Is a Discount Worth Letting Your Insurance Company Track You?

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Meet “Insurefitness”: When it comes to life insurance, it pays to workout. At least, it does when you purchase through certain brokers. That’s because the next generation of life insurance is tracking health data, like exercise, to offer breaks on life insurance costs. 

The old way: Historically, life insurance premiums are determined based on medical history and a medical exam. 

The new way: To qualify for life insurance discounts requires sharing more details than medical history, including ongoing data about exercise, eating and sleeping habits. This can be self-reported or automatically reported through a wearable monitoring device, like a FitBit. When asked how accurate self-reporting is, Sproutt president Assaf Henkin asserts that “people tend strongly to tell the truth.” This is both because skirting accuracy can make life insurance more complicated later on. 

The major players: John Hancock first launched its VitalityPLUS plan, which allows users to save up to 25% on premiums, about five years ago. Now, online insurance brokers including HealthIQ and Sproutt, are doing the same. Sproutt specifically plans to offer a 20% benefit for fitness activity that will be built into the plan through a discount on premiums or a “free” increase in death benefit. 

The discounts: John Hancock’s program allows the insured to earn Vitality Points and with them, discounts of up to 25% (at the platinum level). According to the Health IQ website, the company delivers discounts of up to 8% for “health literacy” as well as the potential for an additional 9% for having an “active lifestyle.” Sproutt’s specific discounts are forthcoming. 

The tracking trend: The idea of tracking customer data to provide better insurance rates isn’t new to customers or insurance companies. Plenty of drivers, for example, allow insurance companies to track their driving habits for “safe driver discounts.” Tracking is new in the health space, however, and it’s expected to grow.

According to Jonathan Godsall, a partner at McKinsey & Company, incentivizing healthy living is “the most important trend in life insurance in at least a decade.” He expects the idea to really take root in the industry within three to five years. 

Why it matters: Life insurance is about to change in big ways. Even if you already have life insurance, it’s worth knowing about the existence of health-based discount programs, which you may be able to add to policies in the future.

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