We Figured Out Pet Insurance — Why Not Fertility?

Paul Tyler (00:02) This is Paul Tyler and welcome to another very interesting episode. Today we will be interviewing Cally Myhrum, founder and CEO of Lotus Fertility Insurance and talking about what I consider to be a very, very interesting product that heretofore has not existed, but we'll get a little more into that. Cally, welcome.

Cally Myhrum (00:26) Thank you, Paul. It's nice to see you. Very happy to be here.

Paul Tyler (00:28) Yeah, yeah, it's great. Actually, I think, let's see, I think I, I'm think where we met. We met at, I think, a conference someplace, and then actually at a pitch event that James Wong put together out in Philadelphia, maybe a year and a half ago, I think. Yeah.

Cally Myhrum (00:43) I think that was it. Yeah, that was, I think, August 2024, maybe a year and a half ago, but I think it was at the Founder's Chair. I tell ya.

Paul Tyler (00:51) Time flies, but from a startup lens, that's a long time, Cally. But listen, tell people a little bit, like who are you and what do you do?

Cally Myhrum (01:07) Yeah, no, I'm just this girl that woke up one day and decided to take on the entire insurance industry. That's just, that's it. No, I'm just joking. No, but I'm the founder and CEO of Lotus and we're building an individually owned fertility insurance product that we white label to carriers. And I don't come from the insurance world. I came to this as a customer looking for something that didn't exist.

You know, a couple, I think I've told you my story before, I was repeating, but a couple of years ago I was working as a Human Centered Design Strategist, working in a lot of legacy tech environments, really redesigning systems to better serve people. So that experience has really been crucial to how I'm building Lotus, but it wasn't until I was encountering personal health challenges of my own that I even thought to try to build something in this space.

And I was looking into actually proactively freezing my eggs a number of years ago when I was in my early thirties, but my employer didn't have any fertility benefit. And at the same time, my health insurance, my employer sponsored health insurance was not covering significant out of pocket expenses I had related to my own, you know, reproductive healthcare. I wasn't trying to get pregnant, but there was enough going on that made me think like, gee, like this could be really expensive one day. Let's say I need to go down the path of getting fertility treatments.

So I went to the individual market to look for like a supplemental insurance, a gap insurance to help me plan, but it didn't exist. And well, the only solutions available are really offered through employers. Really the only solution for me was to go work at Amazon or to go work at Meta, right? Where, you know, you have these larger companies that offer the Cadillac of benefits, but that didn't really jive with my situation at the time or something that I wanted to do.

So it really just sparked a core curiosity for me, which is like, how is it that we have this massive gap in the market for one of the most significant life events that a person can plan for? I had spent maybe a year, year and a half really diving into the insurance world. I was like, surely if this doesn't exist, there has to be a reason, right? Like, why doesn't this exist?

How is it that we can figure out pet insurance, but we haven't figured this out? So it really just led to a lot of conviction that the business model for this existed. It just hadn't been applied to fertility yet. I didn't end up freezing my eggs, but I did take that money that I would have used and actually paid an actuary to build a model. And that was kind of the start of starting Lotus.

Paul Tyler (03:56) Interesting. Yeah, well, I love your connection with pet insurance and I'm always stunned at like how much like a free cat can cost. I had a friend of mine who had a quote free cat that ended up with cancer. Of course, it was, you know, the family loved it. The kid, his son loved it. They took it. I think the cancer treatment was something like $15,000. You know, it's the... yeah, that was great treatment. You know, I think Stanford, Connecticut.

But give me a sense of like, okay, I know this answer, but I'm not sure everybody knows. Like, listen, I want to pay for somebody to... or I'm a woman and I want to freeze my eggs. How much is that compared to like a cat? You know, a cat's $15,000. What does it cost to freeze eggs?

Cally Myhrum (04:47) Yeah, I think depending on the state, it can be anywhere from $12,000 to $20,000 to freeze your eggs. And that's not including the annual storage fees either. So once you freeze your eggs, they're kept on ice for a while, so you have to pay ongoing storage fees there.

Paul Tyler (05:04) Yeah, and even these fertility treatments, I think, are even more expensive than that. Like if you're doing a full round of fertility, right? I think that's upward of $70,000, right?

Cally Myhrum (05:15) For sure, one round of IVF can be anywhere between 30 and $35,000. And most people require two, two and a half cycles for it to work. So you're looking at about 60 to $70,000 to try to have a child. And that's, I mean, that's a down payment on a home, that's retirement, that's education, that's savings.

And so what we're seeing is that there's so many people in their 20s and 30s who are experiencing one of the largest financial shocks that they'll ever face. And it usually hits them at a time in their life when they're least able to absorb it. And so there's a lot of protection gaps in the market. Insurance doesn't always cover everything that everyone needs.

Even as employer benefits continue to grow in this space, people are still left on the hook with tens of thousands of dollars to be able to try to have a child.

Paul Tyler (06:18) You mentioned you started out as a design strategist. What were you able to apply immediately to this, to the problem from your design background?

Cally Myhrum (06:32) Well, I think what I noticed, the biggest takeaway for me is that insurance and the healthcare system is not a system that's truly designed around the patient. It's not designed around, it's not centered around the patient. And so I think that's what's one of the biggest changes that we need to make.

And so for me, whenever it comes to design challenges, figuring out the complexities of how we build this, how we partner with carriers, how we partner with reinsurers, how we partner with distribution and when you're doing something brand new, you're figuring it out, right? And it's the opportunity to be like, well, what's in the best interest of the end consumer, of the actual patient, of the actual policy holder. So really designing it from that perspective.

Paul Tyler (07:23) Interesting. I'll just flip the question a little bit, which is I know you went through a couple of accelerators, right? I think you went through the global insurance accelerator. I think one in Pittsburgh, two, right? Am I correct? The global insurance accelerator. What did you have to learn about insurance that you thought, oh my, I didn't know this going into the project?

Cally Myhrum (07:45) Oh my gosh. That was such an incredible program to go through. And, you know, in the 100 days that it kicks off really with mentor madness, where you're figuring out when and who your mentors are going to be. And you're interviewing people from, you know, with deep expertise in the industry. And you have to narrow that list down to like a max of 10 mentors.

So I interviewed probably 60 or 70 insurance people in order to get that down, which coming from a design background, coming from a research background, I was like, oh, this is gonna be great. So at that point, I had really started leaning into life insurance being the area where fertility protection made the most sense as a fit.

So as I was talking to insurance executives and regulators and just people with deep industry knowledge, just really learning about all the intricacies. And it's, you know, one, is this an insurable risk? How does the industry respond? Or what types of questions come up when considering a brand new risk category? That's definitely a piece of it. But I think even like, think like the underneath the iceberg of that is what is actually required to bring a new insurance product to market when you're working with large enterprises on legacy systems and doing things with the technology that's in front of you.

Rather than, you know, come to them with a bright and shiny object, I really had to understand, you know, really how do brand new insurance products come to market in an industry like insurance. So it was a very valuable accelerator and experience that I went through.

Paul Tyler (09:36) Yeah, yeah, interesting. I was at a refocus. I guess that was in, yeah, if time goes fast, was it February? Wow, a month ago. I heard a number of CEOs from Reinsurance speak and talk to some people we've worked with. And yeah, Cally, there's a huge appetite for looking at some of these new benefits, figuring out how to grow life insurance. But it's a conservative industry, because there's a lot of putting a balance sheet at risk is a big deal, especially for products that are guaranteed in some form or fashion by states or groups of insurance companies.

Maybe just talk to me about the product. So first off, you said life insurance. Why life insurance, not health insurance?

Cally Myhrum (10:26) Yeah, health insurance and life insurance are regulated totally differently. And when I'm looking at the health insurance and the healthcare landscape today, especially as, you know, reproductive health laws start to really differ state by state, there's a lot of, there's a lot of murkiness there, I won't lie.

And it's really important that this is filed as a financial product. This is a product for women and it's a product for men because both bear the responsibility, both bear, you know, you need both in order to make a child. And it's financially devastating for both if the couple needs to go through fertility treatments.

Paul Tyler (11:10) Yeah, and I guess what's complementary with life insurance? Because I think in some ways it's a lot of parallels. You're buying something with odds of something happening with large payout at the end. So I would think the underwriting process, the pricing would be fairly similar.

Cally Myhrum (11:30) Yeah. I mean, the whole reason why people buy life insurance is to protect their family. It's to protect our legacy. But if customers aren't able to have the family that they're imagining that they want to, they want to build, then the value proposition of life insurance starts to really break down for them.

And life insurance, you know, we talk about the, you know, the fertility crisis, these out of pocket expenses. At the same time, life insurance is also going through its own crisis, a relevancy crisis, right? Life insurance is not an urgent purchase for folks in their 20s and 30s if they don't have a family, if they haven't gotten married, if they don't have a home. And these are life milestones that younger generations are starting to push out further and further. So it's really creating a massive distribution and engagement challenge for carriers.

And back to the living benefits, carriers want to be able to offer living benefits. This is a huge area in life insurance now. Consumers want something that they can be able to use. Problem, so carriers want to be able to offer living benefits like fertility protection. And the problem is that they're currently locked out of this market because they don't have the data, they don't have the underwriting, they don't have the knowledge and the expertise in order to build it.

Paul Tyler (12:54) Yeah, I know one of the carriers I work for we, I actually did the marketing for the Living benefit riders on a term policy and it was a much more, I would say, easy to communicate benefit because usually you know people don't like to talk about their death. What happens when you die? How long do you plan to stay dead as one of my mentors love to ask.

Whereas living benefits, you've actually got some value while you're living. So it's not initially a gift to somebody else. You may actually benefit from yourself.

I guess, now, actuaries. I know what the actuaries do. Let me ask the real tough question, which is, how about anti-selection? Like, hmm, Cally, I think I'm gonna have some fertility issues. Let me go buy the policy.

Cally Myhrum (13:49) Yeah, no, great, great question. Life insurance naturally, I think, attracts a more planner-oriented type of person. So that's one of the reasons why, you know, like fertility protection in a life insurance policy is a better risk appetite than fertility insurance on its own. If it's a standalone policy, you're more likely to attract someone who has a higher need.

So for an advisor perspective, this is part of the natural conversation that they're already having with customers. Do you want to protect your family? Do you have a home? Do you want to build a family one day? Do you plan to have a family one day? So as a financial conversation, it's a really natural segue into that conversation.

Life insurance also has the underwriting and the risk framework that would help adverse selection for fertility insurance, because they check pharmacy records, they check health records. So if somebody's already on a fertility treatment pathway, that's going to get picked up, yeah, right from the underwriting perspective.

Paul Tyler (14:50) You're gonna know. You'll know. Yeah. So, just tell me, what does this all cover? Freezing the eggs, what else? What are the other benefits?

Cally Myhrum (14:59) Yeah. So we've built a novel term life insurance with embedded fertility protection. So it's a living benefit up to $75,000 alongside a life insurance policy. And we cover everything from fertility testing to medications up to the more expensive procedures like IUI and IVF. We also cover egg freezing in the event of a cancer diagnosis.

So that $75,000 benefit will be triggered once there's a diagnosis of infertility where there's an underlying medical cause that's been identified.

Paul Tyler (15:36) All right. So does it work a little bit like a living benefit where, you know, typical, you know, living benefit products say for, I buy this, I have a terminal illness, I can get the death benefit earlier, but there's almost like an actuarial revaluation. It's a little too technical, but maybe I had a, in short, I had a million dollar life insurance policy. I'm probably not going to need a million dollars. I may get something, but it's probably not the full amount because of what I paid in, what my new life expectancy is.

How would that work? Would I get, hey, I've got this problem, I get 100% of my fertility payments. Is that how that works, covered?

Cally Myhrum (16:16) There's a lifetime maximum is 75,000, but we have annual maximums of 25,000. So it actually doesn't draw down from the death benefit. It's an integrated but distinct benefit within a life policy. So there's not gonna be any repricing after it's distributed.

Paul Tyler (16:35) Okay. Now, would I, may I be able to buy this policy?

Cally Myhrum (16:39) Yes, it is available to individuals, not just couples, but individuals, female and male, up to age 35. You know, one of the...

Paul Tyler (16:47) Okay, well, okay, so maybe not really me. You're being kind, but I'd cap out. I'd cap out. I'm 37 for the record. Okay. Interesting.

Cally Myhrum (16:55) Not you. I do too. I do too. Yeah.

Paul Tyler (17:00) Now, what about group versus individual? I think the last time we talked, you were sort of saying, is this a group? I think you were going down the individual group line, but also thinking about group.

Cally Myhrum (17:13) Yeah. Voluntary benefit. Yeah. There's huge demand in areas for both. You know, like I was saying earlier, there's, you know, as employer benefits continue to expand and offer more fertility coverage, we're hearing from voluntary benefit providers and HR leaders that there's a lot of benefits out there that currently, you know, don't meet the needs of all businesses. And they want to be able to offer something that's voluntary that people can buy through their employer.

It's important that it's individually owned so that people have the autonomy and the choice to go about their lives and work wherever they want to work and not feel stuck in a job that they hate just because they have good benefits, which is what I hear more often than not from people, either going to work for a company or staying in a company that they don't like in order to have fertility care.

Paul Tyler (18:06) Listen, first of all, I think it's a really interesting product. Every time I've mentioned to people, I think we've gotten interested. We had an interest at that dinner we had with our team out in Omaha. A lot of interest at our company in maybe bringing you to meet some of the carriers we work for.

Maybe just talk about the opportunity. Yeah. I know. I know you're on the list. So I guess product is really interesting. How big is this market? How does it compare to the pet industry? You started talking about the pet industry, insurance industry.

Cally Myhrum (18:26) You say when, you say when, I'm there. Yeah, this is a blue ocean that we're going into. This is a $265 billion untapped category for fertility-focused life insurance. Just looking at life insurance on its own, the total life in annuities business in 2028, I think it's gonna be 1.5 trillion.

So when we look at, okay, are the policy age limits and who can buy it, we come up with a $265 billion blue ocean for fertility-focused life insurance. So it's not niche. It's funny because a lot of people are attracted to what we're building and what we're doing because it's so niche. It's actually so much bigger than we think, especially because men can buy it as well.

Half of infertility cases are male factor. And even if it's the woman bearing the burden of the disease, you know, $66,000, you better believe that affects the man too, right? That's a down payment on a home. That's a mortgage. That's education, that's savings, that's retirement.

Paul Tyler (19:47) It's a nice car. Yeah, very nice car.

Well, let's talk about some of the changes. Like, I mean, it's interesting from policy perspective. Let me get you to sort of pull out your crystal ball for regulators as good as it is. Lots and lots of talk, especially with this current administration, some of the supporters about how important it is to have families. You know, Elon Musk is a very, very loud voice on the topic of people having more kids.

There's plus and minus. One is you got a lot of awareness. The other is I could see the risk would be, you know, listen, states just mandate this stuff. You know, if I've got health care in a state, no, what does that landscape look like today? I'm sure there are four or five different winds blowing in different directions at this point.

Cally Myhrum (20:41) Oh yeah. Well, yeah. And after Roe v Wade was repealed, you know, we see reproductive health laws and decisions going down to the states. So it's going to continue to look pretty fragmented state by state.

And kind of back to the challenge of this being regulated as a health product, it leaves a lot up to the people who are making decisions about what is health and who is deserving of healthcare. I do see a lot of excitement around IVF, a lot of focus on fertility that's shed light in a very positive way. But also at the same time, I'm seeing a lot of exclusive and exclusionary language about who is deserving of it and who gets it.

One of the biggest takeaways of doing the global insurance accelerator was the proximity to regulators and getting to build relationships with different state regulators. Because they have to be comfortable with how this is filed. So I've been very strategic about from the beginning building this alongside regulator input so that they agree that this is a financial product.

Paul Tyler (21:58) Yeah, it's, you know, I've been thinking of like the, you know, healthcare after age 65, you know, do you want to buy Med Advantage or do you want MedSupp?

If you buy Med Supp, you've got a lot of freedom. You can go where you want. Med Advantage, you know. Maybe it covers, maybe it doesn't. And by the way, wait until next year. So I think there'll be a lot of arguments of, I think, even if they do, the state does it. I bet, just like you say, there will be a lot of limits, controls. You may not have the choice as much as you think of who you go to.

Cally Myhrum (22:38) Yeah, yeah, yeah. I mean, filing this as a life insurance product and as a financial product was kind of like me using my crystal ball in a way, right? Like just to see kind of where things are going and a lot of uncertainty ahead. But as people are going to need more autonomy and more choice and more freedom to be able to build their own family on their terms.

Paul Tyler (23:05) Yeah. Well, tell me about where you are in the journey. I know you've had a lot of interest from carriers, but...

Cally Myhrum (23:11) Yes, yeah, we're in active pilot design with multiple carriers now. The next biggest step for us is actually filing the product. We've been working closely with regulators from the Interstate Compact and they have a new innovative program for novel life insurance products getting filed.

So we've been building the actuarial models with experienced life and health actuaries. We have reinsurance engaged. We have a product that's ready to file, ready to be filed and ready to go. We have building agreements with voluntary benefit providers that are excited to offer this once it's available.

And so the filing of the product is really a next big step for us and we're walking that path with carriers.

Paul Tyler (23:57) So yeah, you've worked with the carriers, you've worked with the state. How about the reinsurers? Have you talked, I'm presuming you have to go to market with one of the major reinsurers.

Cally Myhrum (24:13) Yes, yeah, we are, you know, in partnership with a major reinsurer. I can't say it just yet, but of the reinsurers that I've talked to, they're one of the only ones that had already done some pricing on their own related to fertility or infertility. So they had come to the conversation with some expertise and experience and we really got to connect the dots for them.

And so it really helps being able to have a de-risked product that we can bring to carriers by having a reinsurance partner that's willing to take on a majority of the risk. Because carriers know term life, right? They know how to price that. And it's been a huge advantage to really de-risk it for the carriers to have a reputable reinsurer in the mix with us.

Paul Tyler (24:58) Yeah, right. Okay, so great. You get the carrier, you launch this thing. What kind of support do you have to put in place or build? Does this look like one of those legal services where you're going to have people contract around the country to provide counseling service?

Cally Myhrum (25:17) Well, yeah, I mean, I think this is the area where we will be equipping financial advisors and field agents with the knowledge and the education to be able to talk about this product. Health issues like fertility or infertility can be really sensitive or very, we talk very privately about these things.

So really, building the financial education and talking about this as a financial product and naturally weaving it in to the financial planning and legacy building conversations that advisors are already having with their customers and with their leads. We have to build something that fits within their existing portfolio and help them sound really smart as they're talking about it. They don't like to talk about things that they don't feel like they know very well. So education is huge.

Paul Tyler (26:11) No, I think it's really smart. We had Darren Rowe on an earlier podcast who's has this, you know, you probably know Darren with Cadence. He's doing sort of a genetic, has a genetic testing offer there, they're coming out to marketplace. But, you know, he invests a lot of time, kinda like, sounds like you are, thinking about how do you actually educate advisors to talk about these benefits?

Because it's one thing to come up with product, but you've also gotta have some people in the field who actually can explain and talk about the why and how this thing will work.

Cally Myhrum (26:45) Mm-hmm. Yeah.

Paul Tyler (26:46) It's March, like I guess beginning of the second quarter for you. What are the big check, you know, waypoints for you for the rest of the year?

Cally Myhrum (26:58) To get this product filed and commercialized. I cannot wait to say that we've written the first life insurance policy with fertility protection. That's, yeah. I mean, we're on the path. That's the path, that's the plan. There's always the uncertainties that come with the regulators when it comes to filing a novel product.

Thankfully, hopefully the work that I've been doing alongside regulators and being very strategic in building it alongside them will help bring down that time. But you don't know what you don't know, especially when you're building something brand new.

Paul Tyler (27:08) Now, do you think that'll happen this year? Okay, good.

Paul Tyler (27:40) Oh yeah, yeah. Well, let me ask you. You gave us a little bit of your why up front. I'm gonna say, what's the why that keeps you going? Because, you know, you do anything new, boy, it's so easy to get overly excited about the good news, and it's so easy to feel down when things don't go right. What's your secret to persisting here?

Cally Myhrum (28:02) I have this mantra that I like to say, you know, be stubborn on the vision, but flexible on the journey. I'm very stubborn on what the vision is. And for me until we hear Jake from State Farm saying that you can bundle your home auto and fertility, I'm not done.

And so, yeah, you cannot convince me that we can figure out pet insurance, but we can't figure this out. And I think one of the biggest takeaways for why I wanted to do this was, the reason why it doesn't exist has more to do with long standing and long held misconceptions and misunderstandings about fertility and about infertility, namely that we really wedge it into a women's health issue. Yes, it disproportionately affects women. But I think that understanding of, for that limited understanding of it is actually what's holding us back.

So when you reframe the problem statement slightly to say, this is an everyone issue, this is a global health issue, I mean, how did we get here? How could you and I get here? You know, this is not just a niche, you know, women's health, you know, issue that we're talking about.

So once we reframe the problem statement slightly, then you see a world of possibilities open to you. And that, I mean, I cannot put this down. You cannot. What started as curiosity has really been conviction. And I'm more convinced than ever that affordable, accessible options for fertility coverage are possible.

And if it were easy, it would already be done. And building a new category and building something new is tough work. But I feel very honored to do it. You won't find me doing anything else. At least not for a little while.

So I think that, like my stubbornness on the vision, Paul, is what really keeps me going because it is so within reach and carriers are seeing it too. People are understanding that this is one of the largest financially devastating health challenges that people go through and it affects one in six people. So this is not something that is not major. It's a global health crisis.

Paul Tyler (30:20) Hey, listen, I love it. And hopefully some people on the other end of the show do too. If people, carriers want to find out more, advisors want to find out more, what's the best way to find you and learn more?

Cally Myhrum (30:36) Yeah, we have a website, www.insuredbylotus.com. You can also find us on LinkedIn, Lotus Fertility Insurance. I'm Cally Myhrum on LinkedIn. You can find me there as well. But yeah, reach out. We have a whole host of information. And once we get into more of a confidentiality agreement with carriers, we have a whole data room with our product specs, our pricing, our assumptions, and all that research. So yeah, would be more than happy to have a conversation with any carrier that's interested.

Paul Tyler (31:07) Excellent. All right. Listen, thanks so much for joining us. I want to thank our listeners. Yeah, and if you like the show, share it with your friends or your colleagues, and be sure to join us next week for another episode of the LNA Hub. Thanks.

Cally Myhrum (31:22) Thank you.