At I&E, we work with many of the top life insurance companies. So, while we don’t offer Ladder, we do have many other excellent companies you can choose from.
With that said, we offer the following comprehensive Ladder life insurance review as unbiased as possible, with the caveat that we hope you would consider getting a quote with us here at I&E after reading this review.
Table of Contents:
- What is Ladder
- What Types Of Insurance Does Ladder Offer
- Ladder Application Process
- Ladder Pros
- Ladder Cons
California-based Ladder is a fairly recent entrant into the realm of online life insurance. As of February 2020 the company has raised $94 million in funding, with investors such as Northwestern Mutual and Allianz Life.
The financing seed round began in 2015, but the company was actually formed in 2017.
Ladder is a highly-specialized broker, selling only fully underwritten term life policies with no riders or add-ons.
The company is also somewhat unique as an agency because the policies it issues—though backed by multiple legitimate life insurance carriers—its policies offer with a feature that’s not generally available through other brokers.
What differentiates Ladder policies from other term coverage is that, after a Ladder policy has been issued, the policyholder has the option of requesting increases or decreases in the coverage amount.
This lets the policyholder keep the same policy in place over an extended term but adjust death benefits and premiums to suit changing life circumstances.
One Trick Pony
You might describe Ladder as a one-trick pony because the adjustable-benefit term coverage is quite literally the only product the company offers.
Ladder is betting that, for people whose circumstances make modifiable coverage levels a particularly attractive feature, that one trick will be enough to make Ladder worth a second look.
On its website, Ladder makes a few resources available to aid consumers in understanding life insurance and determining their optimal coverage amounts.
However, there are other online brokers who have much, much better “learning centers.”
So, if you’re still in the research phase of the life insurance shopping process, you’re better off doing your homework somewhere other than Ladder’s website.
Ladder has a simplified, stripped-down approach to term life insurance. They only offer fully underwritten term life insurance coverage with no riders. Some people may qualify for no medical exam term coverage for up to $3 million, just health questions asked.
That means applicants’ medical histories are considered when applying and that policies only provide coverage for a defined period of time (the “term”).
You can’t get permanent coverage through Ladder, and you can’t enhance the value provided by a policy by purchasing riders.
Some Options Available
Consumers do have the option of selecting term length and coverage amount. Available terms start at ten years and go as long as thirty years.
However, a policy’s initial term can never extend beyond the insured’s 70th birthday. So, if, for instance, you’re 45 years old, you wouldn’t be able to get a term longer than 25 years.
Coverage amounts start at $100,000 and go as high as $8 million. For an online broker, that’s a remarkably high maximum coverage level—especially when you consider that many applicants are approved on the same day they apply (though others have to undergo a medical exam, which takes longer).
The defining feature of Ladder policies is that the policyholder can adjust the coverage level in response to changing circumstances.
It’s still fundamentally the same policy, it just provides more or less coverage and has correspondingly higher or lower premiums.
So, if you pay off your mortgage and no longer need as much life insurance, you can reduce a policy’s death benefit with little difficulty and save a few bucks on future premiums.
Easy to Reduce, but Increases, Maybe Not So Much…
It’s worth noting, though, that a Ladder policyholder has the right to decrease a policy’s coverage. But, for increases, policyholders only really have a convenient way to submit a request for higher coverage.
There are modified benefit whole life insurance policies that grant you the contractual right to increase your coverage in the future, and you have to pay extra for that right.
Ladder’s coverage increases are different. You can ask the company for more coverage, and they can say ‘yes’ or ‘no.’ If something happens to make you a higher insurance risk and you apply for greater coverage, Ladder can deny the application.
In some cases, policyholders can also extend the duration of a policy’s term. But, again, that’s something that will be subject to approval by the company. And, remember, a longer term or higher coverage level will require a corresponding increase in premium.
One Company Option
Although LadderLifeTM policies are unique to Ladder, they are underwritten by life insurance companies.
Ladder’s application process occurs exclusively online and can take as little as a few minutes.
Because Ladder only sells a single straight-forward insurance product that can’t really be modified, its application can be similarly straight-forward, without much effort required on the consumer side.
Ladder simplifies its operations by narrowing down the field of prospective insureds it will cover.
To apply, you have to be a U.S. citizen or long-term resident between the ages of 20 and 60. If you’re over 60, Ladder can’t help you. And term lengths are limited for applicants over 40, as a policy’s term cannot go beyond age 70.
Buying a policy to cover a loved one also isn’t an option. The applicant, the eventual policyholder, and the insured must be the same person.
Since there are no riders, adding supplemental term coverage for a spouse or child through an additional-insured or children’s rider isn’t possible, either.
If you’re between ages 20 and 60 and buying coverage for yourself, the application process starts with the standard underwriting information: height, weight, birthdate, sex, tobacco use status, etc.
Ladder will also ask for some financial info (like your annual income and mortgage balance, if any) and some background on your health status and family medical history.
There’s really not a whole lot more to it than that.
Ladder (or its software) will electronically review digital records like prescription history and driving record, but that happens very quickly.
Some applicants will need to undergo a medical exam—typically due to potential health concerns and/or requests for very high coverage.
But most applicants don’t need an exam and can get a rate quote, policy approval, and coverage issued in a single online session.
If a policy is issued, the policyholder manages and makes any adjustments to the policy—including requests for increased or decreased coverage—through the Ladder website. Premiums are paid monthly via credit card or ACH.
With most online brokers, after a policy is issued consumers interact directly with the insurance company that issued the policy.
With Ladder policies, though, policyholders continue working directly with Ladder through its website.
Quick and Easy Application Process:
Ladder attempts to remove as many variables as possible from buying life insurance. There’s one type of coverage, no riders, and no insurers to choose between.
You get to choose your coverage level and term length, and that’s about it.
It’s like the old Henry Ford quip about car-buyers being able to pick whatever color they want, as long as they want black. This simplicity makes the application process exceptionally quick and easy.
If you know you want plain-Jane term coverage with a minimal time commitment, and maybe like the idea of being able to tinker with the coverage levels in the future, you’re in Ladder’s wheelhouse.
This is Ladder’s whole gimmick, so if it didn’t have at least a little appeal, the company would be in trouble.
Fortunately for them, though, the concept is kind of cool. Particularly for new parents, homeowners, and anyone else who anticipates needing different coverage levels in the future, the option can lead to genuine savings (if you decrease your death benefit, that is).
When you opt to reduce your coverage, your premiums also decrease in proportion to the reduced coverage.
There are other policies out there that gradually decrease coverage levels over time—usually timed to parallel repayment of a home mortgage.
But Ladder’s version is somewhat distinct in that the policyholder gets to make the decision down the road, rather than setting a schedule for decreasing coverage when the policy is issued.
With that said, it needs to be emphasized that, while Ladder policies let you decrease coverage at your discretion, increases are subject to approval by the company.
So, there’s a chance that, if you need a higher death benefit in the future, you won’t be able to get it.
Even so, coverage flexibility is a nice feature, even if you’re giving up some potential policy options for the flexibility. In the right situation, that could be a worthwhile trade-off.
High Available Coverage Limits:
Consumers can purchase up to $8 million in life insurance coverage through Ladder and no exam coverage up to $3 million. That’s a lot of life insurance and considerably more than what’s available from most online brokers.
Very Limited Selection:
This is a big enough issue that it needs to be divided into three separate points. First, there are no permanent policies available from Ladder. Second, Ladder policies have no room for customization beyond term length and coverage amount. And, third, Ladder doesn’t let you compare rates between insurers.
No Permanent Coverage Available:
Permanent life insurance policies like whole life or universal life aren’t right for everyone. But for some people, they are the best fit. If you need to be 100% certain that your loved ones will receive a death benefit when you die (or if you just like the idea of a low-risk, tax-deferred asset to supplement your retirement savings), Ladder won’t have what you’re looking for.
No Opportunity for Policy Customization:
But let’s say you’re sure you want term coverage. You still can’t get any riders to customize the policy to your individual circumstances. Ladder says it doesn’t offer any riders because they “complicate life insurance and do not provide a significant benefit for their added cost.” But that’s not necessarily accurate.
Terminal illness riders, which allow for early payment of policy benefits if the insured is diagnosed with a terminal illness, come standard (i.e., no extra cost) on most term policies these days.
But you can’t even get one of those riders from Ladder. For many people, paying extra premium to extend coverage to a spouse or child is absolutely a significant benefit worth the extra cost.
Conversion options giving you the contractual right to convert term coverage to whole life also provide genuine value. If you still need coverage when you’re 70, you’re going to have a hard time finding another policy.
These are just a few examples. There are dozens of other riders available from different companies.
Obviously, not every rider is right for every insured—and some insureds are genuinely best served with no added riders—but it’s nice to be able to make that choice yourself based on your own situation.
If you’re looking for a life insurance policy ideally tailored to your situation, Ladder isn’t the place to look unless your ideal policy is the one they sell.
No Opportunity to Compare Rates Between Companies:
OK, now let’s say you know you want a bare-bones term policy that provides a death benefit if the insured dies and nothing else.
Even then, Ladder won’t let you look at premium rates offered by more than one company.
So, for practical purposes, shopping with Ladder is the same as shopping with a captive agent.
It could be that other insurers weren’t comfortable with the idea of coverage amounts fluctuating during the term. Insurance companies like predictability, after all.
But the potential problem is that different insurers weigh the various underwriting factors differently.
If you happen to fall within a group that an insurer views as risky, you might end up paying significantly higher rates for a Ladder policy than what you’d find with another carrier.
By contrast, an independent agent can show you rates from numerous companies, allowing you to find the carrier with the best deal in your situation.
Ladder is betting that its adjustable-coverage feature will provide more value to consumers than the opportunity to personalize coverage and compare products and rates between companies. We’re not so sure.
Limited Age Range for Coverage:
Ladder only accepts applications from people between ages 20 and 60. So, if you’re over 60 (or under 20), you won’t be able to get a Ladder policy.
Even within the available age range, term lengths are restricted for new insureds over 40. The result is that you can’t get a policy with a term that goes past your 70th birthday.
In some cases, you can renew a policy annually at the end of the term for up to five years, but you’re paying much higher premiums at that point.
The bottom line is that, if you anticipate needing life insurance beyond age 70, you should check with another broker.
There are other life insurance companies that will issue level term policies that stay effective later in life.
Or, if you know you want coverage through retirement, whole life or universal life may be the better fit.
Ladder offers limited options and it might turn out that a better policy is out there for you, with little to no hassle. The team at I&E is ready and able to help you find the best policy with the best company, for you, based on your specific needs and goals.
Thanks for reading our Ladder life insurance review. We hope you enjoyed it. Feel free to leave any comments or feedback below.