Permanent life insurance, whole life insurance, direct term life insurance? It’s tempting to say that the biggest barrier for many people in selecting a life insurance policy is just getting through all the different terms and types of insurance. Once you dig in a little, though, it gets a lot less confusing, and the different policy types really do meet specific needs. But let’s lay the groundwork first.
It’s important to point out the difference between term life insurance and whole life insurance (also known as permanent life insurance). Term life insurance covers you for a period of time, usually up to a maximum of 30 years. Whole life insurance, on the other hand, is more expensive but will give you the same premium for the rest of your life until you pass away. Whole life insurance also guarantees a payout to your beneficiaries as long as you fulfill the requirements of those premium payments.
Where whole life insurance provides a defined benefit, term life insurance provides protection for a specific period, then expires. While a term life insurance policy can sometimes be kept in force beyond the initially defined time, premiums usually become too cost restrictive.
Since whole life insurance has different aspects to consider, it is often recommended to consult with an advisor about your options. Term life insurance can be a little more straight forward. Pick a term you need to be covered (usually 10, 20, or 30 years, but it can vary depending on the insurer), decide upon a death benefit, and see if you can afford the monthly premium. With more simplicity comes the possibility of direct term life insurance.
4 Reasons why people like direct term life insurance
Direct term life insurance is nothing more than buying a policy directly from a dealer instead of dealing with any agents or intermediaries. Usually, this means that you create and purchase the policy online with some qualifying information (although you still may need an in-person physical exam).
Changing the transaction process to a direct purchase has the downside of losing a professional that will guide you through the process. Still, it comes with a lot of positives that could very possibly outweigh the loss of professional support:
- Operate on your own time – If you are working with an advisor or an agent, it can be great to have their advice along the way, but you also need to align your schedules to make things work. Usually, this also means meeting multiple times throughout the process before you have your policy. Their wisdom can prove valuable, but if you already know what you’re looking for, the extra meetings and scheduling can be a hassle to get to the policy you already know you want.
- Still have support if needed – You don’t need to go through the hoops mentioned above to get some advice. Of course, any company offering direct term life insurance wants to help you, and they won’t leave you out to dry if you have questions. The assistance might not be as hands-on, but you can be sure to get all the support you need from a company offering life insurance online.
- Quick turnover process – Especially if you are a healthy individual looking for direct term life insurance, you could have your policy very quickly. You could even have your policy in force before the end of the week and may not be required to have a physical at all, depending upon your application process.
- No added pressure – Where you will lack some of the professional experience of an advisor in your corner, you will also be getting rid of the salesmanship a professional might put on you to explore other options or do further planning. This can take up more of your time and potentially add to the overall cost if you’re not looking to discuss any other parts of planning at that time.
Keeping a process intimate and quick is undoubtedly best when you know what you’re looking for. If this is the case for you, direct term life insurance is a fantastic direction to go.
How have you historically bought life insurance?