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At age 40, you likely have a few financial responsibilities, such as a mortgage, spouse or children. A term life policy is an inexpensive way to ensure your loved ones will be taken care of if you pass away prematurely. Many term policies come with a conversion feature, which means you have the option to upgrade to a permanent policy before a deadline. That way, if you need life insurance for longer than you originally thought or want to treat your policy as a cash asset, you can convert your coverage.
Getting life insurance at age 40 makes sense if you have certain financial responsibilities like a mortgage, a spouse or children. A convertible term life insurance policy provides the coverage you need while you raise a family or pay off a mortgage, and gives you the option to convert to a permanent policy later on. Convertible term gives you the flexibility to maintain coverage as your financial situation evolves.
The rate you’re offered is the result of factors like your age, health, family history, occupation, lifestyle and whether or not you opt to get a medical exam. It’s also a product of the insurer’s underwriting guidelines. Either way, as a 40-year-old, you can still qualify for coverage at competitive — and maybe even preferred — rates.
By age 40, you’ve probably climbed the career ladder to earn a comfortable salary. If you’re trying to decide between two or more levels of life insurance protection, there likely won’t be much of a price difference.
Using a popular life insurance company like Manulife as an example, a 40-year-old nonsmoking woman might be charged $25 a month for a $250,000 policy. To double that coverage to $500,000, Manulife may charge the same woman $42 a month, and to boost it to $1 million, the price goes up to $79 a month.
To find the most budget-friendly companies, we compared the rates for a $300,000, 20-year term life policy from 16 major carriers. For a 40-year-old nonsmoking man in perfect health, the cheapest insurer was Foresters Financial at $32.04 a month. A 40-year-old nonsmoking woman could score a rate of $24.21 a month with both Foresters and Empire Life. Keep in mind that smokers always pay more for coverage.
| Provider | Male | Female |
|---|---|---|
| Foresters Financial | $32.04 | $24.21 |
| Empire Life | $32.85 | $24.21 |
| BMO | $34.47 | $30.15 |
| RBC | $34.73 | $26.58 |
| Canada Life | $36.72 | $27.00 |
| Manulife | $35.07 | $27.81 |
| Desjardins | $33.84 | $24.66 |
*Based on sample rates from PolicyAdvisor, June 2020.
Life insurance should be affordable, and if you die, the death benefit should comfortably cover your beneficiaries needs. When you’re determining how much life insurance you should get, think about what you pay for now and what you predict you’ll be paying for in the future. Add up those costs, then consider taking out a policy to match that dollar figure.
Generally, life insurance experts suggest a number between 5 and 10 times your annual salary, but potentially more if you have a family or other financial obligations, like debt.
As a Gen X-er, you might want to consider customizing your coverage with riders such as:
Yes — as long as you can prove to your insurer that you need them and can afford to pay the premiums. This strategy is called “laddering,” and it involves taking out multiple term life policies to match your financial obligations. You can plan it so that the policies expire as those responsibilities drop off.
Let’s say you’re a Gen X-er with young children and a 30-year mortgage. You might buy a 20-year policy to carry your kids through college and a 30-year policy to cover your mortgage. That way, your loved ones won’t be burdened with those expenses if you pass away prematurely.
According to our life expectancy data, a healthy 40-year-old woman is expected to live a further 45.1 years, while a man in the same situation can expect to live another 41.6 years.
Those statistics are even better when you consider that in Canada, a 65-year old man is likely to live until he is 84.4 years old, while a woman can expect to live until she is 87.1 years old.
At 40, financial planning is probably at the forefront of your mind. If you have a family, business or financial assets, you might want to take out a life insurance policy. It can protect all of those things, plus give your family or employees a sense of security for the future. Life insurance becomes more expensive as you age, but if you apply now, there’s a good chance you’ll be offered a low premium.
As always, be sure to shop around to find a life insurance policy that fits your needs.
A note from Frank, Fred and J.
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