Do You Need Life Insurance in Your 40s?

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Between juggling a bunch of financial priorities — paying off your credit card debt, big wins in your career, paying off your house, saving for retirement — and raising a family, you probably have an endless to-do list.

Chances are, purchasing life insurance has been something you’ve been meaning to do for a while but haven’t yet. Whether it’s cost or the lack of time that’s been keeping you from getting coverage, there are several reasons why you should buy a life insurance, especially if you’re in your 40s.

Do You Need Life Insurance at 40?

It really depends. While you’re hitting your stride on both the personal and professional front, you’re also likely “sandwiched” with responsibilities: not only tending to your kin, but also caring for aging parents. If you fit in one or more of these categories below, you probably need life insurance.

1. You Have Debt

Should something happen, a life insurance policy can cover your debt (like your mortgage) so it’s not passed on to your loved ones.

According to MONEY Magazine, the average debt  35- to 44-year-olds carry is a staggering $133,100 and $134,600 for those between the ages of 45 and 54. Besides a mortgage, this includes credit card debt, student loans, among other forms of debt.

That number is twice as a high as the 35-and-under set and those over 65, who carry average debt of $67,400 and $66,000 respectively.

A life insurance policy can pay off your mortgage, credit cards, auto loans — any debt that could become a burden for your loved ones. One benefit of buying life insurance in your 40s is that you likely have a big picture view of your finances, meaning you can buy the amount of coverage you know you’ll need.

2. You Have Kids Who Depend on You

Forty-year-olds are empty nesters, teen wranglers, and new parents.

Whether your household has one or two income-earners, there are valid reasons why all parents should considering getting coverage. There are day-to-day expenses to consider (childcare, housekeeping, chauffeuring) as well as future expenses that you’ve planning for (college).

As you might imagine, higher education is only getting more expensive. The cost of a public, four-year university for 2018-2019 school year — which includes tuition and fees, room and board — was $19,080, per the College Board. Do your kids have their sights set on a private, liberal arts college? Then you’re looking at a hefty chunk of change — $46,680.

Paying for day-to-day expenses adds up quickly, too. Parenting is a tough job in itself. If stay-at-home moms were paid a salary, they’d earn over $143,000 a year! A life insurance policy cannot replace you, but it can provide finance assistance to get the help your loved ones will need.

3. Your Parents Depend on You, Too

As parents age, adult children have to make tough decisions. If your parents do not have any savings or investments to cover their elder care, you may have to pay for their expenses out-of-pocket every month. Assisted living and nursing homes are expensive, ranging on average from $41,000 to $78,000. And in-home care still adds up to nearly $20,000 a year.

What would happen if you were no longer around to provide financial assistance?

There are a variety of insurance options for elder care. Term life insurance is one of the most affordable because it’s simple: pick a term and a coverage amount and pay that until the policy expires. The downside is it only pays if the insured policyholder (you) passes away and the beneficiary files a claim; you cannot withdraw funds or take out a loan. But because there is no cash value component, your monthly premium is much lower and the coverage amount is the same throughout the entire term.

 

What’s the Best Insurance for a 40-Year-Old?

There are a lot of different life insurance products out there. While there’s certainly no one-size-fits-all answer, a popular option is term life insurance.

Term life is simple insurance. You pick a term length (often 10, 20, or 30 years) and a coverage amount (like $250,000 or $1 million). Then just pay the monthly premium until you pass away or you outlive the term and the policy expires.

While whole life is another popular option for its cash value component, but the monthly premiums are more expensive. See for yourself the difference in monthly rates for term versus whole life policies.

 

Life Insurance Quotes for Males in Their 40s for $1M in Coverage

Age Term Life* Whole Life
41 $63 $464
45 $78 $720
49 $102 $1,024

Sources: Bestow & Policygenius

Life Insurance Quotes for Females in Their 40s for $1M in Coverage

Age Term Life• Whole Life
41 $43 $376
45 $56 $552
49 $72 $744

Sources: Bestow & Policygenius

In life insurance, the younger you are when you buy a policy, the better your rate.

Because you’re in your 40s, you may not need as long of a term or as much coverage as someone else in their 20s or 30s. That’s one of the benefits of being in the workforce longer; you’re more established.

If you have other investments that can provide the same benefits for your loved ones (like a pension) or if you have other insurance policies in force, you might be able to self-insure or just buy enough coverage to supplement the other benefits. (If you’re not sure how much life insurance coverage you need, our Customer Care Advisors can help. They work commission-free.)

 

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