More than half of the American population has refrained from considering life insurance because they think it’s probably too expensive, and the most common way to buy it today is in person. A startup that has built a platform to break those conventions and democratize the process by making life insurance (and its benefits) more accessible today announces significant funding to fuel its rapidly growing business.
Ethos, which uses over 300,000 online data points to determine a person’s eligibility for life insurance policies, which are offered as term or whole life plans starting at $ 8 / month , raised $ 100 million from a single investor, SoftBank Vision Fund 2 Peter Colis, CEO and co-founder of Ethos, said the funding brings the startup’s valuation to over $ 2.7 billion .
This is a quick jump for the company: just two months ago, Ethos secured a funding round of $ 200 million for a valuation of just over $ 2 billion.
He has now raised $ 400 million to date and amassed a very illustrious group of funders. In addition to SoftBank, they include General Catalyst, Sequoia Capital; Accelerate; GV; Roc Nation by Jay-Z; Glade Brook Capital Partners; Will smith and Robert downey jr.
This latest infusion of funds – which will be used to hire more people and continue to expand its product suite in adjacent areas of life insurance critical illness coverage – was unsolicited, Colis said, but follows very rapid growth.
Ethos – which is currently only sold in the United States in 49 states – has seen its revenue and user count increase by more than 500% from a year ago, and it is on track to issue some $ 20 billion in life insurance coverage this year. And he’s approaching $ 100 million in annualized growth earnings. Ethos itself is not yet profitable, Colis said.
There are a few trends going on that speak of a large opportunity for Ethos at this time.
The first of these is the current market climate: Globally, we are still battling the global health pandemic of Covid-19, and one of the effects of it – especially given that Covid -19 spared no age group or demographic – has been a greater awareness of our mortality. This inevitably leads at least part of the population to consider something like life insurance coverage that they might not have thought of before.
However, Colis is a little skeptical about the lasting impact of this particular trend. “We saw an initial increase in demand during the Covid period, but then it returned to normal,” he said in an interview. Those who were more inclined to think of life insurance around Covid-19 might have ended up considering it anyway: it was motivated, he said, by those with pre-existing health issues before the pandemic.
Interestingly, this brings up the second trend, which goes beyond our current circumstances and Colis believes it will have the most lasting impact.
Although a number of startups, and even legacy providers, are looking to rethink other areas of insurance such as auto, health, and home coverage, life insurance has remained relatively intact, especially in some markets. like the United States. Traditionally, someone taking life insurance goes through a lengthy verification process, which is not entirely done online and may involve medicals and more, and yes, it can be costly: the stereotype that you best know is that only the wealthiest people buy life insurance policies.
Much like the fintech companies that have rethought how loan applications (and repayment terms) can be redesigned and re-evaluated using big data – pulling a new range of information to form a picture of the claimant and the likelihood of default or not – Ethos is among the companies that apply this same concept to a different problem. The end result is much faster processing, a significantly cheaper and more flexible offering (term life insurance only lasts as long as a person pays for it), and generally much more accessibility for everyone. potentially interested people. This data pool continues to grow.
“Every month we get smarter,” Colis said.
There is also the question of what Ethos is actually selling. The company itself is not an insurance provider but an “insuretech” – in the same way that neobanks use APIs to integrate banking services that were built by others, which they then integrate. with their own customer service, personalization and more – Ethos integrates with third party insurance underwriters, providing customer service, more efficient integration (no in-person medical exams for example) and personalization (both in packages and prices) around them. Given how difficult it is to get more traditional policies, this essentially means completely free water for Ethos in terms of finding and securing new clients.
The rise of Ethos comes at a time when we see other startups approaching and rethinking life insurance also in the United States and elsewhere. Last week, YuLife in the UK launched a grand tour to further develop its own approach to life insurance, which involves selling policies related to an individual’s own health and wellness practices – l the idea being that it will make you happier and give you more reason to pay for a policy that otherwise looks like a dormant investment; but also that it could help you live longer (Sproutt is another who also seeks to emphasize the “life” aspect of life insurance). Others like DeadHappy and BIMA, like Ethos, are rethinking the accessibility of life insurance for a broader set of demographics.
There are signs that Ethos is enriching itself with its mission to expand this pool, and not just develop businesses among the type of users who might have already considered and purchased life insurance policies. . The startup said more than 40% of its new policyholders in the first half of 2021 had incomes of $ 60,000 or less, and nearly 40% of new policyholders were under 40. The professions of these clients also speak about it. democratization: The top five professions, according to the report, were housewife, insurance agent, business owner, teacher and registered nurse.
This pull is probably one of the reasons SoftBank came knocking on the door.
“Ethos is leveraging data and its vertically integrated technology stack to fundamentally transform life insurance in the United States,” Munish Varma, managing partner of SoftBank Investment Advisers, said in a statement. “With a fast and user-friendly online application process, the company can accurately and quickly underwrite and insure a large customer segment. We are delighted to partner with Peter Colis and the exceptional team at Ethos. “