Prior to the pandemic, most life insurance searches began online but more than 90% of policies were secured through in-person interaction with a broker. COVID has not only served as a boon for the industry as consumers paid more attention to their financial security but also as a catalyst for digital transformation. Virtual capabilities for advisors and brokers, digital applications, the electronic delivery of policies, and underwriting automation are all key priorities where significant demand exists to keep up with today’s discerning consumer. Dayforward is a tech-enabled life insurance provider that makes the financial security of life insurance accessible to Americans with through innovative product design and education. The company has automated the underwriting process allowing customers to secure policies in a fraction of the time as compared to the industry standard of three months. Launched in 2021, Dayforward just acquired industry stalwart Commercial Travelers Life Insurance Company to augment its capabilities as a full-stack and full-service insurance provider with expansion plans into disability, health, and retirement as well as national expansion planned for this year. While most insurtech startups are digital-optimized brokers for larger insurers, Dayforward is in a unique position to be able to build, create, sell, and service policies.
AlleyWatch caught up with Dayforward CEO and Founder Aaron Shapiro to learn more about the business, the company’s strategic plans, latest round of funding, which brings the company’s total funding raised to $45M, and much, much more…
Who were your investors and how much did you raise?
Dayforward raised a new, $25M round of funding, led by AXA Venture Partners, with participation from existing investors including HSCM Ventures, Juxtapose, and Munich Re Ventures.
Tell us about the product or service that Dayforward offers.
Dayforward is a full stack digital life insurance company that underwrites and issues its own policies. Our flagship solution is a life insurance policy that protects your income. So, if a policyholder dies, their family will receive payments twice a month just like a paycheck until their kids are financially independent adults. This way, the family’s standard of living can stay the same. Dayforward’s proprietary underwriting system allows people to apply in minutes. If approved, the policy can be purchased instantly at a great price.
What inspired the start of Dayforward?
My own experience buying life insurance opened my eyes to how difficult, tedious, and confusing the process could be. Despite the hassle, life insurance was so important to my family that I was willing to go through extraordinary lengths to get it. I believe that everyone across America should have the opportunity to protect their family, and that they deserve a better way to do it. We created Dayforward to accomplish just that. It’s not just about making life insurance simpler; it’s about making it better, with a policy that is personally tailored to each individual we come across.
How is Dayforward different?
Since Dayforward is a life insurance company and can issue its own policies, the company can innovate across its underwriting, distribution, and product development. The end-to-end customer experience operates on our proprietary technology and automated underwriting stack. On the other hand, many of the other InsureTech startups are agents or brokers selling third-party products through vendor software. As a full-stack carrier, we can build a financial security juggernaut and truly modernize how consumers think about and buy insurance products. We plan to broaden our life offerings and expand into health, disability and retirement product lines.
What market does Dayforward target and how big is it?
Our mission is to bring financial security to families all across the country. We strive to continuously expand our market through product development and underwriting enhancements. Our latest round of funding unlocked our ability to sell products in most of the country, with continued expansion throughout the rest of the year. It’s my hope that, one day, Dayforward will be a completely inclusive company that provides financial security to as many Americans as possible.
What’s your business model?
Our business model is like any other insurance company: we sell insurance policies, and our customers pay monthly premiums to us. Then, if someone dies, we pay the beneficiary over time, so their family can remain financially secure. We have mathematical models to ensure the premiums we collect allows us to pay those claims, while earning a profit. We have capital reserves, reinsurance from MunichRe, and a team to make sure we’re following all insurance regulations to make this all happen.
How are you preparing for a potential economic slowdown?
We’re just focusing on providing great policies to families and strong customer service. If we do the basics well, the rest will follow.
What was the funding process like?
We were fortunate enough to have very supportive existing investors, who agreed to continue to fund the company. And, our early success attracted interest from new venture funds. We met with them, and were attracted to AXA Venture Partners because of their strong experience in both insurance and technology companies, and the overall funding fell into place.
What are the biggest challenges that you faced while raising capital?
The biggest challenge we had is that insurance is an unusual business. It is enormous—over $150B is spent each year on life insurance premiums alone—and has not seen significant innovation in decades, so there’s a lot of opportunity. But it is also heavily regulated, and requires a lot of capital, because people need to be confident that if you buy a policy, the insurance company will be there to service you if the unthinkable happens. So it takes a particular kind of investor to understand the economics of insurance, the tremendous upside that can go with it, but also the regulatory and capital constraints.
What factors about your business led your investors to write the check?
Dayforward is a once-in-a-generation opportunity to build a massive insurance company—something that has not been done in the life space in decades. With the acquisition of Commercial Travelers Life Insurance Company, we have a chance to make this happen. We’re the only digital life insurance company to have a near-national footprint, and be able to both manufacture, service, and sell policies, just like any other insurance company. That’s a big deal and very hard to achieve. So, investors believe we have the right foundation, and the right team, to make it happen. And we already have had success selling in a small number of states.
What are the milestones you plan to achieve in the next six months?
We’re excited to focus on scaling our business nationwide, continuing to launch our proprietary solutions through strategic partners, and developing new insurance products. We plan to broaden our life offerings and expand into health, disability, and retirement product lines. But our primary focus in the next six months is delivering our innovative income protection life insurance offering to families around the country. We think we can make a big difference to families across America with a smarter approach to financial security.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
It’s glamorous to talk about new funding rounds, but what matters is not funding. What matters is building a growing, profitable company. So, my advice to companies is to focus on the basics. Build a business based on customers loving your product or service and paying you profitably for it. Do that, and everything else follows. My last company, Huge, was entirely bootstrapped—not a penny of funding—and we built it to 1,500 employees worldwide.
Where do you see the company going now over the near term?
Dayforward will grow into a comprehensive financial security solution for modern families. Young adults can start with a term life policy like we offer today, and as they mature, purchase products that match their life changes like college savings, disability, pensions, and retirement.
What’s your favorite coffee shop or location in the city to hold a meeting?
I love Patis Bakery on the Upper East Side. Though, much of my team lives downtown, so we’ll often meet at Lafayette for breakfast or lunch.