What Is Direct Life Insurance?

In this article...
  • Get the facts about direct life insurance and how it differs from other policies. Explore benefits of direct life so you can decide if it's right for you.

Many television channels now run commercials for direct life insurance. The ads often show people of all ages saying how easy and affordable it was to get coverage, but they don't fully explain just what direct life is. Knowing the facts about direct life insurance can help you decide if taking advantage of one of those offers is the right move.

What Does Direct Life Insurance Mean?

Traditionally, when you want to get life insurance, you contact an agent or a broker. An agent can represent one or more insurance companies. They can sell you any of the policies offered by the companies they are affiliated with.

An insurance broker doesn't work for any insurance company. Instead, they shop around for insurance for you, determine which policy is the best fit for your needs and then turn you over to an insurance agent to complete an application. Both agents and brokers earn commission when you buy life insurance.

Direct life insurance eliminates the middleman. With this type of life insurance, you work with the insurance company directly to get insurance. Depending on the company, you may apply online or by phone.

What Is the Difference Between Term Life and Direct Life?

Term life insurance:

  • Lasts for a limited timeframe known as the term and then expires
  • Pays a death benefit when you die
  • Typically has lower premiums than other forms of life insurance
  • Doesn't accrue a cash value over time like whole life and other permanent insurance
  • Requires you to pay a monthly premium

Normally, direct life insurance is term life. Policies have all the above characteristics but are simply purchased directly from the life insurance agent. You'll often hear direct life referred to as direct term life insurance.

Who Sells Direct Life?

Some life insurance companies that sell traditional term life also offer direct policies, such as:

  • MassMutual
  • AIG
  • Fidelity
  • Prudential
  • SBLI

You can also buy from a company that only sells direct life, such as one of the following.

  • Haven, one of the first companies to sell direct life, offers term life policies with a Real Rate, which allows you to get approval from an underwriter before you provide payment information.
  • Ladder Life focuses on insurance laddering, which means buying multiple term life policies with varying terms. This gives you more coverage upfront with your death benefit and monthly premium payments declining over time.
  • Fabric Life sells accidental death and term life insurance.
  • Bestow doesn't require medical exams and can usually approve applications within 5 minutes.
  • Ethos offers larger death benefits than many competitors. The company also stands out for providing add-ons or riders that other direct insurers don't.

What Are the Benefits of Direct Life?

Direct life insurance has many benefits, including:

  • No need to interact with an agent or broker
  • Ability to shop and apply for life insurance any time
  • Quick updates about your application and policy status
  • Often no medical exam is required
  • Customer service specialists are available to answer questions about coverage
  • May be less expensive than traditional term life because no one makes a commission on the sale

What Are the Drawbacks of Direct Life?

For all its benefits, direct life insurance does have some drawbacks that you need to know before you buy, such as:

  • Limited choice. Life insurance agents and brokers usually have more options available than direct life insurers, allowing you to get the ideal type and amount of coverage that you need.
  • Expert advice. If you shop for life insurance yourself, you may purchase too much or not enough coverage. Agents and brokers can explain jargon that you don't understand and make sure you're fully aware of what you're buying.
  • Potential for errors. If you make an innocent mistake on your application, the life insurance company may refuse to pay the death benefit. Agents can help spot errors before you submit.
  • Personalized service. You can build a relationship with your agent and turn to them for support as needed. With direct life insurance, you deal with whatever agent responds to your inquiry.
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