Pros and Cons of Direct Life Insurance

iQuanti: Life insurance is a critical consideration for anyone looking to provide peace of mind and financial support for their family. But it can be complicated to choose the right life insurance option with so many types available. Luckily, by researching and considering what coverage you need, you can find the right life insurance plan for your situation.

If you want a straightforward option with affordable coverage, you may want to consider direct term life insurance. Here's what you need to know about the pros and cons of a direct life insurance policy so you can decide if this type of plan is right for you.

What is direct term life insurance?

Direct life insurance is a direct-to-consumer policy that you can purchase from a life insurance agent or company instead of going through a third party. While very similar to a traditional term life insurance policy, this type of life insurance gives you the ability to peruse policy options and sometimes even purchase a policy entirely online.

By keeping the application process simple, you can often apply for a direct term policy online using a sophisticated quote tool. In addition, many of these tools allow you to view coverage levels on a sliding scale and preview an estimated cost for the coverage.

With a direct life insurance policy, you'll purchase coverage for a specific term, often between 10 and 30 years. If you die during the specified term, your family or beneficiaries will receive a cash payout based on the face amount of your policy. Term policies are an easy-to-understand and affordable option for many people.

Pros of direct life insurance

There are several benefits of direct term life insurance, including:

• Affordability: Term life policies typically cost a fraction of what you'd pay in premiums for a whole life policy. That's because these simple policies only cover you for a set number of years and don't have the ability to accrue cash value as whole life policies may.
• Convenient and fast application process: Since many direct life insurance providers offer online applications, you can take your time shopping for a policy when you want, where you want. Also, it often takes only minutes to view available policies for which you may qualify.
• Online policy management: After approval, you'll typically receive access to an online account where you can make policy changes and view forms. Direct term life providers may also offer a suite of online tools to make policy management online easy and fast.

Cons of direct term life insurance

Some cons of direct term life insurance include:

• Hard to qualify with health issues: While some insurers may waive medical exams for certain applicants, many life insurance providers require a medical examination before application approval. That means as you get older and potentially experience health issues, you may have a harder time getting approved for a term life policy at the level of coverage you desire.
• Premiums will increase after term expires: When you purchase a term life policy, you lock in a rate for that term only. If you choose to extend the term, or purchase a new direct term policy after your initial one expires, you will likely discover, the price increased. For example, if you choose a 10-year term, then decide to renew the policy upon expiration, your premium will likely increase in your next 10-year term. That's why many people consider 30-year terms to avoid the price increase later in life.

The bottom line

For those looking for an affordable and convenient policy, direct term life insurance may be an option worth exploring. And while direct life insurance has several benefits, like lower premiums and a fast application process, it's also important to keep in mind your premiums are likely to increase after your term period ends.