think about it. However, there is the possibility of such an occurrence and such tragic events do happen. If you are no longer there then think how much it will affect your relatives. Without your financial backing, it will become much harder for your family to handle all expenses and debts themselves.
That is why you need life insurance in your 40s. With strong financial protection, your family will be well-poised to enjoy financial success and independence in the future even if you are no longer there for them. They need not suffer financial hardships in addition to grieving over your demise. You can take responsibility and give them the gift of life insurance that will protect them. You can enjoy peace of mind knowing that you have discharged your responsibilities towards your household and provided them the highest level of financial care.
You should thus look for the best life insurance options in your 40s if you don’t already have it.
Whole Life Insurance
A permanent policy like whole life insurance provides robust financial protection. The policy may cost more, but it will provide benefits as long as you pay your premiums.
Another major advantage of whole life insurance is that it can serve as a saving vehicle. Here is an example to show how much you will have to pay for a $250,000 whole life insurance policy.
You will have to pay close to $3,500 per annum on this policy. Whole life insurance does not appear to be cheap. The advantage of paying more for whole life insurance is that it won’t expire.
But if you want a cheaper option and think that you have good health, then you can opt for term life insurance. You may have to pass a medical exam for term life.
Life Insurance Without Medical Exams
If you are seeking life insurance in your 40s, then there are options for policies that do not require a medical examination.
There are plenty of insurers that provide no exam policies for people in their forties and even older folks. However, you will have to consider the higher cost that you will need to pay. Although insurers have lowered rates for no exam policies, they are still more expensive than other policies.
If you have serious health problems then you will have to consider no exam life insurance although it is more expensive. But with your current health status, you may not be approved for other insurance policies. So you may have no choice.
A lot of people wrongly assume that if they have serious health problems in their 40s then they will be declined even for a no exam policy. Although it could be true for certain persons, it is not true for many. There are still lots of insurers that will allow you to purchase no exam life insurance in your 40s even if you have health problems.
Once again, if you are certain that you are in good health, then you might want to think about term life insurance for saving costs.
Term Insurance Policies After 40
Term life insurance may be a good choice for people in their 40s who want a more affordable policy. Due to its optimal mix of benefits and cost savings, middle-aged applicants may want to think about term life insurance.
There is a great potential for saving money with term life insurance even if you are past 40. Applicants are often taken aback after they find out how cheap these policies can be even for folks in their 40s.
Here are some ballpark values. A 30 year $500,000 policy can cost around $980 per annum. A 20 year $500,000 policy is even cheaper at around $620 per annum. Hence, term life insurance can be cost-effective for people in their 40s.
Which Term Is Best for You?
Middle-aged applicants face a major dilemma when buying term life insurance. How long should the term be? should it be 20 or 30 years? A 20-year policy can be cheaper but its benefits are valid for a shorter time period. A 30-year term policy on the other hand, purveys benefits that remain valid for 3 decades. Thus, if you are 40 today, a 30-year term policy will work till you turn 70. However, the premium will be about 50% extra as compared to the 20-year term policy.
The best choice may be a 30-year term policy. But why? The answer is simple. People are living longer than ever. Life expectancy is steadily increasing not just in the US but around the world. A lot of people are now living in their 80s. Hence, a 20-year term may be too short.
If you buy a 20-year term policy when you are 40 then it will last till you are 60. You will still need coverage when the policy expires. But buying insurance at 60 years of age is not exactly cheap. You will have to pay a much higher amount that what you would if you had a 30-year term policy. Thus, a 20-year term policy could prove to be more expensive than a 30-year policy in the long term. Thus, you can save more in the long run with a 30-year policy.
Life Insurance Cost After 40
Life insurance will certainly cost more as you grow older. Thus, it makes sense to buy one now even if you are 40. If you put it off, the policy is going to cost you more as you grow older. Instead of postponing it, you should buy one as soon as possible.
Although life insurance is going to cost you more after 40, you can still take a few steps to bring down the cost.
If you smoke, you should quit now. Smoking is the primary reason for a much more expensive policy. If you smoke, then your premium is going to be substantially higher. Besides getting a lower rate, quitting smoking will greatly benefit your health. in fact, the health benefits derived from smoking cessation is the reason why nonsmokers pay less for insurance. Nonsmokers are a lower risk prospect and can thus enjoy lower premiums.
If you disclose during the application that you are a smoker, then your rate could be doubled. That is why you should give up smoking a year before you apply.
Another way of saving costs on your insurance policy is to check out multiple leading insurers before finalizing your purchase. Shopping around will provide several other benefits besides cost savings. You may be able to find more favorable terms and conditions for a reasonable price on certain policies. Insurers are now offering policies that are customized according to demographics, age and other factors. Thus there are several options that you should consider to settle upon the best choice. You should also consider the financial strength of the company as well as its reputation.
Life Insurance from Work Is Often Not Enough
Employers now provide life insurance as benefits for their employees. But don’t let that give you a false sense of assurance. These policies often happen to be extremely basic and provide limited coverage. Thus there is the risk that you may not be covered when you need this policy. The payout on these policies is often very low. Hence, one should not get complacent with life insurance from work. You should look for a better policy that will provide wider coverage and pay out greater benefits.
Policies from the workplace are often worth just $100,000 which is mediocre by today’s standards. The amount is too little to be of much use for your family in your absence.
You should factor in your debts, the earning potential of your relatives and day-to-day expenses. When you mull over the whole scenario, you may likely find that $100,000 is far too modest.
How much do you need then? Multiply your annual income by 10 to get a reasonable amount. A policy worth this amount will pay the equivalent of 10 current annual incomes in addition to other benefits. This is fairly reasonable for most scenarios.
Hence, you should think about buying a good life insurance policy on your own in addition to one that you have from your employer.
What to Do if Life Insurance After 40 Is out of Reach
If life insurance after 40 is prohibitively expensive for you, then you should think about term life insurance.
There is no doubt that despite being highly comprehensive and nearly foolproof, whole life insurance can be expensive. No exam policies can also be expensive. So if you have a lot of financial obligations and limited income, then term life insurance could be optimal choice for you.
Term life insurance can be fairly cheap even for middle-aged applicants. So if you find whole life insurance to be excessively costly then you should try getting quotes for term life insurance.
What if You Already Have a Policy That Is Not Enough
Suppose you bought life insurance in your 20s but find in your 40s that the coverage is not enough. This could happen due to several factors. For instance, you could need additional coverage if you welcome a child later in life. Or perhaps you may suddenly find yourself with greater financial obligations that you would not want to pass on to your kids in your absence. You will then have to update your policy for greater benefits and coverage.
You can buy another life insurance policy in addition to your existing life insurance policy. Insurers now provide flexible plans that will help you to easily accommodate another policy.
Do not make the mistake of thinking that life insurance after 40 is overly costly or impossible. You have several options at your disposal for the ideal life insurance policy after 40 that will work nicely for your family.
Even in your 40s, you can still give the financial protection that your loved ones deserve. Its never too late to buy insurance.
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