Direct term life insurance

Direct term life insurance refers to a life policy you buy directly from the insurance company instead of an agent or broker.

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By

Andrew HurstSenior Editor & Licensed Auto Insurance ExpertAndrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

Edited by

Antonio Ruiz-CamachoAntonio Ruiz-CamachoAssociate Content DirectorAntonio helps lead our life insurance and disability insurance editorial team at Policygenius. Previously, he was a senior director of content at Bankrate and CreditCards.com, as well as a principal writer covering personal finance at CNET.
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Reviewed by

Maria FilindrasMaria FilindrasFinancial AdvisorMaria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.

Updated|3 min read

Expert reviewedExpert reviewedThis article has been reviewed by a member of ourFinancial Review Council to ensure all sources, statistics, and claims meet the highest standard for accurate and unbiased advice.Learn more about oureditorial review process.

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When you begin the process of buying life insurance, it can be overwhelming to decide what type of life insurance to buy and where to get your policy. You’ll generally get the most affordable policy by comparing different term life insurance quotes.

However, if you don’t want to work with a go-between like an insurance agent or broker, you might consider direct term life insurance. You can apply for direct term coverage with a single provider, often online. 

Direct term can offer speed and simplicity to some applicants, but you may sacrifice value by not shopping around. Here’s how to decide if a direct term policy is right for you.

Life insurance terms you should know
  • Beneficiaries: The people you name on your life insurance policy to receive the lump sum of money — also known as the death benefit — when you die.

  • Cash value: The portion of a permanent life insurance policy’s monetary value that grows tax-deferred over the life of the policy.

  • Death benefit: The amount of money the life insurance company will pay your beneficiaries when you die.

  • Face amount: The dollar amount, or death benefit, your beneficiaries receive if you die while your life insurance policy is active.

  • Insured: The person who is covered by the insurance policy.

  • Policy: The legal document that includes the terms and conditions of your life insurance contract.

  • Policyholder: The person who owns an insurance policy. Usually, this is the same person as the insured.

  • Permanent life insurance: A type of life insurance that lasts for the rest of your life and usually includes a cash value account.

  • Premium: The amount you pay your insurance company to keep your coverage active. Premiums are typically paid monthly or annually.

  • Riders: Add-ons to a life insurance policy that provide more robust coverage, sometimes for an extra cost.

  • Term life insurance: A life insurance policy that lasts for a set number of years before it expires. If you die before the term is up, your beneficiaries receive a death benefit.

  • Underwriting: The process where an insurance company evaluates the risk of insuring you and determines your final rate.

What is direct term life insurance?

Direct term life insurance is a term life insurance policy you buy directly from one insurance provider. Term is the simplest and most cost-effective life insurance for most people. It provides coverage for 10 to 30 years and pays a death benefit if you die while the policy is active. If you outlive your policy, it expires.

Most direct term life insurance companies allow you to apply for a policy online. You’ll begin by entering basic information about how much coverage you want, followed by health and lifestyle information. 

An underwriter will evaluate your health information, and you may need to schedule a medical exam. Once underwriting is complete, you’ll receive an insurance offer. You’ll sign your policy and pay your first premium to activate your coverage.

Learn more about the process of buying life insurance

Who should get direct term life insurance?

If your top priority for buying a life insurance policy is to work with a specific insurer, then you might prefer direct term life insurance. 

Most people will find a policy better suited to their needs by working with an independent agent or broker. Independent brokers and agents work with multiple life insurance companies and know which providers are more flexible toward certain health conditions and lifestyle choices. They can offer unbiased advice on the best provider and coverage for your family’s financial needs.

Learn more about the different types of life insurance

Pros & cons of direct term life insurance

Pros:

  • Company representatives know their products well

  • Many direct term applications are self-paced 

  • No back-and-forth with a sales agent 

  • You may be able to complete most of the process online

Cons: 

  • Advice from company representatives may not be impartial

  • Direct term doesn’t always mean the fastest policy approval

  • It’s harder to compare multiple providers at once

  • You may miss out on lower rates from another insurer

Learn why where you buy your life insurance matters

Ready to shop for life insurance?

How much does direct term life insurance cost?

Life insurance premiums reflect how risky you are to insure and are based on several factors:

The younger and healthier you are, the lower your premiums will be. Policygenius data shows that a 30-year-old woman who doesn’t smoke and is considered healthy could pay as little as $23 per month for a $500,000, 20-year term life policy.

Every life insurance company has its own systems to evaluate risk, so some treat certain health conditions with less flexibility than others. Buying a direct term policy means you might pay higher premiums with your chosen insurer than you would have elsewhere. 

Learn more about how insurers set term life insurance rates

Alternatives to direct term life insurance

You might think buying life insurance without an agent or broker will be simpler, but that isn’t a good way to find the best possible coverage for your family. A good agent can help you tailor your coverage to your family’s needs and suggest the best insurance company for any health concerns you may have.

  • No-medical-exam life insurance: If you’re relatively healthy you may qualify for an instant or accelerated underwriting policy, which doesn’t require a medical exam. You’ll still be eligible for affordable rates, but underwriters will use your medical records to set your premiums instead.

  • Traditional term life insurance: Since every provider will evaluate your application differently, you could get lower quotes by considering multiple term life insurers. Take the extra time to compare quotes and find the best match for your situation.

Ready to shop for life insurance?

Direct term life insurance simplifies the application process for those who want to buy coverage at their own pace without interacting with sales agents. For most people, the potential savings you’d get from shopping around for a policy outweigh the benefits of buying direct. If you want to feel sure that you’re getting the best rates and unbiased advice, it’s still best to shop with the help of a professional.

Author

Andrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

Editor

Antonio helps lead our life insurance and disability insurance editorial team at Policygenius. Previously, he was a senior director of content at Bankrate and CreditCards.com, as well as a principal writer covering personal finance at CNET.

Expert reviewer

Maria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.

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