The most common reasons to buy life insurance in middle age are to make sure not to pass debts or mortgage costs to loved ones, to ensure that children are provided for, and to continue or renew policies started in the younger years. In the 40s and 50s life insurance needs can look a lot different than other phases of life, so these decades are an opportunity to see how your financial needs have changed and to re-evaluate what types of plans can best protect your loved ones.

What type of life insurance should I buy in my 40s or 50s?

The most common type of life insurance for people in their 40s and 50s life insurance is term life insurance. The term is generally chosen to either to reflect any outstanding costs or debts—such as mortgages, auto loans, or credit card debt—or to last as long as beneficiaries rely on the policy-holder’s income financially. For example, a term could be chosen to help pay for the education of children or other family members and calculated to last until the beneficiary has graduated.

Other types of life insurance can include whole life insurance—which offers a guaranteed payout—or insurance for specific purposes such as mortgage insurance, debt  insurance, long-term care insurance, or end-of-life insurance.

How do I calculate life insurance?

One popular rule of thumb recommended by most insurance companies for calculating the policy amount is to buy enough insurance to cover about 6-10 times your yearly salary if possible. For people who can’t or don’t want to spend that much, another way of looking at it is to purchase a policy that will cover any outstanding debts so that those debts aren’t passed to loved ones upon your death. 

Another way to calculate the policy amount is to multiply your yearly salary by the number of years left until you retire. This allows your loved ones to maintain the same standard of living. Another standard of living method is to multiply how much money any dependents would need to maintain their lifestyle by 20, allowing them to take out 5% of the benefit each year and invest the rest. 

What is the cost of life insurance?

Life insurance costs vary greatly depending on the length of the term you purchase, your age and health status, and the amount of policy you purchase. On average, most people in 2021 who purchase about a 20-year term—the most common term length—will pay $26/month. However, this is an average out of the entire population, and each individual’s policy can be dramatically different. 

Do I need any other types of insurance?

Other types of insurance to consider include mortgage insurance, family insurance, debt insurance, or long-term-care insurance. These are more specific, less flexible types of plans, but in some cases they can result in a better deal with a carrier depending on your circumstances. Speaking with a life insurance agent or financial planner can help you understand the full range of options available to you.

Certain plans like family insurance are also sometimes offered at a group life insurance rate through your employer, so be on the lookout for those types of opportunities as well.