3 reasons why buying life insurance should be your 2024 New Year's resolution

It's that time of year when many of us decide on our New Year's resolutions. It's not uncommon to make financial resolutions — like saving for a child's college education or finally building up an emergency fund.

Life insurance isn't the most exciting topic, but it's critical if you have people depending on you. The right policy can help make sure those other goals are met, even if something unexpected happens.

"Unfortunately, life does happen and a lot of unforeseen things do arise," said Brian Steiner, executive director of the insurance nonprofit Life Happens. "If there's a premature death, your plan goes out the window. A lot of people are left scrambling."

Here are three reasons why applying for life insurance — or making sure you have enough coverage —should be at the top of your list of New Year's resolutions for 2024.

• Life insurance is relatively inexpensive
• The coverage you get from work may not be enough
• It's easier to get life insurance while you're younger
• Bottom line

More than half of Americans (55%) overestimate the price of insurance premiums by three times their actual cost, according to the report from LIMRA and Life Happens.

A healthy 30-year-old male will only pay about $29 on average for a 20-year, $500,000 term life policy, according to Policygenius. For a female, it's just $23 a month.

Term life insurance does expire after a set amount of time — usually between 10 and 30 years — and it doesn't build cash value like permanent life insurance. But the affordability of term life makes it a good option if cost is what's been holding you back. Guardian Life, our overall top pick for term life insurance, even allows policyholders to convert their policy into a permanent one in the first five years.  

State Farm also offers a wide variety of term life insurance, including a return-of-premium policy, which refunds the premiums you paid if a death benefit is never collected. In addition, State Farm ranks highest for customer satisfaction on J.D. Power's individual life insurance survey.

While some employers offer group life insurance as a workplace benefit, the policy is usually limited to one to two times your yearly income. That will likely fall short, considering many experts recommend coverage equal to ten times your salary.

Employer-sponsored policies usually aren't portable: If you leave the company, your coverage goes away, too. An individual life insurance policy ensures you have protection no matter where your career goes. It also gives you the flexibility to customize your policy with riders.

And if you want a permanent life insurance policy that builds cash value and doesn't expire, you'll need to look outside your job. CNBC Select named Pacific Life the best provider of universal life insurance while MassMutual earned top marks for whole life insurance.

While many factors go into determining the cost of life insurance, age plays a significant role.

"The longer you wait to get it, the more expensive it can be," Steiner said.  

According to Policygenius, the average 30-year-old male will pay $34 a month for a 20-year, $500,000 term life insurance policy. For a 45-year-old, the same policy will average $72 a month, more than double.

In addition, the longer you wait to take out a policy, the more likely you are to develop age-related health complications — like heart disease, high blood pressure or diabetes — that can raise your premiums or make it harder to qualify for coverage at all.

Life insurance can be an affordable way to ensure your family will always be provided for. Make getting all the coverage you need one of your chief goals for 2024.

At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Brian Steiner, executive director of the life insurance nonprofit Life Happens. Steiner previously served as vice president of business development and strategic partnerships for Life Happens' parent organization, the National Association of Insurance and Financial Advisors, and as president of United Wealth Advisors Group.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every life insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of life insurance

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