For years, health insurance plans have been offering perks like a Fitbit or free gym membership as a reward for working out. Now life insurance companies are increasingly getting into the game.
The trend to what might be called “insurefitness” began about five years ago, when John Hancock launched its VitalityPLUS plan, which allows you to earn up to a 25% discount on premiums. Now online broker Health IQ says it also offers such breaks to its healthiest applicants. Sproutt, another such broker, says it will soon launch policies that provide up to a 20% benefit for fitness activity, either through a discount on premiums or a “free” increase in death benefit.
Apart from the benefits to policyholders, the programs make good business sense, says John Hancock chief executive Brooks Tingle. “They’re the life insurance equivalent of good-driver discounts on car policies — a reward to the customers who embody less risky behavior.” And many more insurers will soon be joining in, says Jonathan Godsall, a partner at McKinsey & Company. He sees incentives for healthy living as “the most important trend in life insurance in at least a decade,” and predicts industry-wide adoption of fitness and healthy behavior as a ratings factor “within three to five years.”
Even if your insurer doesn’t have such a program yet, there’s value in knowing how the current incentives work and how the growth of insurefitness might benefit you, now or in future.
How the plans work
Activity-based life insurance programs require sharing more information with your insurer than the usual medical data or exam — specifically, details about your exercise, eating and sleeping habits, either self-reported or via such wearable monitoring devices as Fitbits and Amazon Halos.
The experts we contacted for this story all reported a high level of comfort among customers with such sharing, especially when there are incentives to do so. And when data must be self-reported “people tend strongly to tell the truth,” says Sproutt chief executive Assaf Henkin — in part, he says, because they may know the importance of accuracy when applying for life insurance, since fudging on the facts can complicate things later.
Here are details on three of the major programs:
John Hancock Vitality
Tingle correctly describes his company’s plan as “a frequent flier program for life insurance,” but with rewards for healthy behavior rather than miles flown or dollars spent with an airline. All John Hancock customers have the option to automatically enroll in the Vitality GO program for free at the basic Bronze membership level. That allows points to be earned for workouts and other positive behaviors, data on which is mostly fed automatically to the insurer via the Vitality app. So, as examples, you can earn 10 Vitality points a day for walking 5,000 steps and 30 points for completing a 30-minute workout at home or in a gym.
Earning 3,000 points grants an upgrade to VitalityPLUS. (That perk also comes free if you have a term policy with Hancock, or for $3 a month extra if you hold a permanent policy.) You can then enjoy such discounts as 25% off healthy foods at thousands of grocery stores, Tingle says, and be eligible for premium discounts. Being upgraded to Silver through your healthy behavior might cut your premiums by 5% to 7%, he says, while earning Gold status increases the discount to more like 10%, and achieving Platinum status entitles you to up to 25% off.
Tingle says the program’s most rewarded members aren’t really “triathletes and the like.” Instead, he says, they’re more like “average people” who are less healthy when they start the program and then take measures to improve their health, such as quitting smoking or losing weight in order to better control their diabetes.
Sproutt now uses self-reported data on your fitness activities, eating habits and more to help complete a pre-approval process that Henkin says helps the broker pitch and match customers to insurers, using information beyond what is typically asked when applying for life insurance to get better rates for applicants.
But within a few months, says Henkin, Sproutt plans to unveil its own policies, underwritten by “major re-insurers,” that will incorporate ongoing fitness data into policy pricing and coverage. Henkin says benefits from healthy behaviors could either cut premiums or increase the policy’s death benefit. “Let’s say you qualify for a $1 million benefit under the other factors, and pay 100 bucks a month. Because you’re fitter than most, we might increase that benefit to $1.2 million but still charge you only the $100.”
We have less detail on Health IQ’s offerings than those of the others, since the company did not respond to an information request — a situation some other media outlets who have contacted the online broker have also reported.
But the Health IQ website suggests the company delivers discounts to its customers of up to 8% for displaying “health literacy,” plus potentially up to an additional 9% for having an “active lifestyle.” Further discounts of up to 24% are awarded, the company claims, through reclassifying applicants into more favorable risk categories based on their health knowledge and fitness activity.
What you can do and what’s ahead
Obviously, the programs we’ve profiled are intriguing options if you’re shopping for life insurance and also plan — or at least aspire — to initiate or continue healthy habits in your life. The prospect of lowering the cost of insurance by taking better care of yourself may even provide added incentive to take steps you’ve wanted to take for a while. You can kick the tires of the Sproutt program by completing the company’s online healthy living questionnaire, which will yield a Quality of Life Index that allows you to see which health and fitness factors are helping and hurting your eligibility for insurance.
When insurefitness programs come to your life insurer, says Godsall, they’ll almost certainly utilize devices such a wearable monitors, together with either existing fitness apps or new ones the insurers develop. So the likely arrival of such programs could be further incentive, too, to begin using such devices and apps now to track your activity — and encourage you to exercise more.
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