Life Insurance Is at Risk of Becoming a Luxury Good

Jake Tamarkin is CEO and co-founder of Everyday Life, a Boston-based startup making life insurance smarter and more inclusive for regular people. He and Gilad opened with swag, accelerators and a sunrise yoga session at a Des Moines insurtech event the year before, which Jake hoped would help a hangover.

About Jake Tamarkin

Jake Tamarkin co-founded Everyday Life in late 2018 with technologist Dipali Trivedi. Before that he spent about 20 years as an insurance strategist and executive at firms including MetLife, EY, BNY Mellon and Foresters Financial, and holds an MBA from the Kelley School of Business at Indiana University.

Why He Started

Jake went to buy life insurance for himself a couple of years earlier and was frustrated by the gap between financial planning best practice and what the market made available. As an insurance executive, he said, he’d expected more and was embarrassed that he hadn’t appreciated what it was like as a consumer until he was one. Seeing the problem and the opportunity, he dropped everything.

Where the Company Is

2019 was a focus on product: Everyday Life joined the Global Insurance Accelerator in Des Moines and struck a partnership with Legal & General, going to market toward the end of the year. 2020 was about testing distribution, with pilots including one with an employee benefits provider, and landing on a financial institution strategy that is gaining traction. 2021 is to put it together and accelerate growth.

How Everyday Life Competes

Jake’s answer starts with market focus. He cited a LIMRA study from the summer showing that use of life insurance among households earning under $100,000 fell 25 percent over ten years, and said the industry is at risk of becoming a luxury good. Those households are the ones that most need help and are poorly served, and few companies focus there. Everyday Life’s value proposition is “predictive protection”: a personal plan built to adapt as a customer’s needs change, which saves money, and that is a different sales process from either traditional or online distributors. The third difference is reaching consumers through trusted financial institutions, banks and credit unions, leveraging the reputation of the incumbent.

The company recently added a head of distribution, John, who spent his career building life insurance brands in the financial institution channel and whose relationships have been, in Jake’s words, game-changing. For an early-stage company, credibility is everything, and its first quarter of next year was already full with bank and credit union implementations.

Becoming a Synthetic Carrier

One lesson of the pandemic, Jake said, is that life insurance is a discriminatory product: it isn’t enough to get a customer excited, you need one who will be approved by the underwriter, and he hates turning people away. Everyday Life is adding more insurance products so it can have something for everyone, and is working on a proprietary product, because there is only so much you can transform with off-the-shelf products. He sees it as an opportunity to help the two-thirds of US households that earn under $100,000 a year.

Today Everyday Life is an agency, earning a sales commission by acquiring, qualifying and grooming leads and handing them to the insurer. Over time, he expects it to evolve into what he calls a synthetic carrier: he doesn’t aspire to be a full-stack carrier, but wants many of those capabilities. The structure he envisions: keep the agency on the front end, hold exposure to underwriting profits through reinsurance at the far back end, and in between take on the third-party administrator (TPA) role, which maintains policies, collects premiums and processes changes. The carrier partner would still provide licensing, capital and expertise. The aim is a seamless consumer experience, so it doesn’t feel like a handoff, and a longer relationship that could extend to retirement and financial planning.

Who Is the Customer?

On Twitter, Gilad said, people asked who the customer is, the policyholder or the agent. Jake said this is at the heart of why he left a lucrative career. In life, so much power is consolidated in distribution that commission rates have gone up almost 20 percent in 20 years, in his telling, while in the mutual fund industry commissions fell by far more, a sign of dysfunction. When he was on the carrier side he sat in more than one conversation about who the client is, and the tendency is to treat the agent as the client. But the people paying the bills are policyholders, and if the focus is only on serving agents, things go askew, as shown by the collapse in life insurance utilization among everyone who isn’t rich. He said reasonable people can disagree and he has picked a side.

He added that regulators are moving toward a fiduciary or best-interest standard in life insurance, as in investments, which will be easier for companies already centered on the end customer, and which they can use as a competitive edge.

Accelerators: GIA and Techstars

Everyday Life was in the Techstars Boston winter cohort at the time, and Jake said it is helpful because it isn’t insurance-specific: the cohort ranges from deep science to custom sneakers and a company doing MRIs of the planet. Techstars teaches startup methodology to a team of domain experts, and the network has paid dividends. He compared it with the Global Insurance Accelerator, whose mentorship is very specific to insurance, with expertise from a dozen carriers, and was perfect while thinking through the product. He doesn’t say one is better. Cross-industry exposure, Gilad added, is where innovation happens, and he mentioned the book Range by David Epstein.

Swag

The pair also discussed swag. Gilad mentioned penguin socks from Bold Penguin placed in the desert, Benekiva’s sock campaign on social media, and a Lloyd’s water bottle; Jake said his office is covered in branded swag, including a Legal & General golf shirt.

Advice: Churchill, and Malcolm in the Middle

Jake recommended a biography of Winston Churchill, inspired by a film about Churchill’s wartime leadership, for the lesson that Churchill made disastrous decisions in World War I yet that wasn’t the end of his career, and that you keep at it. On the lighter side, his family has been rewatching Malcolm in the Middle. Gilad’s tip: buy tickets online for the Churchill museum in London.

Key Takeaways

• Everyday Life targets households under $100,000, where, per LIMRA, life insurance use fell 25 percent in a decade.
• Its “predictive protection” adapts coverage to changing needs, sold through banks and credit unions rather than online or traditional agents.
• The company is an agency today and aims to become a synthetic carrier: agency up front, reinsurance exposure behind, and TPA in between.
• Jake argues the policyholder, not the agent, is the customer, and that the best-interest standard will reward that focus.
• GIA provides deep insurance mentorship, while Techstars provides startup methodology and a cross-industry network.
• Because life insurance is underwritten, Everyday Life is adding products so it can serve people who would be declined.