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A New Lease on Life

Celebrities are investing in insurance startups, including a life insurance company that uses technology to simplify the application and qualification process.
  • Lori Chordas
  • September 2018
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Actors Will Smith and Robert Downey Jr. and other celebrities are highlighting the need for life insurance.

The high-profile stars are just a few of the supporting investors of an insurtech startup that aims to simplify life insurance through technology.

Ethos was founded in 2016 by former Stanford University roommates Peter Colis and Lingke Wang as a new kind of life insurance. Ethos uses software and predictive analytics to modernize the life insurance process and align products with what families need during critical times in their lives.

In June, Ethos announced a star-studded $11.5 million Series A led by Sequoia Capital. Participating investors include Jay Z's Arrive, a subsidiary of Roc Nation; Will Smith's Smith Family Circle; Robert Downey Jr.'s Downey Ventures and Kevin Durant's Durant Company. Other investors include Stanford University and a credit financing company in Silicon Valley.

Money is continually being poured into the insurtech space. Since 2012, venture capital investors have invested more than $9 billion in the industry, according to venture capital data firm CB Insights.

A profusion of Hollywood A-listers and sports icons, including actor Ashton Kutcher, rock band Linkin Park, retired Los Angeles Lakers' basketball player Kobe Bryant, four-time Super Bowl champion Joe Montana and others, are diving into the startup scene.

Montana is a general partner with Liquid 2 Ventures, a seed-stage venture fund. Durant Co. has invested in at least 30 startups, including delivery service Postmates and cloud computing startup Rubrik Inc.

While the impact of those investments on startup outcomes is still unclear, the participation of some celebrity investors has contributed to more earned media or public endorsements of startups on social media and other public forums, said Matthew Wong, a senior research analyst at CB Insights.

Building a brand is not for the faint of heart, Colis said. “MetLife, Northwestern Mutual, New York Life, all of the great industry firms were created over 100 years ago. Ethos is a new kind of firm. We have partnered with some of the most globally recognized people because they can help us build a world-class brand,” he said.

Ethos is part of a new crop of digital startups looking to shake up the individual life insurance buying experience, Wong said.

The company offers fully underwritten term life insurance in less than 10 minutes. Ethos is currently licensed in 49 states, and it partners with Assurity Life Insurance and Munich Re to deliver its solution, Colis said.

“There's an industry saying that life insurance is sold, not bought,” he said.

“But our core thesis for Ethos is that with our game-changing product, smart marketing and customer service, life insurance can be bought instead of sold,” Colis said.

Life insurance participation rates continue to decline. The share of Americans with life insurance has fallen from 77% in 1989 to less than 60% today, according to reports.

One of the reasons for the coverage gap is that the agent distribution model is built on misaligned incentives and asymmetric information, Colis said.

“Because the average family doesn't understand the intricacies of life insurance contracts, they frequently either gamble with their family's future by avoiding buying life insurance altogether, or they buy whatever the agent recommends, which is often an expensive and unnecessary permanent life policy. The issue no one talks about is that the majority of permanent life insurance is lapsed or surrendered and never pays a claim,” he said.

Colis is hoping Ethos and its use of technology can change that.

Lori Chordas is a senior associate editor. She can be reached at lori.chordas@ambest.com.


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