Here at IBUSA, we’ve found that usually, when someone decides to purchase a Life insurance policy for the first time, they’re typically thinking about buying a policy that’s going to last their entire life. What they don’t know is that policies that last one “whole life” are called Whole Life Insurance and are usually significantly more expensive than a traditional term life insurance policy.
So much so…
That a lot of individuals will suddenly turn their attention to lengthy-term life insurance policies, such as a 40-year term life insurance policy so that they can get approximately the same length of coverage at a significantly lower price. Now, this may or may not be a bad idea because that’s something that we’re going to want to discuss later on in this article.
But first…
We want to take a look at some sample 40-year term life insurance rates so that you can get a better understanding of how much a 40-year term might cost.
40 Year Term Life Insurance Rates
| Age | 250,000 | 500,000 | 1,000,000 |
|---|---|---|---|
| 20 | $25.23 | $42.80 | $71.97 |
| 25 | $25.23 | $42.80 | $71.97 |
| 30 | $28.67 | $52.18 | $102.57 |
| 35 | $34.83 | $64.49 | $135.94 |
| 40 | $61.58 | $114.14 | $222.63 |
| 45 | $97.08 | $188.99 | $370.06 |
| Age | 250,000 | 500,000 | 1,000,000 |
|---|---|---|---|
| 20 | $20.58 | $33.98 | $57.12 |
| 25 | $20.58 | $33.98 | $57.12 |
| 30 | $22.61 | $38.48 | $72.63 |
| 35 | $28.95 | $52.74 | $93.12 |
| 40 | $48.96 | $91.26 | $176.84 |
| 45 | $77.71 | $145.15 | $288.87 |
OK, now that we have an idea about how much a 40-year term life insurance policy might cost, let’s now address some of the most common questions we’re asked by those looking to purchase such a policy.
Questions such as:
- What is a 40-year term life insurance policy?
- Who should consider buying a 40-year term life insurance policy?
- What does it mean to “ladder coverage”?
- What happens at the end of the 40 years if I’m still alive?
- What does the application process consist of?
- Can you apply for a 40-year term life insurance policy without taking a medical exam?
- What if I can’t qualify for a traditional 40-year term life insurance policy?
- How can I qualify for the best 40-year term life insurance rates?
So, without further ado, let’s dive right in!
What is a 40-year term life insurance policy?
A 40-year term life insurance policy is a type of life insurance that provides coverage for a fixed period of 40 years. If the policyholder dies during the 40-year term, the beneficiary designated in the policy will receive a death benefit from the insurer. If the policyholder does not die during the term, the policy will expire and will not provide any further coverage.
Who should consider buying a 40-year term life insurance policy?
A 40-year term life insurance policy may be a good option for someone who:
- Needs coverage for a specific period of time: If you only need life insurance for a specific period of time, such as to cover a mortgage or provide financial support for your children until they are financially independent, a 40-year term policy may be a good choice.
- Has a limited budget: A 40-year term life insurance policy might be a good option for someone who needs a lifetime of coverage but can’t afford the cost of a whole life insurance policy offering the same death benefit as a 40-year term life insurance policy.
- Is younger: The cost of life insurance generally increases with age, so a 40-year term policy may be more affordable for someone who is younger and in good health. Additionally, if someone is in their 20s and 30s, a 30-year term life insurance policy may not be long enough for them to financially protect their loved ones. In this case, purchasing a 40-year term may provide a solution to their problems.
That said, however, we would be remiss if we didn’t point out that in most situations, an individual’s financial obligations to others, AKA “insurance needs,” tend to decrease as one ages.
For example…
Let’s suppose for a moment that you’re considering purchasing a life insurance policy to protect a spouse or underage children. In that case, it’s quite possible that 40 years from now, 30 years from now, or maybe even 20 years from now, those obligations will have resolved on their own.
- People do eventually retire so the idea of replacing one’s income no longer becomes necessary.
- Children do grow up and begin taking care of themselves financially.
- Mortgages do eventually get paid off.
- Etc.
This is why some people may choose to purchase multiple-term life insurance policies of different term lengths so that their coverage decreases as they age. One of the best ways to achieve this strategy is by utilizing a technique known as “laddering coverage”.
What does it mean to “ladder coverage”?
Laddering term life insurance coverage means having multiple term life insurance policies with different terms rather than having a single policy with a longer term. For example, rather than having a single 40-year term life insurance policy, you might have a smaller 40-year term life insurance policy combined with a larger 20-year or 30-year term policy, which will be in place simultaneously providing additional coverage when your insurance needs are at their peak.
Laddering term life insurance can be a good strategy for people who need to balance the cost of life insurance with their coverage needs. By having multiple policies with shorter terms, you can potentially save money on premiums compared to having a single longer-term policy. Laddering also gives you the flexibility to adjust your coverage as your needs change over time.
For example…
If you have a 20-year term life insurance policy and your coverage needs to change after 10 years, you would need to either cancel the policy and purchase a new one (which may be more expensive due to your age) or keep the policy and pay for unnecessary coverage. With a laddering strategy, you could cancel one of your policies and purchase a new one with updated coverage if need be.
What happens at the end of the 40 years if I’m still alive?
If you are still alive at the end of a 40-year term life insurance policy and the policy has not paid out a death benefit, the policy will expire and will no longer provide any coverage. You will not receive any payout or other benefit from the insurer when the policy expires.
If you are still in need of life insurance protection after the 40-year term has expired, you will need to purchase a new policy. Keep in mind that the cost of life insurance generally increases with age, so a new policy may be more expensive than your previous one. It’s important to review your life insurance needs periodically to make sure your coverage is sufficient to meet your financial obligations and protect your loved ones.
At the end of your term…
You may also be able to convert your expiring term life insurance policy into a whole life insurance policy (if your policy allows for such a conversion) or you may be able to renew your expired term policy year by year without needing to “reapply for coverage” if your policy offers a guaranteed renewable clause.
We should point out, though, that if you are able to renew your 40-year term life insurance policy on a year-by-year basis, the price that you will pay for this policy will likely be SIGNIFICANTLY more than you were originally paying for your coverage. That price will increase each and every year you renew.
What does the application process consist of?
The life insurance application process typically consists of the following steps:
- Choose a life insurance policy: First, you will need to decide on the type of life insurance policy that best meets your needs. There are several types of life insurance, including term life insurance, whole life insurance, and universal life insurance.
- Gather personal and financial information: The insurance company will need to gather information about you, including your age, gender, health history, and financial situation. You will also need to provide information about the person you want to insure.
- Undergo a medical exam: Many life insurance policies require a medical exam as part of the application process. The exam will typically be conducted by a nurse or other medical professional who will take your vital signs and collect samples for testing.
- Submit the application: Once you have gathered all of the necessary information and completed the medical exam, you will need to submit the application to the insurance company.
- Wait for approval: The insurance company will review your application and determine whether to approve or deny your request for coverage. This process can take several weeks or even months.
- Pay the premiums: If your application is approved, you will need to pay the premiums as specified in your policy in order to keep your coverage in force. Premiums are usually paid on a monthly or annual basis.
- Review your coverage: It’s a good idea to review your life insurance policy regularly to make sure it still meets your needs..
Can you apply for a 40-year term life insurance policy without taking a medical exam?
Yes, it is possible to apply for a 40-year term life insurance policy without taking a medical exam. These policies, also known as “no medical exam” or “simplified issue” policies, generally require less underwriting. We should mention, though, that while these types of life insurance may be “easier” to qualify for as far as ease of applying, they will be more difficult (or impossible) for individuals with any pre-existing medical conditions.
Additionally, 40-year term life insurance policies are significantly less common than 20-year or 30-year term life insurance policies. For this reason, individuals choosing to apply for a 40-year term life insurance policy will likely find that they will have fewer options to choose from. Combining that with the desire to avoid a medical exam, will definitely decrease what options may be available to you.
What if I can’t qualify for a traditional 40-year term life insurance policy?
Some individuals may find that they are too old to qualify for a traditional 40-year term life insurance policy. In situations like these, applicants may need to see out a shorter-term life insurance policy such as a 20 or 30-year term or a whole life insurance product instead.
Other applicants, however, may be unable to qualify for any type of traditional term or whole life insurance product due to some pre-existing medical condition or other factors. Individuals who find themselves in this situation will either need to forgo applying for life insurance or seek out an alternative product that will not disqualify them due to any medical or lifestyle factors.
Alternative products such as guaranteed issue life insurance policies or accidental death policies.
How can I qualify for the best 40-year term life insurance rates?
Several factors can affect your eligibility for the best life insurance rates, including your age, health, family medical history, and lifestyle. In general, the younger and healthier you are, the more likely you are to qualify for the best rates.
Here are some tips for improving your chances of qualifying for the best life insurance rates:
- Maintain a healthy lifestyle: This includes not smoking, maintaining a healthy weight, and exercising regularly.
- Get regular check-ups and screenings: This can help you identify and address any potential health issues before they become a problem.
- Disclose all relevant information accurately: Be honest and thorough when completing your life insurance application. Failing to disclose important information can result in your policy being denied or canceled.
- Compare different policy options: Life insurance rates can vary significantly from one company to another, so it’s a good idea to compare quotes from multiple insurers before making a decision.
And finally…
Work with an insurance professional: An insurance professional like those here at IBUSA who can help you understand your options and guide you toward the best policy for your needs and budget.
