Term Insurance in Your 40s

By the time you are in your 40s, your family probably includes many financial dependents such as your spouse, children, elderly parents, etc. These individuals depend on your regular income which may no longer be available if you are unable to continue working due to a disability or in the event of your death. The payout from a term plan can be configured to provide a monthly payout to the policy nominee over an extended period of time which can serve as a replacement for the regular income lost due to your death, disability or illness.

Term insurance plans offer tax deduction benefits to individuals who opt for filing taxes under the old tax regime. The tax deduction benefit extends not only to the premium paid for the base plan but also on any additional premium paid for riders. The tax benefit of the base term plan is available under Section 123 read with Schedule XV of the Income Tax Act, 2025 (Section 80C of Income Tax, 1961). The additional tax benefits available on term plan riders such as the critical illness rider are provided under Section 126 of Income Tax Act, 2025 (earlier Section 80D of the Income Tax Act, 1961).

The most basic benefit offered by a term insurance policy is the life cover that it provides, but that’s not all, you can opt for enhanced protection by choosing optional riders. These can be availed for an extra charge over and above the premium payable for the base plan. Examples of optional riders available with term plans in your 40s include critical illness/disability rider and accidental death/dismemberment rider. These riders are designed to provide a lump sum payout to the policy beneficiary if conditions specified in the applicable rider are met.

Purchasing a term plan can provide you with peace of mind based on the understanding that your loved ones will be financially secure even if you are no longer able to available to take care of them. Once you have ensured that the protection needs of your loved ones has been fulfilled, you are now free to pursue other wealth creation or savings efforts that you might have planned. This is one of the main reasons why purchasing a term plan, even if you are in your 40s, is considered an essential part of any individual’s overall financial plan.

Another factor that can potentially drive up policy premiums apart from your age is the policy term that you are opting for. A longer policy term can ensure financial security for a longer period, but might lead to higher premiums. On the other hand, opting for a shorter policy tenure may lead to lower policy premiums, but you will run the risk of leaving your loved ones without adequate protection. Check different combinations using a term insurance premium calculator in order to figure out which combination of sum assured, policy tenure and premium payment term suits your unique protection needs.

As per current underwriting rules, term insurance applicant who have pre-existing conditions such as diabetes, cardiovascular disease, etc. are charged a higher premium than healthy individuals purchasing similar policies. A similar scenario also plays out in the case of individuals with a history of tobacco use and alcohol consumption.

However, attempting to suppress such information is not the right way to try and get a lower premium. For starters, you run the risk of getting your term insurance application rejected if such an attempt is caught by the insurer at the application stage. What’s more, if such an attempt is discovered by the insurer at a later stage, there could be problems in getting your claim settled. So, make sure you disclose all relevant medical and lifestyle information truthfully at the time of submitting your term insurance application.

Insurers in India have to mandatorily publish a range of information such as individual death claims paid ratio, solvency ratio, assets under management, gross written premiums, etc. All of these bits of information gives insight into the financial health of the insurer as well as its track record of settling claims in an effective and efficient manner.

For instance, Ageas Life Insurance has recorded a claim settlement ratio of 99.82% for FY 25-26, which is one of the highest in the industry. By checking such details you can make an informed decision regarding which term insurance policy is best suited to meet your protection needs in your 40s.