Life Insurance Program That Encourages Longevity

A retired couple, Brian and Carla Restid, bought life insurance protect their way of life in retirement, Paul Sullivan writes on NY Times. After about a year, the couple upgraded to a program offered by the insurer to get healthier and more fit, the publication writes.

Due to their improved well-being, they have saved about $700 in premiums. 

“It provided a way for me to be accountable to myself,” said Mrs. Restid.

“It provided me a way to get going and keep going. I was exercising before, but it wasn’t at the forefront of my mind. This set me on a life-changing program.”

Vitality, the program they joined, will be included in all new life insurance policies underwritten by John Hancock.

The program was developed in conjunction with Vitality, a company that works with insurers around the world on similar plans.

“Vitality has been an optional benefit,” said Brooks Tingle, president and CEO of John Hancock Insurance.

“Now, we’re saying we won’t issue life insurance policies without these Vitality benefits on them.”

If they get involved, customers will be able to lessen premiums by up to 15%.

Additionally, customers will be asked to report their habits on eating, drinking as well as exercise to their insurance company.

“For an insurer, you’re going to get healthier people — that’s why they’re going to give you all their data,” said Katherine L. Milkman, a professor at the University of Pennsylvania.  

Now insurance sales agents can put the buyer in charge, offering lower premiums as well as a range of financial incentives for the policyholder to try to live longer.

After every ten workouts, the couple gets to spin a wheel of fortune on a mobile app and accrue points for gift cards at various retailers.

Mr. Restid said that when the couple traveled to New York this summer, they stayed at a hotel that was part of the program and $1200.

“The main thing we’ve seen in a variety of studies looking at health incentives is that healthy people are very interested in being in these types of programs,” said Justin Sydnor, a professor at the University of Wisconsin at Madison.

“One, it’s about money, but two, healthy people don’t like to fail at getting the incentives. People who know they’re going to struggle aren’t as interested in programs like this.”

For John Hancock, the program is great for business.

“The longer people live, the more money we make,” Mr. Tingle said. “If we can collectively help our customers live just a bit longer, it’s quite advantageous for us as a company.”

The market for life insurance is vast. About half of Americans own some form.

Close to one-third own individual policies.

Individual policies are more profitable than group policies they could get through work.

“It’s a great idea to extend it to their full line of products, but they have not had spectacular success with the product so far,” said Steven N. Weisbart, chief economist at Insurance Information Institute, a trade group.

“People do respond to incentives,” Mr. Weisbart said. “But the question is, do people respond to these incentives? The answer seems to be, not really.”

Mr. Tingle said that what drove the commitment to make Vitality mandatory on all new policies was but how customers used the offering. In the past three years, use of the software has increased 706%.

The company has tried various strategies to get customers involved, beyond just lower premiums.

One shows just how encouraged people are by incentives. For example, customers may sign up to be sent an Apple Watch. If they meet a set of monthly goals over 2 years, the Apple watch is free.

“People like free things in general,” Mr. Tingle said.

“But I get letters from very wealthy individuals who are obsessed with getting that bill to zero.”

According to a poll conducted by the company, 29% of participants claimed that getting the free watch was “one of the main factors” in their choice to buy this kind of life insurance.

The Restids they put on their activity trackers in the morning to count their daily steps.

Mrs. Restid said that before she signed up for the program, she logged close to 4,000 steps. Now, she gets close to 10,000 steps and feels more energized after years of being on disability.

A reviewer of the John Hancock program, Dr. Mozaffarian, said the application used a scoring system to persuade people to purchase more nutritious food.

Customers are awarded more points for purchases of foods with high nutritional value.


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