Millennials, What Will It Take for You to Buy Life Insurance?

Start-ups are going to ridiculous lengths to rebrand an industry in desperate need of some younger customers.

Three iPhones with scrolling images depicting a life-insurance game
Getty; The Atlantic

YuLife is something of a cross between Fortnite and a Fitbit. In the mobile game, players compete against one another to rack up bike miles and meditation hours. They can access hundreds of virtual worlds—collectively known as the “Yuniverse”—each of which represents a level with its own set of real-life tasks. They can challenge friends to a duel, and place bets on who will take the most steps each day. As they go, they earn an in-game currency called YuCoin, which players can then convert into Amazon gift cards, clothing discounts, and airline miles.

But YuLife isn’t some “freemium” game subsidized by ads and microtransactions. The ultimate goal is to ... sell life insurance. Sammy Rubin, YuLife’s CEO, told me that he founded the London-based start-up in 2016 after noticing that most life insurers faded into the background after they sold a plan. The effect was leading people to lose sight of why they bought insurance and abandon their plans prematurely. So he hired King Digital Entertainment, the makers of Candy Crush Saga, to turn his life-insurance product into a game—and just like that, YuLife had created a life-insurance metaverse. Rubin said that the company has 400,000 customers, and one in three who have downloaded the app opens it every day. Most users, he said, earn about £10 a month in vouchers.

Life-insurance companies in the U.S. and U.K. are waking up to the fact that they have a young-people problem. The share of Americans covered by life insurance slid from 63 percent in 2011 to 52 percent in 2021, according to the Life Office Management Association, an industry research group. That has occurred across all age categories, but it is most pronounced among people under 40. The stakes are high, given that, like health insurance, young people tend to subsidize everyone else in the system.

To stay relevant, a new crop of start-ups, boasting names like YuLife, DeadHappy, Lemonade, Bestow, and Dayforward, are borrowing tactics from plant start-ups, game-development studios, and ride-sharing companies. Life insurance 2.0 is a slicker, Millennial-friendly product bursting with brightly colored websites and conversational ad copy that wants you to know that this company isn’t like those other life insurers. But rebranding an industry that the average person tends not to think much about has its challenges. What these insurgents don’t seem to want to consider is that maybe the problem isn’t branding, but life insurance itself.

When people talk about life insurance, they are really talking about two broad types of plans. The most popular version, called term life insurance, is a policy that usually spans multiple decades. Before buying and paying monthly premiums, you specify how big of a payout you want—say $300,000—and if you die during that period, the insurance company hands your loved ones that amount. The other type, permanent life insurance, has no time limit; people pay their premiums until they die. Young people have generally opted for the former to cover them during vulnerable periods of their lives—for instance, from when they have a baby to when their kids are working age. But these days, they are balking at even temporary life-insurance policies.

Industry analysts have a few theories for why. People most often buy life insurance at key milestones in their life, and as younger people, saddled by student debt and underemployment, continue to push back their timelines for owning homes and starting families (if they do either at all), they might be buying life insurance later too. But “even if you take into account homeownership or marriage status, there’s still a disconnect between how many people are buying it now versus how many people bought it 20, 30 years ago,” Niall Williams, an analyst at the tech-analytics firm CB Insights, told me.

He told me that one of the main reasons young people avoid life insurance is simple: It’s a pain to buy. Purchasing insurance from a traditional company like Prudential or MetLife can feel comically outdated. In most cases, it requires going in person to meet either an agent (who sells policies on behalf of a particular company) or a broker (who works like an independent financial adviser, helping people decide which insurer and policy is right for their needs). Then prospective life-insurance buyers submit to blood tests, urine samples, and physical exams to assess their life expectancy. The process takes weeks and helps entrench the life-insurance industry’s branding problem. It can “seem very invasive to the modern consumer,” Williams said.

Behind the Great Life Insurance Rebrand is a basic idea: Signing up shouldn’t be so hard. The industry’s up-and-comers are streamlining the process, and they’re using the same genre of sans-serif-heavy websites that look like they might sell $30 plants delivered to your doorstep. Many of these start-ups—such as Ladder Life, Ethos Life, and Haven Life, all of which launched in 2015 and 2016—call themselves as “direct-to-consumer” operations, because people can buy their policies fully online. In lieu of a blood test, these companies buy third-party medical data about each applicant and send an at-home test kit if they need more information. Most claim that they can keep the application process to just 15 to 30 minutes, and they have attracted heaps of venture-capital money because of it: Ladder Life has raised $94 million, Bestow $137.5 million, and Ethos $406.5 million.

Other companies are sprucing up life insurance in other ways. The start-up DeadHappy brands its life-insurance payouts as “deathwishes,” which the company’s CEO, Phil Zeidler, told me help makes the goal of life-insurance coverage more concrete to consumers rather than forcing them to assign an abstract dollar value to their life. “We don’t ask the question ‘How much coverage do you want?’ We ask the question ‘What do you want to happen when you die?’” he said. Common “deathwishes” include covering funeral expenses, paying for part of a family member’s education, and buying friends an international trip. Zeidler said the recipients of a life-insurance policy can also reject a death wish and just take the money if they prefer.

A company called Spot launched in 2017 by announcing it would take an Uber-like approach to life insurance. Rather than requiring people to buy a years-long life-insurance plan, Spot customers could buy a temporary policy for as short as one day for when they embark on a risky trip, such as skydiving. The approach, the company’s co-founder Maria Goy told me, was designed to reach customers in their targeted moment of need. “Is there a way to tie the experience that we have in everyday life to a much quicker online digital purchase of life insurance?” she said.

But the life-insurance rebrand isn’t always a David-and-Goliath story. The direct-to-consumer company Haven Life, for instance, was created as an “in-house startup” within MassMutual. “It’s not so much that they have reinvented the life-insurance product,” David Kwon, an associate partner for insurance at IBM iX, the firm’s consulting arm, told me. He said that a lot of the start-ups are actually offering insurance plans that are underwritten by the Prudentials of the world—meaning that, although their marketing strategies might feel new, the coverage they offer isn’t.

Meanwhile, some of the major players are also starting to catch up. Even Pacific Life—whose customers skew older than the average traditional life insurer—is looking to move away from in-person brokers and digitize more of its services in the aftermath of the coronavirus pandemic. Other life-insurance companies have taken more of a YuLife-ian approach. In 2018, John Hancock announced that it was shifting all of its life-insurance offerings to a gamified model, called Vitality. It sent out Fitbits and smartwatches to its customers, saying that policyholders who exercise enough—and therefore earn “Vitality Points”—could save as much as 15 percent on their premium.

But despite the flurry of investor and venture-capital interest, life-insurance start-ups remain an almost negligible fraction of the overall industry. Williams estimated that the start-ups represent “less than .1 percent” of all life-insurance dollars. Zeidler of DeadHappy said that his company has 16,000 customers; by contrast, Northwestern Mutual, one of the largest life insurers, has more than 4.5 million customers.

Insurance start-ups can chalk up that slow growth to the fact that most are only a few years old. It takes time to persuade young people to give a second chance to an industry they may have already written off. But their struggles to make inroads raise the question of whether Millennials actually need the life insurance that insurers are trying to entice them to buy.

Some experts told me that people really need life insurance only for specific situations, if at all. Is life insurance necessary? I asked Kwon. “I think being ‘necessary is subjective,” he said in an email, adding that, while he believes it is an essential tool that families should seriously consider, it works better for some people than others.

Single people may not need it, period, and families could consider dropping it once their children enter the workforce.

For middle-class families with kids that rely largely on one breadwinner, buying a temporary life-insurance plan makes a lot of sense—but those families are declining in number. From 1967 to 2017, the share of adults who reported living without kids—the demographic that least needs life insurance—jumped by 19 percentage points. Even for many young families, Kwon said that buying life insurance is not a priority compared with student loans or a home down payment.

There are certainly some positive signs for the insurance industry. Overall applications for life insurance rose 4 percent in 2020, a jump that spanned all age categories but was mostly concentrated among people under 45. Maybe COVID-19 forced young people to face their mortality, and they decided to buy insurance for the first time. But it’s not clear that the bump will last. Although Williams noted that shifting family structures are not the industry’s only problem, as birth and marriage rates continue to slide, the industry’s shrinking reach might not be solved by colorful branding or an iPhone game. Instead, the share of people who feel they need life insurance simply may be permanently declining.

Even one of the life-insurance start-ups has started to think that the problem with the industry may be deeper than it initially thought. In 2019, just a few years after it first launched, Spot soon realized that its customers really didn’t want life insurance at all, Goy told me. So the company pivoted and doesn’t sell it anymore. “I think a lot of it is about bringing to market products that actually fit today’s consumer,” Goy said, “versus just buying a life-insurance policy because our parents always had one and we were told that we should have one as well.”