Run for Your Life…insurance
Would you wear a health tracker to get a discount on your life insurance? asked Tara Siegel Bernard in The New York Times. John Hancock hopes so. The insurance company has become the first in the U.S. to offer policyholders a discount of up to 15 percent on annual premiums in exchange for providing the company with regular data on exercise habits, cholesterol levels, and other medical information. The firm has teamed with Vitality, a global employeewellness company, to manage the data, and program participants will be given free Fitbit activity monitors. Meeting personalized benchmarks for blood pressure and exercise, getting annual checkups, and taking online health courses will allow users to rack up points that place them in one of three tiers: silver, gold, or platinum. The higher the tier, the more they save.
For healthy adults, the savings might be worth it, said Leslie Scism in WSJ.com. John Hancock says “a 45yearold couple each buying $500,000 universallife policies could save about $25,000 on their premiums to age 85,” assuming they get gold status every year. And with industrywide sales of life insurance way down from 1980s levels, the company clearly hopes to appeal to new customers who might see obtaining discounts as “readily achievable.”
Privacy advocates are raising red flags, said Christina Farr in NPR.org. They fear that auto, health, and life insurers will begin “hedging their risks by monitoring your every move.” Already, some car insurers offer discounts to people who install a device in their car to monitor their driving. And not only is the security of your data in question, privacy advocates say, but so are insurers’ ultimate intentions. There soon may be “very little to stop a life insurance company from putting those who fail to stay active on a blacklist,” either raising their rates or denying them coverage altogether.
If tracking catches on, “I’d expect some pushback” from consumers, said Megan McArdle in BloombergView.com. The biggest discounts will end up going “to folks with higher incomes,” who tend to be better educated and healthier. From an actuarial perspective, “this makes total sense.” Healthier people are less likely to die early, and that saves the insurer money. But the result is that poorer, less healthy people—the ones who need insurance most—end up paying more. That’s “exactly the sort of sound underwriting we just outlawed in the health insurance market.” As other insurers begin offering datafordiscount deals, privacy may become the least of our worries. The real problem will be insurance prices that are “too accurate for comfort.”
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