One of the most important ways to ensure you and your family are financially secure is to make sure you are properly insured.
This means not only insuring your home and your car against theft or damage but allowing your family to collect money if you pass away.
Most people, especially younger adults with families, should consider purchasing life insurance. But life insurance products can be confusing, and the application and approval process is often cumbersome and time-consuming.
Ethos Life is working to change that. It is a company that uses a straightforward online platform to offer one product and one product only: term life insurance.
The company allows you to apply for and receive life insurance coverage in a matter of days, and leverages analytics and technology to find competitive rates, especially for young people in good health.
Ethos Life offers a simple way to obtain life insurance online. It provides just a single product, term life insurance, and markets to millennials and other young people. For young people in good health, purchasing insurance through Ethos Life could result in money saved, and the process for applying and obtaining coverage will likely be faster and easier than at other companies. However, older customers and those with below-average health or who use nicotine may find that Ethos’ policies are more costly than others.
Ease of use
- Easy to apply
- Competitive rates
- Claims promptly paid
- Limited options
- Rates vary
Table of Contents
- Background on Ethos Life Insurance
- Why You Need Life Insurance
- Explaining Term Life Insurance
- What Products Does Ethos Offer?
- Who Does Ethos Partner With?
- Signing Up and Checking Your Price
- Filing a Claim
- Ethos Referral Program
- Reviews of Ethos
Background on Ethos Life Insurance
Ethos is based in San Francisco and was founded by fellow Stanford MBA students Peter Colis and Lingke Wang. Previously, the two founded Ovis Life, a life insurance exchange company for seniors.
In a blog post on the Ethos website, Wang said the inspiration for the company came in college when he was sold a whole life insurance policy that he did not need.
“With no spouse or children, he had no need for life insurance,” the post said. “However, [an insurance] agent convinced [Wang] it would be a good investment vehicle. As the costs quickly mounted, he realized his financial mistake and lost most of what he paid into it.”
Thus, he and Colis founded Ethos based on a few simple principles:
- Focus on term life insurance, which is generally a better value for most people.
- Use technology to make the application and approval process as simple and smooth as possible
- Avoid the use of commissioned agents.
- Offer friendly support and helpful advice.
Ethos was founded in 2017 but became visible in the marketplace in 2018 after garnering $11.5 million in funding from Sequoia Capital.
Other funders include Arrive, a subsidiary of Jay-Z’s Roc Nation, Will Smith’s Family Circle, Stanford University, Robert Downey Jr.’s Downey Ventures, Kevin Durant’s the Durant Company and Silicon Valley Bank.
Why You Need Life Insurance
It’s not easy to think about life insurance. After all, it’s a product that is entirely based on a reminder that you will one day pass away.
If you’re uncomfortable with death, it should not prevent you from protecting your family’s finances if you die.
If you are a primary earning in your family, you have loved ones that may be counting on you for support. They rely on your income to get by, and without it could find themselves facing financial hardship.
Life insurance can replace lost revenue and ensure that your family will be well taken care of if you die.
Some people may argue that life insurance is not useful when you are younger because you are unlikely to pass away at that point in your life. But life insurance for young people is generally pretty cheap.
Moreover, life insurance may be more necessary to have when you are young because you have not yet accumulated enough wealth for your family to get by if they lose your income.
Also, you may also have expenses, such as student loan debt or a mortgage, that you may not have later in life.
Many older people choose not to get life insurance because it can be costly, and they may have enough wealth to self-insure. Moreover, they may be retired, in which case their family may not be relying on their income at that point.
Explaining Term Life Insurance
There are two major types of life insurance: term and whole. Whole life insurance is often referred to as permanent insurance. For most people, term life insurance is the most sensible option.
With term life insurance, you pay a certain fee monthly or annually for coverage of a certain amount, usually about three times your current annual income. You are covered up to a specific point, typically 20 or 30 years into the future.
With whole life insurance, you generally pay more in premiums but will be covered for your entire life. Some people consider whole life insurance to be an investment because it has cash value.
But many financial advisors warn against whole life insurance, arguing that it’s costly and unnecessary, and that term life insurance is a more cost-effective option for most people.
What Products Does Ethos Offer?
Ethos Life (available in every U.S. state, except New York) offers one product: term life insurance with 20-year terms. The company emphasizes that it is the simplicity of term life insurance that makes it attractive for most people.
“We exclusively offer level term life insurance at Ethos,” the company says on its website. “We believe that this is the best policy for the large majority of families and is also the cheapest form of life insurance.”
Ethos allows you to select the amount of coverage you want. In my case, I was able to choose a policy with as much as $1.5 million in coverage.
However, it is unclear if that maximum applies to everyone. The company simply states that it bases the amount of coverage available to you on your income and current age.
Who Does Ethos Partner With?
All of Ethos’ products come from Assurity Life, a Nebraska-based provider of life insurance products. It also works with Munich Re, one of the world’s largest reinsurers.
Assurity has been around for more than 125 years and has a rating of A-minus from A.M. Best for its financial strength. The A-minus rating is the 4th highest out of 15.
Signing Up and Checking Your Price
Getting started with Ethos is straightforward. You begin by clicking on the “Check My Price” link located at the top right of your screen.
You are then presented with a series of questions about who you are, such as:
- What is your gender?
- Do you currently use nicotine products?
- How is your health? (The choices are average, great or excellent.)
- What is your zip code?
- What is your birthdate?
- When are you looking to purchase life insurance? (today, within the next seven days, in one to two months, within the next 12 months or in more than 12 months.)
Seconds later, they give you three policy options.
As a 40-year-old, non-smoking male of average health, I was offered a choice of three 20-year plans:
- $29/month for $191,000 of coverage.
- $49/month for $405,000 of coverage.
- $79/month for $690,000 of coverage.
I could choose to select my specific plan by entering my preferred coverage amount. ($1.5 million is the maximum coverage offered.)
How do Rates Compare?
There are many companies offering term life insurance, and rates can vary widely. But an examination of rates from Quotacy, an online insurance agency, suggests that Ethos’s rates are competitive, though younger people who do not smoke and are in good health will fare the best. Women will generally see better rates than men.
It’s important to note that making precise apples-to-apples comparisons of rates is difficult. To clarify, insurance companies ask different questions relating to your age, height and weight, health and family health history, medication use, tobacco use, geographic location and more.
With that caveat in mind, let’s compare monthly rates for 20-year terms based on a variety of different parameters entered.
|Person||Coverage Amount||Ethos Monthly Rate||Quotacy Monthly Rate (range)|
|Male, non-smoker, age 25||$200,000||$17||$16-27|
|Male, non-smoker, age 40||$200,000||$30||$16-27|
|Male, smoker, age 40||$200,000||$93||$59-$102|
|Female, non-smoker, age 25||$200,000||$14||$11-$18.29|
|Female, non-smoker, age 40||$200,000||$24||$14.26 – 23.54|
|Female, smoker, age 40||$200,000||$76||$46.55 – $83.54|
|Male, non-smoker, age 25.||$500,000||$32||$19.08-$30.63|
|Male, non-smoker, age 40||$500,000||$59||$29.09 – $41.56|
|Male, smoker, age 40||$500,000||$195||$127.60-$195.08|
|Female, non-smoker, age 25||$500,000||$24||$15.84-$25.38|
|Female, non-smoker, age 40||$500,000||$48||$24.62 – $37.63|
|Female, smoker, age 40||$500,000||$149||$101.79-$158.53|
Ethos claims that after the application process, you may receive approval for a plan instantaneously. If not, applications are usually approved within 7-10 business days.
The company reviews all applications individually, and in some cases, an underwriter may contact you to collect additional information or clarify certain facts.
Applicants are not locked into the policies they may have initially selected. You may change your coverage amount or term length up until the policy is active, and speak to an agent to find the best one for you.
Once your policy is active, you may lower or increase your coverage for the first 31 days. After 31 days, you can only lower coverage.
The final policy that you purchase may be different than the one that you selected when you applied. Once applications are received, Ethos deploys underwriters to explore the best policy for each customer.
The underwriter takes into account any loans or liabilities you may have, estimated costs for your end of life and burial, and education opportunities for children.
Ethos recommends paying for insurance through a bank draft, but it also accepts debit cards and major credit cards.
You can set up monthly, quarterly, semi-annual or annual payments. Annual payments are 4.4% cheaper than paying month-to-month, according to Ethos.
There is a 31 day grace period for a missed payment. And, if you miss a monthly payment, the company automatically enrolls you in quarterly payments.
Filing a Claim
If you pass away, the beneficiaries of your Ethos Life policy must file a claim. Only the listed beneficiary can file a claim, but they will not be able to collect if you provide false or incomplete information on the application.
If you are the beneficiary of an Ethos policy, you can file a claim by calling 415-915-0665. To ensure the claim is processed correctly, you must provide:
- Your relationship to the insured
- Social security number and date of death of the insured, as well as some other personal information.
- Death certificate of the insured
- Policy number
After you file a claim, an underwriting team begins working on the claim and may reach out to you with questions.
Ethos Referral Program
You can earn an Amazon gift card worth $50 by referring someone to Ethos.
When creating an application with Ethos, you will receive a unique referral link, which you can share with anyone. If a person uses that referral link and creates an application of their own, you receive the gift card.
It is not necessary for either side to actually purchase an insurance policy for you to receive the gift card.
Reviews of Ethos
In its short lifespan, Ethos has generally received positive reviews from customers. As of September 2019, it had a rating of 4.5 stars out of 5, based on 494 reviews on TrustPilot.
Eighty-one percent of respondents rated the firm as “excellent,” with another 10% rating the firm as “great.”
“I loved working with Ethos,” wrote a reviewer identifying as M.F. Cook. “They are professional, timely, honest and quick to respond to my questions and concerns. I was really pleased with the service I received through working with them.”
Another reviewer, identifying as Leslie, said, “The Ethos process couldn’t be easier, and my rates were very competitive.”
The few criticisms of the company included some complaints that the approval process took longer than expected. In some cases, customers claimed they were quoted one rate but ended up paying more once the policy was finalized.
Here are the pros of Ethos Life.
Ethos Life takes out some of the intimidation from purchasing life insurance. The online interface is clean and clear. There are only a few questions to answer, and the products and rates are presented to applicants quickly.
The focus on a single product eliminates confusion. Perhaps best of all, there’s no need to share any personal identifying information until you are ready to purchase a policy.
So this means you can shop around without fear of being bombarded by calls or emails from a sales team.
Good Rates for the Young and Healthy
An examination of the rates offered through Ethos Life suggests that if you are young and healthy, the company could save you money.
For example, you may be able to get a 20-year term with $200,000 in coverage for less than $20 a month. To drop a cliche, that’s just a few cups of coffee each month to provide financial security for your family.
Here are the cons of Ethos Life.
Lack of Options
Imagine going to a store and seeing just one product from a single brand. That would not be a place you’d feel too excited to shop, would it?
However, the lack of variety in product is marketed as Ethos Life’s appeal since the company is striving for simplicity and convenience above all else.
But some customers may be turned off with a 20-year term policy as the only option. What if you are looking for a different kind of insurance product? What if you aren’t pleased with the rates that you are quoted? What if you want a longer-term?
If the term life insurance product that Ethos is selling isn’t ideal for you, there’s a good chance you may have to look elsewhere.
Higher Rates for the Older and Less Healthy
While Ethos offers competitive rates for young and healthy people, it can be on the expensive side for older people as well as those who use nicotine products. If you are over age 40, or if you smoke (or both), you may end up with a rate that is higher than average.
Ethos Life offers a simple way to obtain life insurance online. It provides just a single product, term life insurance, and markets to millennials and other young people.
The sign-up process for Ethos Life is straightforward and speedy, with very few questions required.
Some applicants may find the choice of products to be too limited. Only term life insurance is available, and only for 20-year terms. All offerings come from a single company, Assurity Life.
For young people in good health, purchasing insurance through Ethos Life could result in money saved, and the process for applying and obtaining coverage will likely be faster and easier than at other companies.
However, older customers and those with below-average health or who use nicotine may find that Ethos’ policies are more costly than others.