Will Wellness Data Revolutionize the Life Insurance Industry?

By buying life insurance, consumers are investing in themselves, and some insurers are taking that sentiment literally. Recently, John Hancock announced a new program that integrates data about client activities into life insurance policies, according to The New York Times.

While the current incarnation of this program may not be appealing to all consumers, the steady march toward greater integration of mobile devices into the insurance selling process and the growing prevalence of personal devices that can track physical activity will continue. This may mean these types of programs – or other systems that integrate personal health information into insurance buying – could become standard during the next few years.

A personal touch has always been a critical component of life insurance sales, and the data provided by these devices could enhance the financial professional-client relationship – if it’s implemented correctly.

The first step

shutterstock_165321734Fitness tracking devices that monitor an individual’s activity have been on the market for a few years, and many offer accurate assessments of a person’s physical activity. While this has traditionally acted as a way to motivate people to achieve their personal fitness goals, John Hancock has become the first American company to use this data to adjust life insurance premiums and offer additional rewards for clients who maintain a healthy lifestyle.

NPR also reported on the program, which is already being used in Australia, Europe, Singapore and South Africa. After a client purchases a policy, they receive a Fitbit tracking device that will monitor their activity. At the end of each year, clients can receive discounts on their life insurance premiums, gift cards, and potentially half price Hyatt hotel nights and cruise discounts as rewards for pursing a healthy lifestyle.

Participants are awarded points for different amounts of physical activity. Over time, these points grant the client access to different reward tiers, with commensurate discounts off their insurance premiums. This type of system offers benefits to the consumers as well as insurers. Traditionally, insurers only conduct a preliminary health examination of potential clients before they are granted a policy. This system does not include provisions for future activities and risky behaviors, such as smoking, after the investigation has taken place.

The monitoring system introduced in this scenario provides insurers with consistent data about their clients, and could be upgraded with even more information about clients’ habits in the future, as tracking devices become more advanced. Accurate tracking, and rewards for that information, could be great ways to build lasting relationships with clients, particularly if financial professionals are seen as partners with clients as they pursue their own health goals. At the same time, some are worried this new frontier represents a breach of privacy.

Concerns about personal information

While the life insurance process has always involved some form of auditing to ensure that the insurer is not taking on unexpected risk, some believe this new type of monitoring is overly invasive. The system implemented by John Hancock allows clients to opt out of supplying certain information to the insurance company, so those client who participate in the program but choose not to submit all their information may not qualify for premium discounts.

Insurance producers who want to capitalize on this technological development will need to emphasize how it represents a partnership between client and financial professional to improve the client’s health while offering additional benefits. While this type of program may push away individuals who want to maintain complete freedom after purchasing a policy, it will also provide a sensation of control for clients who might otherwise feel bound to the initial assessment they received when they purchased a policy.

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Highland Capital Brokerage

Highland Capital Brokerage

Highland Capital Brokerage is committed to developing client-focused relationships with financial advisors using our core competencies of life insurance, annuities, and long-term care. We distinguish ourselves by providing point-of-sale support, advanced marketing, and creative estate and business planning techniques.
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