Life Insurance For Over 40S: What's The Best Option?

Life insurance is a crucial financial tool that often goes overlooked. While it may not be a priority for those in their 40s, it is worth considering as it can provide financial protection for loved ones in the event of your death. The best type of life insurance depends on your budget, health, and goals. Term life insurance is a popular option for those seeking affordable coverage, while permanent life insurance offers lifelong protection and may accumulate cash value over time. When choosing a policy, it is essential to assess your current and future financial needs to ensure adequate protection.

Term life insurance

When shopping for term life insurance, it's important to compare coverage options and choose a term length that suits your health, finances, and goals. You can also add life insurance riders to customise your coverage for specific needs.

• Guardian: Best for applicants with health conditions.
• MassMutual: Best for term length options.
• Northwestern Mutual: Best for customer experience.
• Thrivent: Best for social responsibility.
• New York Life: Best for high coverage amounts.
• Pacific Life: Best for conversion flexibility.
• Penn Mutual: Best for term life versatility.
• AARP: Best for older applicants.

Permanent life insurance

There are several types of permanent life insurance policies:

Whole Life Insurance

Whole life insurance is a permanent life insurance policy that builds cash value over time and usually lasts a lifetime. It has fixed and guaranteed premiums, rates of return on cash value, and death benefits. Whole life insurance ensures that your dependents receive a payout regardless of when you pass away. It is a good option for those in their 40s who want to build cash value over time, but it typically costs more than term life insurance.

Universal Life Insurance

Universal life insurance is a type of permanent life insurance that offers flexible premiums and death benefits. It allows you to increase or decrease your premiums within certain parameters. There are three main types of universal life insurance: guaranteed universal, indexed universal, and variable universal. Guaranteed universal life insurance has a fixed interest rate, while indexed universal life insurance has a set minimum and maximum interest rate. Variable universal life insurance has a variable interest rate.

Burial and Final Expense Insurance

Burial and final expense insurance is a small whole life insurance policy designed to cover funeral costs and final expenses. The death benefit is usually between $5,000 and $25,000. This type of insurance is ideal for those with underlying medical conditions that would disqualify them from other coverage types.

Survivorship Life Insurance

Survivorship life insurance is a type of whole life insurance that insures two people and pays out the death benefit when both have passed away.

When choosing a permanent life insurance policy, consider your long-term goals and budget. Compare the average life insurance rates by age and policy type to make an informed decision. Additionally, consider the financial strength and customer satisfaction of the insurance company, as well as the availability of optional add-ons, known as riders, which can provide extra protection.

No-exam life insurance

There are three types of no-exam life insurance:

• Accelerated Underwriting Life Insurance: This process involves the insurance company gathering information about the applicant electronically, and algorithms are then used to assess the quote. Accelerated underwriting policies are convenient and competitively priced.
• Simplified Issue Life Insurance: This is a streamlined approach to underwriting. These applications typically ask some health and lifestyle questions and do not require medical exams. The cost of simplified issue policies tends to be higher than fully underwritten policies.
• Guaranteed Issue Life Insurance: Guaranteed issue life insurance policies offer coverage regardless of health status and without a medical exam or health questions. This type of policy is intended for those in poor health who want minimal coverage, usually to cover funeral expenses. Guaranteed issue policies are generally the most expensive way to buy life insurance.
• Pacific Life: Offers low rates and high coverage amounts for no-exam policies.
• Protective: Offers long level term lengths and a choice of permanent life insurance policies if you choose to convert the term life.
• Symetra: Has some of the lowest average term life insurance rates and offers instant approval for young and healthy individuals.
• Corebridge Financial: Offers very low term life insurance rates and the ability to customize level term lengths.
• Legal & General America/Banner Life: Offers competitive rates and a 40-year level term option.
• Transamerica: Offers the best term life insurance rates for healthy buyers in their 50s.

Whole life insurance

• Get started in your early 40s: As you approach 50, the cost of whole life insurance will increase due to age and potential health changes. Buying coverage in your early 40s can help you lock in lower rates while you are still relatively young and in good health.
• Purchase a policy with an appropriate death benefit: In your 40s, you likely have a clearer understanding of your career path, earning potential, and family situation. Use this information to determine how much coverage you need and purchase a policy that provides an adequate death benefit.
• Consider adding to your existing coverage: If you already have a life insurance policy from your 20s or 30s, it may not be sufficient for your current needs. You can add another whole life insurance policy to ensure your family has the financial protection they need.
• Convert your term insurance: If you have term insurance, review your contract to see if it is convertible to whole life insurance. This option allows you to extend your coverage and enjoy the benefits of whole life insurance.
• Shop around for the best policy: Compare quotes from multiple companies to find a highly-rated insurer that offers the right coverage at an affordable price.

Remember that the cost of whole life insurance is typically higher than term life insurance, and it's important to consider your budget and long-term goals when choosing a policy. Whole life insurance can be a valuable tool for protecting your family and building financial security in your 40s.

Universal life insurance

The flexibility and freedom of universal life insurance also mean that there are fewer guarantees. In a whole life policy, the premiums, cash value growth, and death benefit are guaranteed not to change. With a universal life insurance policy, all these things are designed to be flexible. However, the amount of premiums you pay affects the cash value growth. As you use funds from the cash value, it will affect the amount your family receives when you're gone. It could even cause the policy to lapse, so you should stay in contact with your financial professional to ensure your policy continues to meet your needs.

Frequently asked questions