How Much Life Insurance Should I Get At Age 40?

As a 40year old you probably should be pretty settled in life by now? You may or may not have a family, but you are working towards paying off the mortgage and are settled in the career. So, at 40 years old, you still don’t REALLY want to talk about the fact you might actually die one day, or early? Whether it may be now from an accident or a long day down in future. We get it. 

Talking about whether you need to buy life insurance is never nice. But, it’s actually an important decision to think about, or a discussion you need to have with your family. You want to ensure you and your family are protected financially in case the unexpected happens to you (yes, even to you if you’re single with no dependents). Billy Explores wanted to help so he’s got together this list of information about how much life insurance you should buy when you’re 40 years of age.

Why You Haven’t Thought About Life Insurance Yet

You’ve hit 40 and you may or may not be sure that your superannuation account includes life insurance coverage. Or even worse, you may not even be aware of what life insurance is! It’s definitely an important topic to think about as you want to make sure you and your family are secure financially should something happen.

You may already be familiar with the term “Death Cover,” which is another way to refer to life insurance. You can get a life insurance policy that, in the event of your death, pays a predetermined lump sum. In essence, it is made to replace the money you would have received in the event of your death. This implies that even if you pass away, your family will still be able to pay bills like the mortgage.

Additionally, there are additional aspects of life insurance that you should consider if you want to protect yourself, especially if you’re under 30. Read up on insurance for trauma, total permanent disability (TPD), and income protection, which are all relevant for people in their 30s at this stage of life.

Should a 40 Year Old Buy Life Insurance?

A 40-year-old should purchase life insurance for a variety of reasons. To begin with, you’ll feel confident knowing that you and your family will be financially secure in the event of an emergency. Second, should something happen to you, your family’s future financial obligations will be met.

However, a number of things need to be taken into account before you compare life insurance and choose the best life insurance coverage in Australia for your needs (including the below). Items like your life insurance term and coverage should be taken into account as well.

I want to buy life insurance at 40 but how much do I need?

The first step is figuring out your actual family need. It can sometimes feel like ‘how long is a piece of string’ when looking at different policies and rates, however the key here again balances out with understanding what will work for both yourself or others in case something terrible happens so they are able cover their financial commitments after death due either via cash settlements from assets such as houses etc., plus ways where someone else takes over paying off loans/mortgage whilst still maintaining payments on any other outstanding debts left behind by an absent loved

To work out how much life insurance coverage you need, start by writing down the answers to these questions: 

There’s a general “rule of thumb” method for working out approximately how much life insurance coverage you really need so that your life insurance payout can replace your income if you pass away or can no longer work. To start, write the down all the answers to the below:

  1. What is your income each month?

    Firstly, write down how much you and your family actually earns each month. This is the basis of all future income requirements to meet your commitments.
  2. How much do you spend on living expenses each month?

    Grab your bank statements and then itemise all of your costs. This includes rent (but not mortgage), groceries and power bills, school fees through to phone plans. Write down all of your spending, which will then give you a monthly figure. For example, $2,000 monthly spend – this is called your living expenses.
  3. How much do you owe?

    Write down any debt you’re paying off. Things like a mortgage or car loans are easy, since it’s a set monthly repayment for a specific number of years. Other debts like credit cards are harder, because they can rise and fall as you spend, and it’s not as easy to know how long you’ll have to cover that debt for.

4. What is your family savings plan?

Your family savings plan also needs to be included. There are two reasons to talk about this: on the one hand, the more you have saved, the less your family will be reliant on any insurance payout to meet financial commitments and general living expenses. That also means you can opt for a lower level of life insurance coverage and pay lower premiums.On the other hand, if your family savings plans are working towards any savings goals, you may need to add that into your life insurance coverage and payout – for example sending your kids to university or helping them with their home deposit.

On the other hand, if your family’s savings plans are geared towards any savings objectives, you might need to include it in your life insurance coverage and payout, such as helping your children pay for university or their down payment on a home.

Now Calculate How Much Life Insurance To Buy

We now have all the necessary information; all you need to do is determine how much life insurance you actually require. Take the following actions as a general rule of thumb:

Step 1: To determine your financial obligations, add the below elements together:

  • the number of years you wish to replace that income times your yearly salary
  • Any money you owe on your mortgage and other debts.
  • any future living expenditures, including tuition at a university or other institution, travel, and burial expenses.
  • family saving plan
  • the price to replace, if necessary, childcare or other services that a stay-at-home parent offers.

Step 2: From that sum, deduct any liquid assets you may have, such as stock portfolios or savings accounts, as well as any active life insurance policies.

The amount of life insurance you should buy as part of your life insurance coverage is the dollar amount that is remaining.

When Should I Purchase Life Insurance If I Am 40?

Now that we’ve established how much life insurance you actually require, when is the ideal moment to purchase it? Your financial obligations and your ability to pay premiums will determine the best course of action.

Up until the age of 65, you can typically get a life insurance policy, and you can continue to do so until the age of 99. But keep in mind that life insurance premiums increase in price with age and with shorter life insurance terms, so it’s wise to start thinking about life insurance sooner rather than later. Additionally, Billy Explores offers you the chance to compare life insurance policies in Australia on a regular basis. We know you’re pretty busy at 40 years of age with life, so you can save time and energy by comparing life insurance in Australia through Billy Explores and our panel of providers to get the best value life insurance that meets all of your requirements.

Life Insurance Comparison In Australia For A 40 Year Old

You now have all the necessary information, so compare life insurance providers! You can review and compare from our panel of providers the best value life insurance policy in Australia that meets your family’s needs. Simply supply some basic information, and Billy Explores will take care of the rest! Click here to start comparing life insurance for a 40 year old in Australia!

FAQs

  • How Much Life Insurance Should I Get At Age 40?

    If you’ve decided to buy life insurance, you know you need it, in whatever form it is. The question of how much life insurance you need buy at age 40 is an extremely personal one and based on your own personal circumstance (for example any debts, family etc).  When you buy life insurance, the final cost of your life insurance cover depends on how much and which type you get. It’s often less expensive than people expect. Billy Explores has a helpful guide to understand how much life insurance you actually need.

    It also helps to compare life insurance cover through Billy Explores and our panel of providers. You can save time and effort, and see if you can get a better deal on your life insurance cover here.

  • What Is The Best Life Insurance Cover For My Needs?

    A good start is to review your debts and current family situation before you can answer, ‘What is the the best life insurance cover for my needs’? Every individual’s circumstances is different and your life insurance cover requirements will be different to your neighbours and co-workers, including those in their 30s, 50s and 60s. Of course, you can also read if you have enough life insurance cover in your super here. Billy Explores also recommends regularly checking and going to compare life insurance cover here, to make sure you have the best deal for your needs from our panel of providers.