New term market entrants target younger consumers with easy online applications and no exams
A new wave of insuretech startups is converging on the term life insurance market, looking to woo uninsured and underinsured millennials with quick, simple online applications using big data to generate quotes and approvals in minutes without medical exams. And they’re saying they can do it at prices competitive with fully underwritten term policies, which has previously been a hurdle that simplified issue policies have not been able to clear. This isn’t only for small amounts of coverage, either. One of the new products just unveiled this week offers policies with death benefits up to $1 million.
Some of these well-funded startups are partnering with established carriers such as MassMutual and Protective or reinsurance giants like Hannover Re. What’s missing? What these disruptors would call the middleman – otherwise known as the independent life insurance agent.
With multiple new online-only term products hitting (or about to hit) the market, aiming squarely at millennials, this seems like a good time to take a closer look at some of these startups and their products. Beyond SoFi on this page, click through to following pages for info about Haven Life, Ladder, and a new simplified issue product for credit union members from CUNA Mutual Group.
And to share thoughts or comments about this influx of new term offerings, please visit this discussion thread: Startups target online term market
SoFi partners with Protective for term life product aimed at Millennials
SAN FRANCISCO and BIRMINGHAM, Ala. – Fast-growing online lender Social Finance Inc. (SoFi) and Protective Life together this week announced a new term life insurance offering that provides up to $1 million in coverage through a simple, online application with “competitive pricing” and no medical exam for a majority of people under 40 – available today.
"This is a first in the industry: coverage in minutes without a medical exam in many cases, and at incredibly competitive prices," said Andrea Blankmeyer, SoFi's VP of Finance. "Protective has more than 100 years of experience providing valuable protection to nearly 8 million customers, and we're happy to work together with them to deliver what we think is the easiest experience for buying term life insurance."
SoFi, a fintech startup launched in 2011 that made its name by helping top-tier college graduates refinance student loans at low interest rates, has been expanding with the addition of personal loans, mortgages, wealth management and other financial services.
A Bloomberg article earlier this year noted that CEO, Chairman and Co-Founder Mike Cagney has a goal of eventually rendering banks obsolete. Turning millennials into lifelong customers by making them feel like they’re a part of an elite community is part of that strategy. SoFi refers to its customers as “members” and “HENRYs” (High Earners Not Rich Yet).
In 2015, the company issued $5 billion in loans and is on pace to double that this year, the Bloomberg article said. SoFi uses a variety of criteria to underwrite its loans, which allows it to maintain a low default rate, including an applicant’s free cash flow, history of paying bills, education and résumé.
The company was known to be looking to add life insurance earlier this year, as the millennials which comprise a large portion of SoFi's member base are especially in need of adequate life insurance coverage as they hit major financial and personal milestones, like home ownership and starting families. SoFi may be well positioned to capitalize on that demographic thanks to its already sizable base of young customers. According to 2016 LIMRA Ownership Study data:
• Millennials are least likely of all generations to have existing life insurance coverage
• 1 in 3 households would have immediate trouble paying living expenses if they were to lose their primary wage earner, with millennial households most at risk
• Millennials overestimate the cost of life insurance premiums by 213%, causing them to delay getting coverage
"Protective is pleased to work with the talented team at SoFi on this innovative new product which is designed to meet the rapidly evolving expectations of younger consumers," said Aaron Seurkamp, Chief Sales Officer at Protective. "We have specifically designed the product to make it easy and convenient for SoFi members to get the financial protection they need."
The policies will be issued by Protective Life Insurance Company, which offers full customer support. Applicants who prefer to speak to someone in person will have the option of talking with a licensed Protective insurance advisor over the phone.
About SoFi: SoFi is a new kind of finance company taking a radical approach to lending, wealth management and insurance. From unprecedented products and tools to faster service and open conversations, SoFi all about helping members get ahead and find success. Whether they're looking to buy a home, save money on student loans, ascend in their careers, or invest in the future, the SoFi community works to empower members to accomplish the goals they set and achieve financial greatness as a result. For more information, visit SoFi.com.
About Protective: Protective Life Corporation provides financial services through the production, distribution and administration of insurance and investment products throughout the U.S. Protective Life Corporation has its home office in Birmingham, Ala., and is a wholly owned subsidiary of Dai-ichi Life Holdings, Inc. As of Sept. 30, 2016 the Company had assets of approximately $76.2 billion. The flagship subsidiary, Protective Life Insurance Company, was founded in 1907. For more information visit www.Protective.com.
Next page: Haven Life introduces InstantTerm for up to $1 million in coverage
• Are these types of new online, no med term products that strive to compete on price with fully underwritten term policies and aimed at millennials of concern to independent agents? Please comment on this thread: New term products target millennials, miss agents
- Small businesses big winner with reinstatement of Health Reimbursement Arrangements
- Insuretech startups Hippo, Lemonade on the attack against agents who sell homeowners coverage in California
- 4 industry trends to watch for in 2017
- Shopping up, enrollment channels shift for Medicare Part D as more consumers rely on brokers
- Why companies can’t get marketing right
- Optimism rebounding among independent P&C agencies; leads to aggressive growth plans in 2017
- Lessons from the U.K.’s bold new retirement initiatives
- Annual review of client needs only makes sense