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Life insurance startup Ladder launches in California


Ladder, the new life insurance startup looking to bring policy enrollment as easy as picking up a mobile phone, has launched in its first market — California.

That’s right, citizens of the “Eureka” state are now able to select a life insurance policy right on their phones or their computers.

Ladder was born out of Jamie Hale’s own experience struggling with the byzantine business of the insurance industry. He resolved to make it better.

After raising a $16 million initial round of institutional capital last October from investors led by Canaan Partners and including Lightspeed Venture Partners, NYCA, and 8VC, the company is finally taking the covers off of its initial product in its first market.

Typically life insurance was considered something that was sold rather than something that was bought. A salesman would pitch customers on the benefits of life insurance benefits to overcome the (natural) reluctance of would-be buyers at the daunting task of running the gauntlet of approvals necessary to get coverage.

Ladder claims that its offer of pure, term insurance will most likely be the best, most cost-effective option for consumers.

And consumers certainly need a better way to buy life insurance — at least according to the industry’s own estimates.

There’s something like a $20 trillion coverage gap between what consumers need and what they’re actually paying to receive. Most Americans don’t have life insurance in part because the process is such a pain in the ass.

Upstarts like Ladder aren’t the only ones to recognize this. MassMutual, an insurance giant, has actually set up its own upstart life insurance subsidiary — Haven. Currently pitching policies in Massachusetts, Haven’s taking a similar approach to woo customers who will — at some point — die. And when they die they will probably leave loved ones behind who could probably benefit from some sort of insurance policy.

As folks start to age, have kids, and get a house (or… given the financial outlook for this generation maybe not get a house) the need for life insurance becomes more pressing, says Will Kohler, a seed investor in Ladder and a partner at Lightspeed Venture Partners.

“There are massive markets that through whatever incentive base were constructed very early on where there are these human intermediaries who create much more friction in the process,” says Kohler. “Meanwhile consumers are getting more comfortable with purely digital processes.”

There’s an 80% drop-off rate between application and approval because customers just don’t want to deal with the process. By simplifying things to a few basic, binary questions (“Are you a smoker or a non-smoker?”), Ladder can make some decisions about a potential policyholder and streamline the process (thanks in part to the buzziest of buzz words… big data).

It helps that the company has a massive re-insurer backing up its policies and partnering with the company to make claims. German reinsurance juggernaut Hanover Re, is giving the founding team at Ladder tips on how it has structure its own claims, Kohler says. That body of knowledge has helped Ladder integrate existing methodologies into its system to come up with policies that make sense, the company claims.

“That is the benefit of going through this structural partnership where we can leverage many many years and understand our that partner has gone about looking at these profiles,” says Kohler. “This is a methodology that we’re able to leverage with these processes.”

And while the insurance industry may be staid and traditional, the massive amounts of money involved can be eye-popping. The U.S. alone is a $128 billion market for life insurance.

Featured Image: Moolanomy/Flickr UNDER A CC BY-SA 2.0 LICENSE


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