In 1965, the population of the US was around 195M, and they purchased 27M life insurance policies. Today, when it is around 323M, even then only 27M Americans have purchased life insurance policies. The life insurance industry is suffering as a new generation doesn’t find traditional life insurance useful. That is where Life By Spot comes in – the Austin, Texas-based insurtech startup which is looking to cater to an audience that the traditional industry has been unable to tap.

According to Life By Spot, Americans under the age of 45 account for less than 5% of the population with life insurance. Companies like Kin Insurance, for instance, offer cover for hurricanes. But the life insurance market seems to have stagnated. Life By Spot believes it can change that, by offering flexible short-term life insurance to those who live each day like it is their last.

Life By Spot – not your traditional insurance provider

The company’s website is quick to make the difference clear with an analogy. It claims that Spot is to traditional life insurance what ride sharing is to car ownership. While that might be a subtle way of calling itself the Uber of life insurance, does the company live up to the claim? The business model is similar. Instead of buying a car as a long-term asset, Life By Spot offers on-the-spot coverage and instant approval. It is more like renting a car, with 1 to 30-day terms. The costs are also lower – plans start at $7 for $50,000 of coverage. It also offers event-based short-term insurance, allowing users to pursue their passions while mitigating the risk through insurance.

The company’s products are designed for the new-age experiential traveler. Planning on going cliff-jumping? Add a small dollar amount to your budget and get invaluable reassurance that you have insurance. The company also makes it a point to list other offbeat activities like lawnmower racing with the tagline that it approves of the activity that your mother won’t.

The company hasn’t yet started operations, but it has already made some critical partnerships. Spot policies for the company will be issued by the Fidelity Life Association and be reinsured by Hannover Life Reinsurance Company of America. The partnership between Hannover and Life By Spot was announced in October 1, 2018. Tony Laudato, the Vice President of Hannover, was quoted in the accompanying press release saying that the partnership with Life By Spot was in line with Hannover’s core tenets of agile underwriting, improved risk selection, and an overall better customer experience.

Can an app-based interface rescue life insurance?

Life By Spot believes that it can save life insurance by making it easier and more accessible. Co-founder of Life By Spot Maria Miller points out that 3 out of 4 millennials think that a $250,000 policy is 4x-6x more expensive than it really is. The company is hoping to break down the myth that life insurance is too expensive or complicated through consumer education. Part of that attempt is to use adventure as a lead acquisition channel.

Miller adds, “Traditional life insurance trigger events have been marriages, births, home purchases, but these [Life by Spot’s offerings] are more geared towards experiences.” The company’s goal is to widen the reach of life insurance products by creating new life insurance products. If you’re about to go scuba diving or kayaking, Life By Spot wants to insure these events. They want to create a new funnel for bigger life insurance policies and products.

Life By Spot’s focus on a smooth UX helps make it more accessible. This helps them reduce the process of getting life insurance down to a few minutes. A simple sign up and instant coverage makes it more millennial friendly. They claim to have simplified pricing and contracts to ensure a straightforward and transparent process. Hannover’s Partnership Solutions Group helped the company build rule-based mechanisms to speed up evaluation. Hannover’s data helps built mortality and morbidity risk models to make the result more accurate, too.

Life By Spot’s logo. Picture credit – Life By Spot’s Instagram

Life By Spot’s $5.85M funding

Matt Randall and Miller started Life By Spot in 2017, after discussions which took place at the InsureTech Connect event that year. Randall, the CEO, is an Austin-based entrepreneur who was previously the Founder and CEO of Twyla, a startup to collaborate with and sell the works of artists. Miller is the Chief Operating Officer and is a former executive at New York Life. In December 2018, the company announced that it had received $5.85M in savings from Silverton Partners, an Austin-based VC firm.

According to Kip McLanahan, General Partner at Silverton, “Life By Spot is redefining the traditional insurance market with a truly innovative suite of products. We believe the time is right for a new take on insurance and Matt and Maria’s vision for Spot is incredibly exciting”. The company intends to focus on product development and marketing when they initiate operations later in the year. With the funding, partnerships, and product idea all in place, Life By Spot looks to make a big splash in the coming year.