When you think of life insurance, the words love, empowerment, and simple don’t exactly come to mind. The purpose of life insurance is intrinsically good — to protect families in their most vulnerable moments. But somewhere along the way, life insurance agents started putting profits before people; 43% of Americans say they don’t trust insurance companies either. The life insurance industry has remained fundamentally unchanged for decades, and the share of Americans with life insurance has fallen to less than 60%, from 77% in 1989.
The reason for this decline becomes clear when you consider the misaligned incentives and asymmetric information of the agent model. 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 insurance policy. Ethos was born out of an experience just like this.
While co-founder Lingke was in college, he was sold an unnecessary permanent life insurance policy. As a 20 year old with no spouse or children, he had no need for life insurance, but an agent convinced Lingke it would be a savvy investment vehicle. As the costs quickly mounted he realized the unfortunate financial mistake he had made, and lost most of what he paid into it. His experience is not unique: the vast majority of permanent life insurance never pays a claim, it is surrendered or lapsed due to cost.
Families deserve something better.
After that experience, and a lot of walks around Stanford campus, Lingke and I clearly saw cracks in the traditional model - and wanted to build a system that advocated for the family, instead of profits. We started Ethos in our grad school dorm with one goal in mind: to make life insurance easy, accessible and affordable.
At Ethos, we firmly prioritize families, not profits: by building a company with honesty at its core and products designed for the average family. We don’t employ a single commissioned agent, meaning individuals don’t profit from selling a policy, eliminating the temptation to hard-sell or upsell. There are no extra fees. Our #1 priority is making sure families are appropriately protected considering their financial means, and we will work all night to accomplish this goal. We focus on making the process simpler: building software and predictive models that cut the standard 10-week process down to 10 minutes. We have already processed thousands of applicants, and more than 99% of them have required no medical exam or blood test to get a policy.
We are excited to be on our journey with Roelof Botha and Stephanie Zhan, Partners at Sequoia Capital. Roelof (who has led investments in Instagram, YouTube and Square) is even a trained insurance actuary and uniquely understands the frustrations that exist and the solutions needed.
The road to get here was two years of patient work. Lingke and I are lucky to work alongside the talented Ethos team of engineers, designers, and product, partnerships and customer success folks, whose passion keeps us focused on our priorities: protecting families and expanding accessibility.
Welcome to Ethos and stay tuned—there is more to come!
If you're interested in learning more about life insurance with Ethos, you can get started by filling out a few questions to get a quote: