Financial Protection: Life Insurance Over 40

Written By Alla Levin
September 09, 2021

Life Insurance Over 40

Turning 40 is a monumental birthday to many across the world, and often it’s a birthday that can spark the feeling that we’re getting older. However, a 40th birthday can also be a time to reflect on life.

If you haven’t previously thought about financial protection, your 40s may be a crucial time to consider securing life insurance to protect your loved ones.

Life insurance provides a payout to your loved ones if you pass away during the term of your policy. The funds from the policy can help ease any financial difficulty your loved ones may face as a result of your passing.

But why do we need life insurance in our 40s?…

Do I need life insurance in my 40s?

Whether or not you need life insurance is a very personal decision and will depend on your unique circumstances. In society today, it’s not uncommon to hit big milestones such as buying a house, getting married, and starting a family later on in life. With this in mind, life insurance can be extremely beneficial to those in their 40s to help protect key aspects of their lives.

Life insurance can help your loved ones to:

  • Continue their current lifestyle with minimal financial disruptions;
  • Cover expensive funeral costs, so they’re not left out of pocket;
  • Pay off the remaining mortgage balance and remain in the family home;
  • Pay off any outstanding debts in your name.

Why should I take out life insurance in my 40s?Why should I take out life insurance in my 40s

In terms of life insurance, it’s better to take out cover sooner rather than later. It’s unlikely that you’ll be able to secure life insurance in your 40s without having to provide information such as:

  • Your age;
  • Whether you suffer from any pre-existing medical conditions;
  • Your family’s medical history;
  • Your weight and BMI;
  • Whether you’re a smoker or not.

Because of this, it’s always best to take out cover as soon as possible. If you’re worried you’ll need more or less cover later on in life as your needs change, some insurers will allow you to change your cover amount to meet a change in circumstances.

Award-winning UK life insurance broker, Reassured Ltd, provide 4 key reasons you should consider taking out life insurance over 40:

Life insurance over 40: Lock in a lower premium

As discussed above, the price you pay for your life insurance is calculated using personal information. A key personal factor that can influence the price of your premium is your age.

In your 40s, you are still young enough to lock in an affordable premium – often, this can be under £10 a month (but can vary depending on your personal circumstances). As we age into our 50s and 60s, our risk to the insurer increases, and therefore the amount we can expect to pay for our premium also increases significantly.

You can make sure you’re securing the best deal on a life insurance policy by comparing quotes. This will allow you to see the different offerings from multiple providers. You could conduct this lengthy research yourself or use a life insurance broker, like Reassured, to do all the hard work for you.

Provide an inheritance for your loved onesLife Insurance Over 40

When taking out life insurance in your 40s, you’ll likely choose between three main policy types:

  • Level term life insurance – provides cover for a specified period of time and offers a fixed payout amount;
  • Decreasing term life insurance – provides cover for a specified period of time and offers a payout amount that reduces; throughout the lifetime of the policy;
  • The whole of life insurance – provides lifetime cover and offers a fixed payout amount.

As the whole of life insurance lasts for the rest of your life, it will require you to make premium payments until you pass away. This can become a costly option if you take out this form of cover at a young age.

However, your 40s can be an ideal time to take out this policy type. As we touched on above, in your 40s, you’re still young enough to benefit from cheaper premiums than if you were to take out a policy in your 50s.

You’re also old enough to make a whole of life policy a more cost-effective option than if you were to take out a policy in your 20s or 30s.

As a whole life insurance policy lasts for life, you can guarantee your loved ones an inheritance which they can spend as they wish. You can also write your whole of life policy in trust to avoid 40% inheritance tax for your loved ones (this is charged on an estate that exceeds the £325,000 threshold), so they receive a full payout.

Protect your remaining mortgage balance

With many milestone moments now happening later in life, the average age of a first-time buyer in the UK is now 32 years old. Combine this with the average mortgage length, and, likely, the majority of us will still be making mortgage payments well into our 40s.

If your household relies on your income to help make mortgage payments, would they face financial strain keeping up with payments if you were to pass away? Term life insurance is an ideal way of protecting a mortgage as you can have your policy length mirror your mortgage term.

Due to the fixed pay-out amount with a level term life insurance policy, it’s well suited to protect an interest-only mortgage. A decreasing term life insurance policy is best suited to a repayment mortgage, as you can have your sum assured reduce in line with your mortgage balance.

When protecting your mortgage with life insurance, you’ll need to have your policy length be at least as long as your mortgage term and your sum assured should at least mirror your remaining balance.

However, you may want to factor in additional funds to help cover ongoing expenses such as household bills, council tax, etc.

Ensure the financial future of your familylife insurance over 40

With the population becoming increasingly career-driven, many choose to start a family later on in life. With this in mind, taking out life insurance in your 40s can be crucial in protecting the financial future of your loved ones.

A life insurance payout could be used by your loved ones to cover any additional childcare costs, pay for education (uniform, school trips, private school fees, higher education) and help your family continue their current lifestyle without the need to make adaptions to meet a new budget.

Parents in their 40s can also save money on their premiums by securing a joint life insurance policy. Joint life insurance covers both lives under one policy, meaning there’s only one premium to pay.

However, this does mean that there’s only one payout which typically happens after the first death. Meaning the surviving partner will need to secure a new cover at an older age. So, if it’s within your budget, two single policies can provide a more comprehensive level of cover by providing two separate payouts.

Life insurance over 40 – final thoughts

Hopefully, this article has helped outline why taking out life insurance in your 40s is beneficial. Not only can you secure a more favorable premium than if you were to wait until later on in life, but you can also provide essential financial support for your loved ones when you’re no longer around to take care of them yourself.

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