If you’re a new parent, you may feel a level of financial stress and responsibility that you haven’t experienced before. Fabric is a company that aims to alleviate a bit of that stress by serving as a one-stop shop for several of your financial needs, starting with life insurance.
I’ll explain how Fabric’s products are designed to simplify the process of making financial moves most new parents need to make including getting life insurance and creating a will.
Table of Contents
- Fabric Review: Quick Look
- What Is Fabric Insurance?
- Fabric Insurance Review: Where It Shines
- Fabric Insurance Review: Where It Falls Short
- Examining Fabric’s Term Life Insurance Product
- What Other Products Does Fabric Offer?
Fabric Review: Quick Look
|Company Type||Suite of financial tools for new parents|
|Key Features||Simplified issue life insurance designed for maximum convenience; free last will|
|Downsides||Doesn't offer life insurance beyond 20-year term or to those 60+|
|Best For||New parents who would otherwise procrastinate on purchasing coverage|
What Is Fabric Insurance?
Fabric isn’t what you throw into the dryer along with your clothes. That’s fabric softener!
This Fabric was founded in 2015 by Adam Erlebacher and Steven Surgnier, who were high-ranking employees at Simple. We ranked Simple as one of the best online banks. Its initial goal was to create a better front-end experience for banking. The bank accounts on its platform are actually held elsewhere.
Fabric is similar in structure: It’s backed by Vantis Life, an insurance company with an A+ A.M. Best rating. Penn Mutual, the second-oldest life insurance company in the United States, bought Vantis Life a few years ago. So while Fabric is a baby by insurance industry standards, it has the backing of a giant legacy company.
Money expert Clark Howard says you should filter companies by their A.M. Best ratings when shopping for insurance. He recommends buying only from companies with A++ ratings, but he says A+ is OK on policy terms of 20 years or less.
Fabric wants to provide a complete financial tool kit for new parents. To that end, its primary product is term life insurance, but it offers a variety of other tools as well.
It’s worth noting that Fabric has changed significantly since we first reviewed the company in July 2018. It continues to create new versions of its current products while developing new ones.
Fabric Insurance Review: Where It Shines
Fabric has decided that convenience is key when appealing to new parents. It has minimized the application and decision-making processes. It also offers “one-stop shopping” for some of the financial services new parents need.
Here are some of the pros when it comes to Fabric life insurance and other products:
- Maximum convenience. Much like Robinhood for investing, Fabric decided to minimize the pain points for anyone wanting to buy term life insurance. It’s possible to fill out your application online, get instant approval and make a purchase in about 10 minutes without needing to speak to anyone. That process takes days or weeks and sometimes involves at least one gatekeeper even for some of Fabric’s competitors, including those that sell exclusively online.
- Above-average UX/UI. As you’d expect for a digital-native company, Fabric’s website and app employ an intuitive design that eliminates clutter and confusion. User experience usually goes hand-in-hand with convenience, and Fabric doesn’t disappoint.
- Powerful automated underwriting algorithm. It uses information beyond basic health questions. According to a company representative, that includes some new additions that have enabled Fabric to grant instant approvals for five of the seven standard health levels within the insurance industry.
- No sales calls ever. Fabric limits almost all communication to email, and that’s usually to gather additional information during the approval process.
- Constant improvement. The company is adding new products and improving existing ones at a fast pace relative to the rest of the insurance industry.
- Free financial tools. Fabric’s last will and testament and online financial management products don’t cost a penny — whether or not you’re an insurance customer.
- Great Trustpilot score. Fabric has an unusually high 4.8 rating (on about 1,600 ratings) on the prominent consumer review website, which we recently reviewed.
Fabric Insurance Review: Where It Falls Short
You can probably predict most of Fabric’s cons before reading this section. It’s still a new company and is part of the group that’s disrupting the insurance industry.
The downsides typically associated with disruptors are not unique to the insurance industry:
- Limited product offering. Fabric doesn’t offer term life insurance beyond 20 years. It also doesn’t offer whole life insurance. But that’s not so bad considering Clark thinks term life insurance is much better for almost everyone.
- Age limitations. Fabric won’t sell a policy to anyone 60 or older. Although as a direct replacement for income, term life insurance isn’t designed to last well into retirement.
- Limited human interaction. If you want to talk to someone for guidance during the shopping process, Fabric may not be the place for you.
- Sometimes requires medical exams. That’s more of a downside for the company’s marketing. Fabric can’t claim “medical exams never required.” But in some ways, that’s intentional and beneficial for customers. People with pre-existing conditions may get flat rejected by “no medical exam ever” companies, and if they do get an offer, it’s usually expensive. Fabric says it attempts to gather more information on applicants who are considered to be high-risk in hopes of offering them coverage.
- Products not yet perfected. Fabric freely admits it’s still iterating and improving. It’s possible that you could be a “guinea pig” for one of the company’s new products.
- Not the cheapest on the market. If you’re looking for the cheapest possible monthly premium from a company with a good A.M. Best rating, you can probably find a less expensive option. But Fabric’s prices are relatively affordable and competitive.
Examining Fabric’s Term Life Insurance Product
|Gender/Age||Policy Amount||20-Year Term Life|
Fabric offers term life insurance policies lasting 10-20 years and coverage amounts from $100,000 to $5 million.
A 35-year-old non-smoking male from Florida in excellent health can get a 20-year instant-issue policy with $500,000 in coverage for $28.74 per month. There are more price quotes I gathered in October 2020 in the table above.
A Fabric representative pointed out that the monthly premium for a 45-year-old with a 10-year policy term is almost twice as cheap as for a 20-year term, adding that most 45-year-olds aren’t parents of newborns and probably don’t need 20-year terms.
Fabric requires medical exams for policies of more than $1 million in coverage and for people with certain health conditions. But it’s possible to buy simplified issue term life insurance in 10 minutes on the Fabric website or app without a medical exam.
Thanks to a beefed-up automated underwriting algorithm, Fabric says it’s approving about three times more applicants instantly than it did in 2019. It also gives you a second shot at approval without a medical exam by having a human underwriter review your application. This person will ask you more questions and gather more information and will sometimes ask for documentation.
If you do need a medical exam, it’s free. You can schedule it through Fabric at a time that’s convenient for you, and the company will send medical personnel to your house or workplace.
If you’re healthy, there’s a great chance that you’ll get instant approval as soon as you finish your application. You can buy Fabric life insurance immediately. You can also modify the coverage amount and term length and instantly review the difference in the cost of your monthly premiums.
What Other Products Does Fabric Offer?
Fabric believes its efforts to offer a full suite of products to new parents differentiates it from its competitors. I appreciate the sentiment, but the company still has work to do to fully realize that vision. However, the offer of a free will product is commendable.
Here’s what Fabric currently offers beyond term life insurance.
- Last Will and Testament: This product is similar to what LegalZoom and others offer, but it’s free. You don’t even need to be a life insurance customer. Fabric makes the application process quick and easy. It thinks having a will is important for new parents because it provides a way to name a legal guardian for your child or children. We wrote more about this product in our review of the best online wills.
- Accidental Death Insurance: This used to be a larger part of Fabric’s marketing but it’s no longer a priority. A company representative says Fabric doesn’t think it’s useful to that many people. It’s still available, but Fabric is focusing more on term life insurance.
- Financial Management Tool: Fabric says it created this tool as a logical extension of term life insurance. Adults in 2021 tend to have numerous financial accounts. If you were to become incapacitated or die, this tool is a great way for your partner, spouse or family member to know which bank, investment, credit card and loan accounts you have. Similar to Mint, this tool also can help families centralize their overall financial pictures.
- College Savings & Rainy Day Fund: These are two of Fabric’s newest products. I couldn’t find information about them on the company’s website. But a Fabric representative told me they’re currently testing the funds as additional tools for new parents. The representative also suggested that Fabric has other products in its developmental pipeline.
Digital technology disrupted plenty of other major industries before it tackled insurance. And smart people can disagree on whether fast and convenient service is more valuable than the traditional slower approach that offers more human contact.
Whatever philosophy you hold, consider that a pharmaceutical company can create medicine with a 100% cure rate, but if no one will take it, it’s worthless.
Other insurance companies offer more product variety, a longer history, and in some cases, cheaper monthly premiums. But new parents can be busy and stressed, so they may not feel like they have the time to shop for life insurance and related products. Fabric streamlines the process.