Life insurance meets modern technology. Anyone who has applied for life insurance will know you need to answer a long list of health questions, possibly participate in a paramedical exam, and your doctor may be asked to complete an attending physicians report on your health in order to secure coverage.
It’s no secret that insurance companies do their homework on your health before agreeing to a policy binding them to pay thousands of dollars should you meet an untimely death. Insurance underwriters carefully manage the longevity and mortality risk for the pool of people they insure. If you have poor health you may be denied coverage or required to pay a higher price for it. On the flip side, if you have good health you may be offered a standard or sometimes preferred rate premium.
Two people the same age and sex with similar health at application will pay the same premium but as time goes on each of those people may treat their ongoing health and fitness very differently.
What if you are the person who has excellent health and takes very good care of yourself? What if you are significantly more fit and active than the majority of the population, committed to exercise on a regular basis, and eat well? Should you be granted a discount? How can you prove ongoing good health? Enter Fitbit technology.
Manulife Financial Corporation’s US subsidiary (John Hancock) is now offering rate reductions to customers who can demonstrate they are maintaining their fitness and good health, as proven by their Fitbit. It looks as though a Canadian launch of insurance discounts tied to healthy habits may not be too far behind.
How does this work? Similar to traditional life insurance, you complete an application to qualify for your policy, and from there you can register to link your Fitbit or other wearable technology to the program. Once enrolled, members start earning points for maintaining healthy lifestyle activity. Based on the amount of points accumulated, a healthy person could earn themselves up to an additional 15% off their premium, compared to their less active counterparts.
Details of the Canadian program are still being ironed out but it appears as though Canadian consumers are interested. Wearable technology has become so widespread and the demand for fitness trackers continues to grow.
Critics and privacy experts express some concern due to the personal nature of the data collected and indicate this might not be an ideal choice or a discount that’s worth it for everyone.
On the opposing side, insurance companies already collect lots of personal health data to determine insurability and already follow strict rules and regulations surrounding privacy laws.
While some consumers might not be comfortable with this health data collection, many others will welcome it. Millions of people around the world already track and document their personal fitness, health and other information on different apps, technology and devices. This concept allows people to put their data to work and prove themselves worthy of a fitness discount.
It will be interesting to see the evolution of fitness tracking and wearable technology in the Canadian life insurance market.
Stephanie Farrow, B.A., CFP., Stephanie has over 20 years experience in the financial services industry, a diploma in Financial Planning from the Canadian Institute of Financial Planning and Certified Financial Planner designation. Stephanie has been writing a financial column for local business magazine Elgin This Month since 2010. Stephanie and her husband Ken Farrow own Farrow Financial Services Inc. About our Farrow Financial Team.