When you reach your 40s, you may have an established and well-paying career, a growing family, and more assets and wealth than in previous decades. You might finally be enjoying the fruits of your hard work during your younger years.
At the same time, protecting your dependents and financial commitments is vital in case the worst happens. That’s where life insurance comes in handy. This article will cover several facts people in their 40s should know and cover policy types to consider, such as term life insurance, permanent life insurance, and more.
1. It’s not too late to get coverage
It’s not too late to get coverage in your 40s. This could be a perfect time, especially if you have a family you wish to protect.
Additionally, you may be approaching your peak earning years in your 40s and need additional wealth-building options. Permanent life insurance cash value growth components can help you do this — part of each premium goes into this component, growing tax-free at a specified rate.
You can tap into this cash value via withdrawals or low-interest loans when it’s large enough. You can also get the full cash value if you surrender the policy.
2. Term life insurance can be affordable — even in your 40s
Term life insurance is a policy that typically lasts from 10 to 30 years. That means these policies can expire, but they also offer some of the more affordable premiums. So you could get coverage into your 40s while locking in low premiums today.
3. Lifelong coverage is available
If you want the peace of mind that comes with lifelong coverage, there are plenty of life insurance policy types for you. Here are a few to consider:
Permanent life insurance
Permanent life insurance is typically the most expensive lifelong policy but offers the most coverage, and there are several types. It also comes with the cash value growth component discussed earlier, offering another wealth-building vehicle.
Final expense insurance
Final expense insurance is a small permanent life policy for end-of-life costs like funeral expenses and medical bills. Death benefits are small, but premiums are low, and you can build cash value.
Guaranteed issue life insurance
This is a small permanent life insurance policy that lets you skip the medical exam and questionnaire. It guarantees approval and comes with low premiums and a lower death benefit.
Keep in mind that these policies tend to have lockout periods of two to three years. If the policyholder unexpectedly passes away during this period, their beneficiaries don’t receive a death benefit. Instead, they may be refunded the premiums the policyholder paid.
4. Workplace coverage may not be enough
Your employer may offer life insurance in your benefits package, but this might not go as far as it could. While it’s better than nothing, you may find that you need additional coverage for your beneficiaries.
You can supplement this coverage with an external life insurance policy. The benefit is that you may be able to get a slightly smaller death benefit with a second policy to save on premiums since you already have some workplace coverage.
5. You can change coverage amounts later
Life changes, and so too can change your policies and coverage. For example, if you have a new child or you get a big pay bump, you can increase your death benefit or purchase a new policy, depending on the policy you already have.
Depending on your policy type and insurer, you can also reduce your coverage if needed. For instance, if your child got a full ride to college or you aggressively pay down your debt and downsize your lifestyle expenses later, you may be able to reduce your coverage to save on premiums.
The bottom line
It’s not too late to get life insurance in your 40s — in fact, it can be one of the most important periods of your life to get covered. And at this point in life, workplace coverage may not be enough.
People in their 40s have several options. If you need maximum coverage on a budget, term life insurance may be for you. On the other hand, if you’re willing to invest more, a permanent life policy may be the better option. And if you need a smaller death benefit for end-of-life costs or want to skip the exam, consider final expense insurance or guaranteed issue life insurance.
Ultimately, shop around for several quotes when you settle on a policy type. This will help you get the most for your life insurance budget and cover your loved ones in your 40s and beyond.
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