SoFi life insurance is a relatively new player in the life insurance marketplace. With the coronavirus pandemic, the desire for affordable life insurance has really blown up.
If you want an affordable term life insurance policy, I recommend getting free real quotes from PolicyGenius. PolicyGenius is my favorite life insurance market place that helps you get the best deals.
I've met the founders and my wife recently got more life insurance coverage for less with PolicyGenius.
SoFi Life Insurance Alternative
It's been years since I got my $1,000,000, 20-year term life insurance policy and I almost forgot about the cumbersome process. After filling out the application material, I had to schedule an appointment to have a medical examiner come over to test my blood pressure, weigh me, ask a series of questions and draw blood. Ugh, I hated the blood draw. The worst is when they miss a vein and have to poke you again.
I had to wait at least a month to see if I got approved, since the insurance company had to wait for my blood results to make sure I didn't have some random deficiency unknown to them or me. The process was a pain, but I kept thinking about the importance of being a responsible man. I had just taken out a million dollar mortgage and didn't want to saddle my girlfriend with debt in case of my demise.
I firmly believe the medical checkup is one of the main reasons why people don't bother getting life insurance or can't get life insurance because something happens during the process. If only there was a better way.
When SoFi reached out with their value proposition on their new term life insurance offering featuring no medical checkups, I had to learn more. As a good business man, I got them to sponsor this post to pay for my time. All thoughts and opinions are my own.
About SoFi And SoFi Life Insurance
In the emerging fintech lending world, SoFi is the giant that has raised over $1.5 billion in funding and has lent out over $14 billion in loans since its founding in 2011 by four Stanford business school students. They hypothesized their fellow alumni would be willing to lend future alumni money at lower interest rates to refinance their loans. Their hypothesis has since been proven correct with an accumulation of over 200,000 members.
Fintech is a boon to most consumers because it lowers our borrowing costs. Advancements in underwriting allow lenders to analyze risk much more efficiently. In the past, big banks never considered where you went to school, or whether people with graduate degrees had lower default rates. Now the race is on to lend as efficiently as possible.
Quick Facts About Life Insurance
For those of you with loved ones who depend on your income to maintain their lifestyles, getting life insurance is a worthwhile gift. The benefit is usually paid out tax free and it feels good knowing if the worst happens, you can still provide.
Here are some quick facts you should know about life insurance:
- Only 4 in 10 people surveyed for Life Happens’ 2015 Insurance Barometer Study feel they have sufficient life insurance coverage largely due to cost. Yet, most people overestimate the true cost for term life insurance by several times.
- About 60% of Americans have access to individual or group life insurance through their employer.
- Term life policies offered by employers are typically 1-2 X salary, but 7-10 X salary is the often-recommended policy size.
- According to MetLife's Employee Benefits Trends study, only 44% of employers offer “portable benefits” to workers who leave.
- With workers aged 25-34 job hopping every ~2.8 years on average, a lot of people lose coverage when they switch employers, according to the Bureau of Labor Statistics.
- About one in three households would have immediate difficulty paying living expenses due to the loss of a primary wage earner, according to Life Happens.
How Is Technology Making Life Insurance Better?
SoFi teamed up with Protective Life Insurance Company in 2016 to offer term life insurance policies. SoFi's technology and Protective's long track record as an insurance provider bring some unique, modern-day benefits to the insurance industry. Here are some highlights of their offer:
- Easily access a personalized free quote online in about two minutes.
- If you like what you see, complete the application process in about 20 minutes.
- Policies are offered in 10, 15 and 20 year terms ranging from $100,000 – $5,000,000.
- Bypass medical exams for policies up to $1 million policies for ages 18 – 40 and $500,000 for ages between 41-60 if you meet eligibility requirements.
- Low-cost rates and reliable service.
- Receive and sign your policy as quickly as one business day.
Life Insurance Tips From SoFi Life Insurance
Tip #1 Before you start the application process, you'll want to have quick access to your annual income, net worth, driver's license or ID card, contact info of your primary care physician (PCP), current and past medical info for yourself and your family, and any pending or replacement life insurance information.
Tip #2 When determining how much coverage to get, consider these top 5 coverage needs: 1. replacing income, 2. college tuition costs for your children, 3. mortgage payments, 4. elder care for your parents, 5. paying off debt. You can utilize their online calculator to help select a policy size.
Tip #3 Being healthy is not only good for you and your family, it helps you get lower premiums coupled with the potential perk of bypassing medical exams that are typically required with traditional life insurance applications. In addition to the age and policy size restrictions above, criteria that may disqualify applicants from bypassing a medical exam include having previous or pre-existing medical conditions, being a smoker, having a higher weight to height ratio, and having close relatives with medical conditions.
Tip #4 Don't expect to qualify if you fudge about your health and family medical history just because you don't have to get physically examined. The underwriting team will review your medical records and may contact your physician to confirm the information in your application.
The main point is that through this process, you get to spend less time to see if you qualify. If you don't, no sweat because you didn't have to go through a medical checkup.
Who is Protective Life Insurance Company?
Protective Life Insurance Company was established in 1907 by Alabama Governor William Dorsey Jelks. Over the course of the company's 100-year+ history, they've only had six CEOs, showing their management stability. The company prides itself on 4 core values: do the right thing, serve people, build trust and simplify everything.
Protective has actively completed acquisitions over the years, helping it grow from $1 billion of life insurance in force in 1957 to over $765 billion by its 100-year anniversary in 2007. Protective offers products and services in all 50 states and today provides protection to its customers through 7.8+ million policies.
In 2015, Protective became part of the Dai-ichi Life Insurance Company, Limited, one of the largest global life insurers. With a strong parent company in place, Protective continues to look for new growth and expansion opportunities and in January 2016, Protective completed its second largest acquisition to date, acquiring a block of life insurance policies from Genworth valued at $589 million.
Protective Strengths:
- In business for over 100 years.
- Strong reputation for great customer service.
- Valuable teammate due to their willingness to innovate and deep understanding of the regulatory landscape.
- 2,500+ employees.
- Operating locations in AL, CA, IL, MO, NE, NY, OH, SC, TN.
- 7.8 million policies & contracts in force.
- $767 billion life insurance in force as of 12/31/15.
- Ratings: A+ (A.M. Best), A+ (Fitch), AA- (S&P), A2 (Moody's).
- Made $5.25 million in philanthropic contributions in 2015.
- Given over $53 million to communities over the past 21 years.
Note: As of December 2016, New York residents are currently ineligible to apply for coverage via the SoFi through Protective. The good news is this restriction is only temporary and is expected to lift in Q2 of 2017.
Why Not Just Apply Directly Through Protective?
The main reason is the ease of the application and speed to qualify. Through SoFi and Protective's offer, candidates have access to qualify for the 20-minute online application with no medical exam. You don't even have to be a current SoFi client to apply.
SoFi is combining its sophisticated algorithm developed over the past 5 years with Protective's 100+ years of underwriting experience to help find the most cost efficient policy for customers. In essence, SoFi is trusting its research to help give consumers the best terms possible.
Applying directly to Protective can still get you a great policy, but the process will take longer and there will be an actual medical exam.
How Much Does Term-Life Insurance Cost?
Here are some sample quotes through SoFi and Protective's offering.
A 30-year-old male in excellent health and living in California can purchase a
- 10-year, $500,000 term-life policy for roughly $15 per month.
- 10-year, $1,000,000 term-life policy for about $22 per month.
- 20-year, $500,000 term-life policy for about $22 per month.
- 20-year, $1,000,000 term-life policy for around $37 per month.
A 39-year old female in excellent health and living in Texas can purchase a
- 10-year, $500,000 term-life policy for just under $17 per month.
- 10-year, $1,000,000 term-life policy for about $26 per month.
- 20-year, $500,000 term-life policy for about $26 per month.
- 20-year, $1,000,000 term-life policy for around $45 per month.
A 20-year, $1,000,000 term-life policy for $37 – $45 per month is great value. One idea is to match the duration of the policy to when your mortgage will be paid off and/or when your kids finish school (usually college).
As a 39-year-old fella who plans to have a kid in 2017, I should be thinking about getting a 20-year, $2,000,000 term-life policy. Even though I plan to pay down all my mortgages in 10 years, life always gets in the way. Private college tuition will cost over $100,000 a year by 2037 as well.
With no medical checkup for qualifying individuals 40 and under for policies up to $1 million and a ~20-minute application process to see if I qualify, the process is so much better than the past. The process is more efficient because companies like Protective have leveraged technology to gather more datapoints and leverage new types of data in their underwriting metrics.
Please educate yourself on all the different life insurance options out there. The more you know, the more you can better protect your loved ones in a cost-effective manner.
One of the best ways to get life insurance is with PolicyGenius, the #1 life insurance marketplace where qualified carriers compete for your business. Applying on PolicyGenius is much more efficient than going to each carrier one-by-one. I've met the founders many times before and they are great. So are the tools PolicyGenius offers to help consumers find the most appropriate life insurance policy.
Readers, do you remember getting a medical checkup to qualify for life insurance? Anybody ever get rejected from a life insurance policy application after a medical checkup? How much life insurance do you have and how do you determine the amount?
Quitting my job will also end my life insurance coverage, so I’ve been contemplating my options going forward. These rates seem pretty reasonable, but I’m not sure I need any coverage at all. I’m going to have to think about it a little more.
See: Never quit! Get laid off instead!
I really wanted to get laid off, but I couldn’t come up with a scenario I was happy with.
I did, however, cook up a scheme to get a little cash from quitting. Since my baby was born recently, I’m taking family leave and technically quitting after that.
Why do they need to know your net worth to buy life insurance?
Hi Jason – we ask for net worth to help make sure that the amount that’s been requested is enough to cover your existing obligations. It’s important to not only seek coverage, but to know what the right amount is to request. That’s why we want to help guide applicants through this important decision, as well as provide a convenient way to obtain a policy.
The insurance company wants to know your net worth so that it doesn’t get ripped off too badly. If you have a net worth of $500, it’d be suspicious if you bought a $5M policy and then committed suicide 2 years later leaving your family with $5M tax-free. (Yes, insurance companies pay out on suicides as long as you wait 2 years.)
Most insurance companies will allow you to buy a maximum policy of up to 25x your annual income or 2x your net worth.
Great info. I signed up for a plan with Protective Life a few years ago after the birth of our son and it has brought such piece of mind. I thought the process was easy then but it seems to be getting so much easier now! Good to see SoFi expanding their suite of already awesome services.
Good man being responsible!
The funny thing is, it’s hard to determine what is “quality” when it comes to life insurance. To me, it just means the life insurance company will be around and pay out if something happens. It’s good for people to analyze an life insurance company’s balance sheet and investments.
Luckily, I could bypass the medical exam since I obtained my life insurance through my employer for 10x my salary.
I told my attorney that if anything suspicious should ever happen to me, the first person he should suspect is my wife since she will basically be winning the lottery! Ha ha! She was sitting right there when I said it and didn’t think it was funny…
Rather have one that requires a checkup…
I need to take advantage of being in fantastic shape and get a better deal!
Also if you have veins that are difficult to draw from… it means you are overweight… sorry! Yes I am certified to draw blood, so don’t say I this is not true fatties!
;)
I’m always suspicious of these come-ons.
1) SoFi has an algorithm to predict default rates on student loans; how does that translate to life insurance?
2) If SoFi predictive algorithm is so accurate, why doesn’t Protective Life Insurance Company switch to it exclusively instead of relying on the more cumbersome process if you apply with them directly?
3) If SoFi predictive algorithm is so accurate, why do they cap the benefit level to which it will apply and rely on the medical exam for higher benefit policies?
4) How does SoFi make money on this? Are they taking a cut of the monthly premium or a one-time payment? Does that add to the policy holder’s expense meaning would the same policy with Protective be less expensive (albeit slower to approve due to a medical exam) if a person went directly with Protective. It is hard for me to understand why Protective would undercut their own price on a joint project with SoFi.
Howdy Dan,
It’s always good to be skeptical about everything. I had some similar questions, so let me try and answer them for you during the holidays. Maybe one of them can elaborate further.
1) SoFi believes that its algorithm allows for more efficient price discovery. Only they know their proprietary algorithm results. I venture to guess their algorithm is predicting their 200,000 members have a lower mortality rate because they have more education, higher incomes, and therefore are more health conscious. With lower mortality rates, life insurance companies can offer lower premiums and still earn a profit. That’s a win-win.
2) Protective has a 100+ year business life where they’ve done things their way. I imagine they are willing to try new ways to acquire customers. So is SoFi. In business, there are always business development deals to grow the pie. It’s always good to start small and work your way up to larger transactions in any business.
3) It’s all about actuarial risk and reward. Theoretically, if you have perfect information and know exactly when everybody will contract an illness, get in a car accident, and die, you would BET THE FARM and price at the lowest rate or most efficient rate as possible across EACH individual to capture max market share. But given nobody can correctly predict the future, there has to be a responsible limitation on exposure. SoFi has decide that limitation is 40 years old and up to a $1M policy.
4) I don’t know the specifics, but this is a business partnership. SoFi may get paid a percentage of sign up or earn a flat fee from Protective. What they are trying to do is lower costs to consumers, lower friction regarding signing up, and grow their business like most businesses do.
Hope these answers help. Are you a business owner or considering starting a business? It’s a whole lot of fun, and talking about customer acquisition, revenue generation, and profits is really exciting for me.
Sam
I think it’s great that Protective is making it easier for people to get life insurance. Another insurance carrier called SBLI now offers $500K without a medical exam.
Last year I had two friends in their 30s with young children die from cancer and the loss of the wife’s income was devastating. Living in CA on one income isn’t easy. Sadly, I told of one of those friends to get life insurance but she didn’t want to buy any because the chance of dying prematurely is small. When she died do you think her husband said I’m glad she saved us $50/month by not buying life insurance? No, I’m sure he wished she had spent the $50 to get a $1M policy. That’s a $1M tax-free that could help pay the bills and her kids daycare and eventually college tuition.
As a CPA and CFP that is very knowledgeable about life insurance here’s my response to #3 and #4.
3) The limit is $1M so that the life insurance company doesn’t get ripped off too badly. Since the insurance company only relies on your medical history, that’s kind of risky. Imagine that you know you’re very sick but haven’t gone to the doctor so there is no medical record. You could take out a $5M policy and die 3 years later and the insurance company would be on the hook for the $5M. But if you gave a blood and urine sample, the insurance company can see that you have diabetes, AIDS, or some other serious health issues that would have denied you insurance.
4) Insurance companies pay commission to whoever sells the policy. It’s a one-time payout of 70% of the annual premium for term insurance. Even if you call an insurance company directly to buy a policy, some agent is going to earn that 70%. The cost of the insurance already has the commission factored into it so the monthly premium is going to be the same whether you buy it from me, Sofi, or call the insurance company.
Great article – but how do those rates compare for a healthy individual at other companies requiring a medical exam?
If I’m healthy-as-a-horse paying $37/month for 1MM in coverage through SoFi (using the above example), would it be cheaper getting the medical exam at another company? If so, how much? 10-30% if at all? I haven’t shopped this, but perhaps those that have gone down this road can chime in.
The medical exam requirement reminds me of the Progressive “snap shot” discount. Put a monitor on your car for 6 months to monitor your driving habits, and if it’s cheaper, you’ll realize that benefit. Awful lot of privacy to give up though.
Hard to say. I’m paying more than $37/month for my 1MM 20 year term I took out from USAA 13 years ago. This is why it’s nice to use a comparison tool as well w/ PolicyGenius and SelectQuote, as two examples I’m familiar with. Life insurance is highly regulated, and the pricing isn’t too different based on the same underwriting variables. But each insurer may have different variables and weightings for each variable.
The biggest allure for this product offering is the no medical checkup for qualifying individuals b/c I found it to be a PITA.
Hi Ben – The rates that you obtain with a policy through SoFi and Protective are competitive with those that you can obtain with other companies and a fully underwritten policy. We encourage you to take a look for yourself to see how we’re saving you both time and money with our life insurance policies.
Thanks Sam, as a guy in his early 30s I’d been thinking about getting some life insurance but the process always seemed like too much effort versus the (touch wood) low risk of mortality for someone in their 30s.
Think there is a real market for easy to access insurance for people like me and you really cannot complain at double digits a month!
Will look into this.
Nice review. It’s the first time I’ve heard of this company. I just got a new 30-year policy last month. The medical exams, and additional follow-up were a pain in the butt. I would’ve loved to have bypassed tests; assuming this insurance company’s rates were comparable.
Oh man, I’ve heard some horror stories about inexperienced nurses drawing blood. A buddy of mine had an in home test and passed out after the nurse couldn’t find the vein and kept moving the needle around. I’m not skittish of needles but I get a little nervous every time I have blood drawn after hearing his story.
That’s pretty awesome SoFi is able to bypass the medical exam and approve applicants in 20 minutes. In today’s world, we expect no hassles and want a streamlined process. Heck, my Christmas shopping was done all online this year. I even bought the Xmas card for my wife online through Amazon.
With options like this becoming more popular, I’m guessing we’ll see the current 40% of people who feel adequately insured start to increase.
Yikes! Sorry for your buddy. Having less pain is part of the reason why Theranos became so popular with it’s testing. Too bad Theranos turned out not to be what they said.
The more data that comes through, the more precisely fintech companies can analyze data for more perfect price discovery.
Why should someone who went to graduate school and lands a high income earning, stable job have to pay the same student loan rate as someone who doesn’t go to college and lands a lower paying, unstable job just b/c they are the same demographic. There should be more reward for higher performers and healthier people.
Good points. Better borrowers should receive better rates. Now that more data is available to determine health risks, those who are healthier should get the higher reward.
Nice review. I, too, had to go through the medical checkup, which was a long process. The less I have to get poked and prodded, the more I’m going to be willing to spend money for what is potentially good for my financial future!
If one thinks about it, who in their right mind would pay money after an injection? Only the most responsible and willing. With SoFi removing this step, they should be able to capture more business.
I have term life insurance through work but I will need compare this against the rates that you proposed above because I may be able to get more insurance and pay less which is a win/win in my book. Thanks for sharing!!!
I had a medical exam when I got my life insurance policy. It was fairly quick, blood pressure, blood draw, weight, height, questionnaire, and a urine test.
I have a $500K 20 year policy for $21/mo that I got when I was 23. At the time it was roughly 15X my annual income.
I’ve always used SelectQuote and the medical checkup was easy. They come by, do their thing, and I’ve been approved usually days later. My last policy was taken out 2 years ago. $500,000 30 year policy for about $500 / year, with SLBI.
I like SelectQuote and have met their CEO and other team members as they are based in SF. They’ve been around for 30+ years and I’ll probably write a review on them as well.
I just don’t like medical checkups, especially if I know I’m fine. To the consumer, it feels like we’re being taken advantage of and analyzed on many things we have no control over.
Have enough clients and data, things should become more efficient.
We have 500k in coverage on me. I didn’t need a medical checkup as they bypassed me based on medical history. My plan is a 20 year due at age 52, or basically the date my first born will graduate from college. At first my goal was to match kids graduation from college. However by the time the 2nd child graduates I should be long since self insured. No sense insuring if you no longer require active income after all. I chose 500k as enough that my wife could adjust her lifestyle over 4-5 yrs without impacting retirement savings.
Why would you want your wife to adjust her lifestyle at what should be one of the most difficult times in her life?
Thanks Sam, just an FYI it is not available in New York state and Puerto Rico atm
Yep. Noted in the post.
Note: As of December 2016, New York residents are currently ineligible to apply for coverage via the SoFi through Protective. The good news is this restriction is only temporary and is expected to lift in Q2 of 2017.
Thx
Thanks for the review on an interesting new player in the life insurance arena. This is an area I definitely need to look into in 2017. Protecting my assets and hedging against the inevitability of the future is something we all should consider – but I think many of us miss this. Thanks for the reminder.
That is a sweet offering to be able to bypass the medical exam. I remember when I did mine and although the nurse was nice and came to my house, it was still an inconvenience and cut into my work. The underwriting process was also really slow. Being able to get a policy in ~24 hours is SO fast compared to the rest of the life insurance industry.
I didn’t appreciate life insurance in my 20s, but now that I’m quickly approaching my late 30s, I find it invaluable.