LifeRaft, an Oakland, California-based startup that offers supplementary health insurance, recently raised $3.5 million in seed funding and started offering its first product.
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Ian Blumenfeld, CEO of the company, said he wants the company to be an insurance policy in your pocket when an unexpected hospitalization happens. Its seed funding was co-led by Costanoa Ventures and XYZ Venture Capital.
“Health care spending has skyrocketed over the last 20 years due to rising costs in hospital stays, increased specialist visits and new, expensive treatments for a range of diseases,” said Mark Selcow of Costanoa Ventures. “LifeRaft takes on the health expense monster, relieving the financial stress for patients so they can focus on getting better, rather than how they will pay their hospital or specialists’ bill.”
LifeRaft was co-founded in March by insurtech and fintech veterans Blumenfeld, Nimish Shukla and Joyce Noah-Vanhoucke, who previously worked at Clover Health, Blueprint Income and SimplyCredit, respectively.
Its first insurance plan product went live in November: A hospital supplement insurance offering affordable monthly premium options and a direct-cash benefit to the policyholder upon hospital admission for a covered event, Blumenfeld said. The platform is end-to-end digital—from application to policy generation to claims—and aims to offer a seamless purchase, enrollment and administrative experience.
“While researching insurance, the same question kept coming up: If this was something serious, how would we handle it?” Blumenfeld told Crunchbase News. “It kept coming back to: Where are the health-related products that look like life insurance?
“If I get a cancer diagnosis, which I know is an underwriteable risk, I would probably be happy to pay a premium against that. Then we can pull enough money together to deal with the problem, but not be in a situation where the health plan has all of the control,” he added.
Its seed funding will be used for product development, including discovering what kinds of coverages can be built and how, as well as how to support operations around insurance, such as enrollment, policy generation, claims and the most critical: how to get it into people’s hands, Blumenfeld said.
He likens LifeRaft’s product to Aflac, which has a market capitalization of more than $31 billion. Overall, the U.S. health and medical insurance industry has brought in $1.2 trillion in revenue in 2020.
“Aflac is the brand that everyone knows in this space, and they do well and provide a valuable service, but technology has shifted enough that we can figure out how to do the next stage of this and fill in some of the gaps,” he added.
Meanwhile, there are early demand signals in the market, and data is showing that LifeRaft’s product fills a niche if it gets to people at the right time, Blumenfeld said.
“Ultimately, we would love for people to begin thinking about LifeRaft in the same way they do when they purchase life insurance,” he added.
Illustration: Li-Anne Dias
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