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Best Life Insurance for 40-Year-Olds and Why It’s So Important

Feb 24, 2023 | Insurance, Life Insurance

Life insurance is one of the best ways to ensure family and loved ones will be financially secure if you pass away. However, many people are not sure when they should get a policy. If you are 40 years old, you might be wondering how much a life insurance policy would cost. 

So today, the team at Alliance Income is here with this handy guide on buying life insurance for a 40-year-old. 

Why Get Life Insurance When I’m 40?

If you are 40 years old, you are still young and healthy enough that you can get a decent policy with relatively low premiums. At 40, you should still be at a relatively low risk for health issues, which can affect policy costs. 

Some people receive nominal coverage through their employer, but these policies typically have low coverage limits. Also, if you change jobs, you might lose that life insurance policy. A separate life insurance policy can provide more security in case you have any gaps in employment. 

Additionally, you might want to change a policy you purchased when you were younger. Perhaps you want to switch policy types from a term policy to a whole life policy or change your death benefit amount. Whatever the reason, 40 years old is a good age to reassess your current life insurance coverage. 

You Have Many Options for Life Insurance at 40

We can help you navigate.

How Much Does Life Insurance Cost for a 40-Year-Old?

The average cost for a 20-year term policy of $500,000 for a 40-year-old with no underlying health conditions is about $26 a month or about $315 a year. This price is approximately 20% higher than the cost of the same policy for a healthy 30-year-old.

Whole life insurance is a bit more complicated to calculate, as payments consist of premiums and an investment component. You can also adjust the premiums and death benefit of the policy depending on changing financial needs. 

A $250,000 whole life insurance policy costs an average of $150 to $200 a month or around $2,500 a year. Remember that premium costs for whole life insurance policies tend to rise faster than costs for term life insurance policies. You can also rely on the accrued cash value to cover premium costs. 

Keep in mind these figures are averages. Your actual insurance costs will differ depending on the policy type, provider, and various other factors. Understanding the other factors involved with how life insurance is calculated, is much easier when you utilize the expertise of an insurance broker. An insurance broker isn’t promoting one specific company.  Rather, they are committed to finding you a policy which best suits your own unique needs, and can effectively recommend the best possible option based on their knowledge across the entire industry and their products.

Factors that Affect the Cost of Insurance

Several factors can affect the cost of a life insurance policy, including.


Age is one of the most important factors affecting the cost of life insurance policies. The older you are, the more expensive your policy will be, regardless of your overall health. You won’t be able to purchase term life insurance after a certain age either. 


Health is another major factor affecting premium costs. Common health risks that affect insurance costs include blood pressure, body weight, diabetes, cancer, and other chronic illnesses. Most insurance policies will require you to fill out a health questionnaire and take a medical exam. 

The life insurance company may also take family medical history into account. For instance, if you have a family history of cancer or kidney disease, your premiums may be higher. 

Smoking Status

Smoking status is probably the single largest health factor affecting insurance premiums. Smoking significantly increases health risks and can almost double insurance premium costs. You must quit smoking for at least 12 months before insurers will consider you a non-smoker. Keep in mind that vaping and cannabis use counts as smoking for insurance purposes. 


Your gender will also affect insurance costs. Studies show that women typically have a higher life expectancy than men, so women typically have lower premium costs. Generally, policies for women are usually 10% to 20% cheaper than policies for men. Whether or not the policy considers sex-assigned-at-birth or gender identity depends on the insurance provider. 


Those that work risky occupations will have to pay higher life insurance premiums. Occupations that insurance companies may consider high-risk include roofers, miners, loggers, fishers, construction workers, and commercial drivers. 

Hobbies and Lifestyle

Your hobbies and lifestyle also affect the cost of insurance. If you engage in high-risk hobbies or behaviours like race car driving, skydiving, or extreme sports, you will have to pay additional premiums. Most insurance companies also look at your driving record and criminal record to determine policy costs. 

How Much Life Insurance Do I Need?

Traditional wisdom states that you should purchase at least ten times your annual salary in life insurance coverage. For instance, if your annual income is $50,000, you should buy at least $500,000 in insurance coverage.

The times-ten method is a simple estimation, but you may want a more detailed calculation. You can use the DIME method to identify insurance needs more accurately. 

  • Debt. Debt includes any loans or credit card debt as well as other forms of credit.  
  • Income. Take your annual income and multiply it by the number of years your family would need coverage. 
  • Mortgage. Add the remaining mortgage costs, taking into account interest charges and potential rate changes. 
  • Education. Estimate the costs of college and multiply by the number of children you have. Be sure to account for rising tuition costs. 

The DIME method is more accurate but doesn’t account for any unpaid work stay-at-home parents may perform. 

Should a 40-Year-Old Buy Term or Whole Life Insurance?

Like most other kinds of financial products, the life insurance you choose depends on your specific financial and family situation. For many Canadians, term life insurance provides sufficient coverage for reasonably cheap monthly premiums. Term life insurance policies can also have very high coverage limits. 

However, term policies eventually expire, and most providers will not sell a term policy to anyone over 75. If your policy term expires before you are 75 and you want to review it, you will likely have to take a new medical exam and face higher insurance premiums. 

Whole life insurance policies offer more flexibility in premium payments and also have an investment component and tax benefits. Whole life policies are more expensive than term policies but don’t expire as long as you pay the premiums. Whole life policies are a good idea if you have loved ones that require continual care. Take a closer and more in-depth look at the fundamental differences between whole and term life insurance in our recent publication.

Saving Money on Insurance

Below are some tips on reducing the monthly costs of insurance. 

  • Staying healthy and fit with a good diet and exercise can lower premium costs.
  • If you smoke, quitting can reduce premium costs by as much as 50%. Some policies might provide a discount if you start a smoking cessation program. 
  • Term insurance offers low, predictable policies and high coverage limits. 
  • Some insurance companies will offer a slight discount if you pay your premiums annually rather than monthly.
  • Don’t just buy the first policy you see. Compare and contrast policies to find one that gives you the best rates.
  • The younger you buy insurance, the cheaper it will be. Buying young gives you that chance to lock in a policy for low monthly premiums.  

Is Life Insurance for a 40-Year-Old Worth It?

If you have dependents that rely on you for income, buying a life insurance policy is one of the smartest things you can do, regardless of your age. At 40 years old, you are still young enough that you can benefit from lower premium costs. Life insurance can also provide wealth-building options for your spouse and children. 

Even if you don’t have children or a spouse, a life insurance policy can be a smart decision. Life insurance can cover funeral and end-of-life expenses, or you can leave some money to help loved ones with their bills. Further, the cash value component of a whole life insurance policy can supplement retirement savings. 

Related Article

Every Canadian needs life insurance, and this article explains the top 3 benefits.

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Alliance Income strives to make shopping for life insurance for a 40-year-old as simple as possible. In fact, shopping for life insurance at any age is a simple process with us. The experts at can help you find and compare quotes from the best insurance providers across the nation. Finding life insurance doesn’t have to be stressful when you work with us.

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