In the following review of Ethos Life Insurance we will discuss the pros and cons of the company. When searching for the best life insurance companies, it is important to know which company will cater to your specific needs and goals.
About Ethos Life Insurance
Ethos Technologies, Inc. is an online life insurance broker headquartered in San Francisco. Doing business under the name “Ethos Life” or just “Ethos,” the company was established in 2016 by a couple Stanford Business School grads who observed a potential entry-point into the life insurance brokerage market.
By using predictive algorithms to bypass the traditional underwriting process, Ethos’s founders believed they could simplify and speed up the application process and capture the business of a younger, tech-savvy clientele.
Though Ethos Life has policies available for a wide range of ages, the company’s business model is built around marketing straight-forward term life policies to young, healthy insureds.
Most notably, for the right applicants, the Ethos platform can provide fully underwritten no exam term life insurance coverage.
Ethos Life has developed sophisticated software that predicts longevity as well as a traditional medical exam (or so the company asserts).
The downside to the approach is that the algorithm is designed to identify the lowest-risk insureds, and so many applicants outside the company’s sweet spot (in terms of age and medical history) won’t be eligible for fully underwritten rates without an exam.
For those applicants, though, Ethos offers simplified-issue term and guaranteed-acceptance whole life policies, which have progressively lower underwriting requirements.
Importantly, Ethos Life is not itself a life insurance company. Instead, Ethos acts as an online broker connecting applicants to insurers using the lure of a simple, time-efficient application process.
So far, Ethos only has four life insurance carriers in its network, and only one of those is issuing fully underwritten coverage relying on Ethos’s system.
As a result, Ethos customers can’t compare policies and rates between companies (at least, not relying on Ethos alone).
Even so, Ethos can be a time-saving option for relatively young, healthy insureds who want straight-forward term coverage and who prioritize speedy application over rate comparison.
For a young company, Ethos has garnered considerable investment capital—over $100 million according to the company’s website.
So, at least a few venture capitalists (including Sequoia, Goldman Sachs, and Robert Downey, Jr., among others) apparently think that the idea behind Ethos Life has a strong chance of succeeding.
What Kinds of Life Insurance does Ethos Sell?
Ethos Life focuses on selling level-term policies underwritten by Legal & General, Ameritas, and TruStage. A final-expense whole life policy issued by AAA is also available for older applicants.
The flagship offering marketed by Ethos is a fully underwritten level-term policy issued by Legal & General, aka Banner Life Insurance.
Policy limits range from $50,000 all the way up to $1.5 million.
Policies are available with term lengths of 10, 15, 20, or 30 years, with annual renewal available (for a much higher premium and potentially lower coverage) when a policy’s initial term ends.
The L&G-backed term policies are available for new applicants from ages 20 to 65, though extended term lengths are limited for older applicants.
Although the L&G term policies are “fully underwritten,” a medical exam is not usually required.
Instead of an exam, the underwriting relies on a thorough online application that screens out high-risk insureds. In addition to brokering, Ethos also serves as third-party policy administrator for the fully underwritten term policies.
So, if you purchase coverage, you’ll keep doing business with Ethos—making policy elections and paying premiums through Ethos’s website (which is fairly user-friendly).
Ethos’s other term policies (issued by Ameritas and TruStage) are “simplified issue,” which means the underwriting review only considers information provided in the application and within medical reports accessed by Ethos.
The TruStage and Ameritas policies don’t require a medical exam and are geared toward individuals whose age or medical history might make qualifying for fully underwritten coverage more difficult.
Applicants for simplified issue policies are able to obtain a coverage decision with very little delay but usually end up paying premium rates notably higher than what is available with fully underwritten policies.
Along with the term life options, Ethos offers a single permanent policy that’s only available for a narrow range of insureds.
AAA Final Expense Insurance
For retirement-age applicants, Ethos has a final expense insurance policy, which is a guaranteed-acceptance (a/k/a “guaranteed issue”) whole life policy issued by AAA.
As a “guaranteed issue” policy, there’s essentially no underwriting during the application—anyone who is in the right age bracket and able to pay the premiums can get covered.
Guaranteed-acceptance whole life policies have higher premiums and usually provide less coverage than term, but they can be a workable option for people who are otherwise unable to obtain life insurance.
The whole life policy Ethos sells is essentially a final-expense policy, designed to cover estate expenses like funeral and burial costs, administration expenses, taxes, and estate debts.
Application is open to new insureds ranging from 65 to 85 years old—basically, if you’re past the age cap for the term policies, Ethos will sell you a AAA whole life policy.
Coverage amounts are fairly low, starting at $10,000 up to $25,000, and, as whole life, the policies accumulate cash value that can be tapped during the insured’s life.
Premiums are fixed, and policies are scheduled to be paid-up when the insured reaches age 100.
Guaranteed acceptance policies present a significant risk to insurance companies, as the company could be agreeing to insure someone who is in very poor health.
To mitigate some of that risk, Ethos’s whole life policies include a graded-benefit period lasting for two years after a policy is issued.
If an insured dies during that initial two-year window (and the death did not result from an “accident”), the death benefit is measured as the total premiums paid to date, plus 30%.
After two years, full coverage kicks in. Death resulting from an “accident” will trigger the full death benefit regardless of when it occurs.
What Services Does Ethos Life Provide to Consumers?
Ethos Life is an online independent broker that focuses on simplifying the life insurance application process. Most independent life insurance agents market a variety of policies issued by multiple different companies.
The idea is to afford consumers the opportunity to look at different rates offered by different companies and find the best deal for the ideal policy. Ethos, though, has a different business model.
Ethos has a more streamlined approach featuring an online application that can be completed quickly and easily.
Ultimately, Ethos’s number one advantage is that it can help relatively young and healthy insureds obtain fully underwritten term coverage in a relatively brief amount of time.
Usually “fully underwritten” policies require a medical exam. But Ethos’s proprietary software is designed to act in place of an exam.
So, eligible insureds can get the lower rates of a fully underwritten policy without any needles, poking, or prodding from a healthcare professional.
One downside of this streamlined approach is that Ethos needs to prove to insurance companies that its predictive algorithm is at least as accurate in predicting longevity as a medical exam.
So far, it has apparently only convinced a couple, which means Ethos’s insurer network is small. Consumers don’t get to look at rates from multiple companies, so they don’t know whether they could get a better deal elsewhere.
It’s a trade-off: Ethos delivers convenience and efficiency, but the cost may be not getting lower rates from an insurer other than Legal & General.
Or, if you’re not sure what kind of life insurance you need or if you’re in the market for permanent coverage like universal life or whole life (other than final expense), Ethos won’t be of much help.
The streamlined application approach is not conducive to more sophisticated policies, so Ethos focuses on simple level term policies without any additional riders available.
Not everyone needs riders, but in the right circumstances, they can be a valuable addition to a policy.
If you can’t qualify for the L&G policy, you can still go with one of the simplified issue policies Ethos offers.
But, in that case, the convenience factor is less of an advantage. There are plenty of other insurers offering simplified issue term policies, and the application process is almost always relatively brief—that’s the whole point of “simplified issue.”
With all that said, we don’t want to discount the value of Ethos’s system too much. It does have real advantages for the right applicants.
As Ethos notes, their goal is to make the life insurance process “more people friendly.”
And, if allowing applicants to obtain fully underwritten coverage without ever having to speak to actual people is “people friendly,” then Ethos has succeeded.
Indeed, the value of avoiding face-to-face interactions has increased significantly in the era of COVID-19.
Ethos Life allows qualified applicants to obtain term coverage relatively quickly and easily—and exclusively online.
If you’re in any state but New York, are shopping for term coverage for yourself, and value a quick, easy application process more highly than finding the best rates available, Ethos may be worth a look.
If you want permanent coverage or riders, are outside of Ethos’s demographic wheelhouse, or you want to compare rates from multiple insurers before committing, you might be better off working with another independent broker.
If you’re not yet set on purchasing life insurance but want to do some research, Ethos’s website has a decent amount of information about life insurance and about Ethos’s system specifically.
It can be a good place to look if you know you want term coverage and are considering Ethos. However, the site has very little information about permanent coverage, so, if you want to research whole life or universal life, you’ll need to look elsewhere.
Ethos also offers a pretty good “instant quote” tool on its website. You can obtain a preliminary rate range with only a relatively small amount of basic information. If you like the range, you can enter some more info to get an “instant quote.”
The quote isn’t a firm rate offer, but the process only takes 15 minutes or so, and the quotes appear to be fairly accurate–provided you input all the requested information accurately.