Can’t Decide Between Direct Term Life Insurance and Whole Life (Permanent) Insurance

The idea of life insurance is far from being a modern-day invention. Life insurance has a long history that stretches back thousands of years into the distant past.

Around 1705, England witnessed the foundation of the very first insurance company known as the Amicable Society. From there, insurance businesses sprung up all over the UK and throughout the world.

As society has evolved, so too has basic life insurance. We now have so many different types of life insurance such as whole life insurance, direct term, universal, final expense, variable, guaranteed issue, simplified issue, variable universal, the list goes on and on. There is even a variation of life insurance that pays a benefit when you are totally and permanently disabled, providing you with funds should you be unable to work again. Claims from this type of insurance can be difficult, especially at a time when you are not at your best, which is where companies like Curo can help. You can see more information about TPD insurance claims from Curo here. However, the meaning behind life insurance as a whole has not changed significantly. Life insurance is a way of seeking financial protection for your family when you lose your life. 

For the purposes of this post, we’ll take a look at direct term vs whole life insurance, so that it can be easier for you to decide what suits you best.

Term Life Insurance and Whole Life Insurance – What Does It All Mean?

In 2018, the LIMRA Insurance Barometer found out that almost 60% of Americans had registered for some form of insurance policies. In the same study, about half of all adults sought online information on life insurance in 2018. Meanwhile, 1 out of 5 Americans believes they still do not have enough insurance. All in all, these statistics tell you that awareness of life insurance is gaining momentum.

Going by its most exact definition, term life insurance is a type of insurance product that protects beneficiaries against the potential death of the insured person for a specified time period. The term ‘direct’ means that you seek your life insurance directly with the provider – as opposed to going through a third party. The duration of this term usually lies within the range of 5–30 years. If the insured person dies after the expiry of the term, no death benefits will be paid out. The beneficiaries will only receive death benefits if the insured person dies within the stipulated term of coverage. Unlike whole life insurance, a term life insurance only covers for the time limit on the contract. 

Now let’s take a look at whole life insurance, also known as permanent or traditional life insurance. Whole life insurance covers you for life and a medical health examination will need to be done. Without this examination, you can still receive permanent life insurance but your rate will be more expensive. Payments are made to beneficiaries upon the death of the policyholder – so long as the premium payments were maintained. The main difference with whole life insurance is the cash value that is built up over time as a savings portion with tax-friendly benefits. It acts as an investable asset and also accrues interest. Withdrawals (loans) can also be made based on the cash value.

Term vs Whole – What Is Best for You?

The considerations before you make your decision. First, think about what financial needs you would like covered and protected, then think about how long you would like these needs protected. If your priorities include covering the mortgage and college funds, this may be fully covered within 30 years if your children are already in their teens. Therefore, a term life insurance policy may make more sense for you today. But if you want all these needs covered as well as a pot of savings for your family to use when you’re gone, then a whole life policy makes more sense. 

In making these decisions, key factors to consider include age, assets and liabilities, your children’s age and your future family plans eg college funds. You also need to look at the current state of your health, your planned retirement age and any other savings you currently have.

Advantages of Direct Term Life Insurance Over Whole Life

If you’ve made your decision and you’re trying to find out how to get direct term life insurance, think about using comparative websites in your search to make sure you’re getting the best deal. Here are some of the benefits of term life over whole life:

• The application process is expedit
• It’s less expensive because there are no agents involved
• You get timely updates on the status of your insurance policy
• It’s dynamic as consumers can make policy changes on their accounts anytime.

If you are looking for a life insurance policy to cover your short-term financial obligations that won’t break the bank, have a look at decreasing term life insurance. Decreasing term insurance is a type of renewable term life insurance with coverage decreasing over the life of the policy at a predetermined rate. Purchase Decreasing Term Life Insurance here. 

To summarize, direct term life insurance allows you to insure your life for a fixed term with the flexibility of switching to a whole life policy as your needs change over the long-term. Sounds good? Make sure you visit this page to get your quote!

In the event of your demise, your named beneficiaries will receive death benefits. This insurance package is relatively cheaper than other insurance policies. Moreover, it’s renewable if you don’t die within the agreed term.

You might also like to read:

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• What Insurances Are Out There, And Do You Need Them?