Seven reasons to get life insurance in your 40s.

Seven reasons to get life insurance in your 40s.

For many New Zealanders, the 40-something decade is a time of high responsibility. On one hand, you might be supporting a young family and a sizeable mortgage (as we all know, kids aren’t cheap and neither is real estate). On the other hand, you might have ageing parents who require support from you, in one way or another. Basically, you’re the ‘sandwich’ generation, squished between younger and older people who rely on you. But hey, it’s nice to be needed!

Now think for a moment about how things would be if your income stopped, due to sickness, injury or something worse. The financial impact of these common events is why people in their 40s may decide to get some sort of life insurance. There are several types of cover available, each designed of balance a different risk.

To find out what you may need, we recommend you talk to a financial adviser before making any decisions. Find a financial adviser.

Now, let’s take a closer look at the question ‘why get life insurance in your 40s?'

Reason #1: You’re not getting any younger.

As people age, they become more susceptible to health problems*. So the older you get, the greater your chance of coming down with a serious illness. It’s the same with vehicles; the more kilometres on the clock, the higher the risk of parts wearing out and system malfunctions. Which is why getting a type of life insurance called Trauma cover could be seen as a wise decision for someone in their 40s.  

Trauma cover, aka critical illness cover, is designed to pay a lump sum if you are seriously injured or diagnosed with a condition that meets the criteria defined in your policy. Typical examples of conditions covered include cancer, loss of a limb, heart attack, deafness, blindness, Alzheimer’s, Parkinson’s and multiple sclerosis. A Fidelity Life Trauma cover policy lists more than 40 conditions. You can see the full list here.

The money from a Trauma cover claim can help with household expenses, mortgage payments, medical treatments or anything else you need. It’s your call how the claim money is used. 

 

Reason #2: You have a mortgage and debts.

Debts and loans are common reasons to consider life insurance. Many people in their 40s have a home loan. And if you’ve recently moved into a larger property, to accommodate an expanding family, that loan could be sizeable. You might also have a vehicle loan or ongoing credit card debt. This is all perfectly normal for many New Zealanders, but it does expose your family to financial insecurity if payments can’t be met.  

What’s your plan for managing loan payments if you can’t work for an extended period, due to sickness or injury? And what would happen if you died? Would your partner or family be able to take on your debts? Having insurance can be part of your backup plan for helping to service or clear loans. After talking to a financial adviser, you’ll discover there are several types of cover that could provide financial peace of mind to help balance your loan commitments when you have a life insurance claim paid.

 

Reason #3: You don’t have a lot of savings.

Some people choose to use their savings as a back-up plan when sick leave runs out. But what if sickness or an injury means weeks or even months off work? Would your savings last and, more importantly, would you want to use them all up?

An alternative to using your savings could be Income protection cover that kicks in when sickness or injury prevents you from working for an extended period. With Fidelity Life, up to 75% of your gross monthly income can be covered.

When you arrange cover, you’ll need to choose a wait period that determines when payments will start. With Fidelity Life, the wait period could be from two weeks to up to two years. You also need to decide how long you’d like payments to keep going while you’re unable to work due to sickness or injury. With Fidelity Life, this means a choice of two or five years, or up to either age 65 or 70.

 

Reason #4: You have dreams you want to fulfil.

It’s possible you’ve been putting money away to achieve important life goals. Whether you plan to travel with your family, retire to the beach, help your kids to buy their first homes or some other worthy ambition, protecting your finances be important. Life insurance can help to ensure your cash reserves don’t get gobbled up when your income is disrupted due to sickness or injury for an ongoing period.

 

Reason #5: You have dependents.

If you’re the ‘get married and settle down to have kids’ kind of person, it’s likely your 40s will be a time of financially supporting other people. Your partner might have limited income, having elected to be at home for the kids. And your children might be school-age, so the costs of after-school activities, sports, clothes and school fees can really add up.

To protect your nearest and dearest from the risk of seriously reduced income, because you die or experience a long-term health problem, you might want to talk to a financial adviser about life insurance. If you’re a single parent, the need for protection is magnified. More about life insurance as a backup plan for single income families.

 

Reason #6: You’re self-employed or own a business.

Sole traders and small businesses represent a staggering 97% of all businesses in New Zealand**. Becoming self-employed is a goal many New Zealanders reach in their 40s. If you’re a company owner, freelancer or sole trader, getting some form of life insurance can be part of your business continuity plan. What would happen to your business productivity if you can’t work for a while, due to health problems? If you have a business partner, have you thought about whether one of you might buy the other out, following death or permanent disability? There are several forms of life insurance that could be suitable for protecting your business in these scenarios. We recommend you talk to a financial adviser who can present you with options to meet your needs.

 

Reason #7: You want to leave something for the next generation.

As life responsibilities ramp up in your 40s having a plan in place for your children can be comforting. If you’d like to leave your children a nest egg when you die, it’s possible to continue with Life cover to the very end. With Fidelity Life, you can choose to have age-rated life cover until you die. You just need to continue paying premiums. You can apply for cover at any time up to age 75, however earlier is better, as the cover you can get and the amount you’ll pay for it depends on a number of factors, including health status.

 

To design a financial backup plan, talk to a financial adviser.

Before you go any further with your life insurance research, it is a good idea to get professional advice. Financial advisers know all about life insurance for people in their 40s and can help you to choose appropriate cover for your situation. Find a financial adviser.

 

DISCLAIMER: The information contained in this article is a summary of the key points of the insurance cover(s) mentioned and is general in nature. This article does not constitute a financial advice service. All covers are subject to the definitions, standard exclusions/limitations, terms and conditions contained in the full policy documentation which is available from Fidelity Life or your financial adviser who holds a Distribution Agreement with Fidelity Life. All applications for cover are subject to underwriting criteria.

Find a financial adviser.

Get in touch.
Fidelity Life pattern

*euro.who.int - 'Risk factors of ill health among older people' 2022

**mbie.govt.nz - ‘Small business’ 2020