The cost of life insurance is largely dependent on your age, and at the age of 40 your prices are as low as they will ever be. The chance of a health event starts rising rapidly as you get older, and your premiums reflect this.
If you haven’t looked into life insurance, it might be time to start. You probably have more financial obligations than you used to and getting life insurance sooner rather than later can get you an important level of cover at a lower price, while also protecting yourself and your family.
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Updated February 23rd, 2020
How much does life insurance cost in my 40s?
Let's take a look at the monthly cost across brands for a $500,000 sum.
Quotes are an estimate taken from our quote engine and are based on a 45 year old office worker from NSW. Data last checked on February 2017.
|Asteron Life Complete||$40.21||$125.96|
|Zurich Wealth Protection||$47.53||$122.25|
|AIA Priority Protection||$47.90||$114.31|
|TAL Accelerated Protection||$48.38||$115.85|
|BT Protection Plans||$52.35||$122.39|
|AMP Flexible Lifetime Protection||$52.45||$131.96|
Should I get life insurance in my 40s?
You might think of age 40 as part of a tipping point which spans several years.
- You’re getting closer to retirement. As you get closer to retirement, it’s time to start thinking about it in more concrete terms, and how close you are to your retirement goals. Your superannuation fund might already include life insurance, even if you don’t remember signing up for it. Your premiums for this policy are taken out of your super contributions, which decreases the amount of money going towards your retirement. Switching to a policy of your choice can deliver more effective cover and also help you save for retirement.
- Prices will start rising rapidly. It’s not unusual for a 50 year old to pay twice as much as a 40 year old for the same cover. Fixed-price policies are widely available and can help ensure that you have affordable cover in the future.
- Other forms of cover become more important. The odds of a disabling health event, or some other specific condition covered by life insurance, happening multiply with age.
- Your circumstances change. At age 40, it’s relatively likely that you have children and a long-time partner. You might have more financial obligations now than you used to, and your family may be less able to adjust to your loss.
How does the cost of life insurance change as you get older?
Here's a sample of how life insurance rises as you get older. There is a sizeable jump from the age of 40 to 50.
Why does the cost of life insurance rise as I age
The chances of severe health events increase a lot as you get older.
According to the Australian Bureau of Statistics, by the age of 85, males have more than a 47% chance of experiencing a heart attack or experiencing some other form of heart disease.
- Age 24-34. The odds of having some form of heart disease, including suffering a heart attack, are about 0.5%.
- Age 35-44. The risk has more than tripled to over 1.5%.
- Age 45-54. Males now have almost a 5% chance of experiencing a heart condition, while females have a 3.2% chance.
Cardiac arrest and other forms of heart disease are just some of the health risks which increase dramatically with age.
What are my life insurance options?
All life insurance policies will pay benefits in the event of death, and many will also offer extensive cover in the event of disability or specific health events. The chances of all of these increase significantly with age. You can find policies with the following options:
- Life cover. This is the core of life insurance, paying out on death.
- Trauma insurance. This option can pay out a lump sum should you experience specific health events, such as loss of a limb or a heart attack.
- TPD insurance. This option pays out in the event of a permanently disabling health event.
- Income protection. Your policy pays out if a permanently disabling health event leaves you unable to work.
You can choose to hold these policies separately, or you can bundle them together instead. The right option depends on your financial situation and on what kind of cover you need.
What factors should I consider before getting a policy?
As a main income earner, a homemaker or part of a dual-income family, you’re making a financial contribution, either in the form of earnings or invaluable work around the house. In all cases, the correct policy can protect these contributions.
Consider your obligations before taking out a policy and look for one that’s able to cover them. Think about the following:
- Assets and investments. If they require time to appreciate or further contributions, such as a home with a mortgage, you want to make sure your policy is able to help your family retain it.
- Debts. Ideally, you want to be able to leave your beneficiaries without any debts.
- Dependents and family needs. Consider the cost of your children’s schooling, your partner’s earning ability and the other factors specific to your family.
- Existing forms of insurance. Many life insurance policies will not pay benefits if they are claimable elsewhere, and it can be a good idea to avoid overlap when selecting a policy.
- Your career. Your career can have a significant impact on your risk levels as well as your earnings and the lifestyle to which your family is accustomed. Part-time and seasonal workers can also find life insurance policies which are able to adapt to sporadic income, while homemakers are able to get cover that reflects the financial value of their contributions around the home and can pay out in the event of being unable to continue doing them.
Identifying your financial obligations can help you decide on the required sum insured, how much cover you need and what type of policy is most suitable for your needs.
How can I maintain the cost of my policy as I get older
As you get older, your policy costs as well as the level of cover you need may change. Fortunately, there are ways to fix the price of your policy, as well as ensure you have enough cover going forwards to keep meeting your needs and those of your family.
- Premium types. The two main types of life insurance premiums are stepped and level. Stepped premiums will increase with age, although you can use a premium freeze option to help keep costs down, while level premiums will remain fixed over time.
How can I make sure my policy still has value in 20 years?
- Adjusting for inflation. Life insurance policies will typically adjust for inflation in the form of indexation benefits. These will increase your sum insured each year, either at a specific rate such as 5% or by following the cost of living index.
- Increasing your level of cover. You might consider this after having a child or an increase in wealth. Be wary, this may be difficult if your health conditions change.
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