John Hancock wins for next big idea in life insurance

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John Hancock is the first life insurance company to offer something this radical to American consumers — let the company monitor your health on a Fitbit tracker you wear and pay less on your life insurance premiums. At first glance, the proposal seems far-fetched, but there’s promise for positive change in between the lines.

In most life insurance companies, premiums are determined after employees review a snapshot of your health: you go in, document your family history and state your existing health conditions such as high cholesterol or hypertension. From that point on, your premiums are fixed. The problem with human health, however, is that it doesn’t remain static. If you decided that you wanted to do something about your health problems and started exercising regularly to improve your health, your premiums would remain high.

John Hancock and its partner company, Vitality, aims to solve this problem by offering premiums tailored to each individual’s present health. In exchange for wearing a free Fitbit monitor, which monitors your activity levels at the gym and sends the information back to the insurance company, you can receive up to a 15 percent discount on your premiums. The more you exercise, the lower the premium you pay because statistically, you have a greater chance of living longer. Tie exercise to decreasing premiums and people are incentivised to improve their own health. It’s a win-win situation as you can continue to live a long, fruitful life while the company is less likely to have to pay for your premature death.

While many people might balk at the idea of giving out unnecessary personal information to life insurance firms for fear of hacking or privacy concerns, John Hancock doesn’t force you to provide any information. Those who prefer the more traditional means of determining premiums can simply continue with a process that they’re comfortable. But for those who see potential benefits and want to take the leap, this revamped premium payment system might just rejuvenate the declining life insurance industry and create a new precedent for how life insurance is provided in the U.S.