Is There 40 Year Term Life Insurance?
Why Choose a 40-Year Term?
Reason #1: You’re Young and Healthy
To understand why you might want a 40 year term, we need to explain a little bit about how life insurance is priced. When you buy life insurance, the price is determined partly by your age and health. If you’re young and healthy, the insurance company probably won’t have to pay out on your behalf anytime soon. They have a long time to collect payments from you, and that money earns interest over time that will help them make that death benefit payment to your loved ones.
In other words, if you’re young and healthy, life insurance is never going to be more affordable than it is at this moment. So if you can afford it, it’s a good idea to get the maximum amount of coverage you can afford before you develop any health problems that may make waiting a costly choice.
Reason #2: Cover the Length of Your Financial Obligations
If you’re young and healthy, you want a policy that’s going to cover you for the length of your financial obligations. Those obligations could include paying off a mortgage, raising kids, or providing replacement income for all your working years.
And since people are living longer, that means they’re working longer. They’re earning longer. And they may have more financial obligations to cover during those working years. People need affordable coverage that isn’t going to expire before they reach retirement. And if you’re 30 years old, for example, it’s reasonable that you could work until you’re about 70. That’s a 40-year span for your working life. And that’s exactly what life insurance is designed to cover.
Reason #3: Cover the Rest of Your Life
Let’s say you’re 44 years old and don’t have another 40 years of working life left. Why would you still opt for a 40-year term?
In this case, you probably still want to buy the longest term you can to ensure that policy pays out. After all, if you’re still alive when your term ends, your loved ones won’t get a payout. Term life only pays if you pass away during the policy’s term. (Permanent life insurance is the only type that offers a guaranteed death benefit payout no matter when you pass away.)
Now, with longer term lengths, it’s possible to buy a 40 year term with the expectation that you might pass away before it’s expired. If cost is your primary consideration, a long term life policy is going to be more affordable than a permanent policy. Of course, none of us can accurately predict when we’re going to pass away. There’s always the possibility that you may outlive even a 40-year term. It’s up to you to evaluate how likely that is. But this new longer term length at least gives you the option to consider.
