Auto insurers offer premium discounts to their customers for taking actions that might reduce the number and size of policy claims: taking a defensive driving course; or installing an anti-lock brake system and daytime running lights.
Rewards that link premiums to policyholder behavior have, however, been noticeably lacking in the life insurance space. Life companies issue a policy and, based on a single point-in-time assessment as to the insured's mortality risk, collect the contract-prescribed premiums.
That's now changing. At an April 8 dinner I attended, John Hancock Financial unveiled an initiative that promises to transform a largely passive relationship between insurer and insured to one where customers are rewarded over the life of a policy for healthy living.
Developed in partnership with The Vitality Group, a provider of incentive-based wellness programs, the solution avails policyholders of opportunities to save on their annual premiums and earn rewards and discounts by taking steps to improve their health.
How the program works
John Hancock policyholders take an online Vitality Health Review to determine their "vitality age." An indicator of health that may vary from the policyholder's actual age, the vitality age can be lowered by policyholders as they pursue wellness-related activities: exercising, getting an annual health screening or securing a flu shot.
As part of the program, policyholders receive personalized health goals and can log their activities using online and automated tools. One that John Hancock is giving to policyholders for free is Fitbit, a high-tech wristband that tracks the user's number of steps walked, quality of sleep and other personal metrics.
The device transmits this information to the insurer; this data, when combined with other health-related activities, earns "vitality points" for the policyholder. These points, in turn, can be redeemed for rewards (e.g., retailer discounts). Depending on the insurance contract purchased, customer can also cut their annual premium by up 15 percent — a potentially significant sum over the life of a policy.
During the dinner, John Hancock described this "smart life insurance" program as a representing a paradigm shift for the industry. By tying the ongoing cost of premiums to certain activities, the company expects that policyholders will become more actively involved in maintaining their health long-term.
