Are Fitness Stats the 'Frequent-Flier Miles' of the Insurance Industry?

Working with Apple's HealthKit platform, one company is letting customers use fitness trackers to earn life insurance discounts.

by Jonathan Takiff, The Philadelphia Inquirer / May 1, 2015
Charlie Wynkoop tracks his exercise using a digital fitness device he wears on his wrist and syncs with his smartphone at his home in West Los Angeles on July 23, 2014. Los Angeles Times/Lawrence K. Ho

(TNS) -- Keeping fit used to be its own reward. Now, living healthy can also save you money on life insurance, if you're willing to share statistics about your fitness campaign gathered on a smart watch, fitness band or mobile phone.

On Monday, John Hancock Insurance dangled a new app ("Vitality") for iPhone, iPod Touch and Apple Watch users that enables the deal, working with Apple's HealthKit platform to track your vitals and good conduct.

Walk or run a lot, lower your blood pressure (and be able to prove it) and it will earn you lower premiums — discounted as much as 15 percent — for new John Hancock Vitality life insurance available in Universal Life and Term Life forms. (The former is available regionally in Pennsylvania and Delaware, the latter just in Delaware.)

Accumulating "Vitality Points" - likewise won by completing health-related activities, such as an annual health screening - also can "earn valuable travel, shopping, and entertainment rewards and discounts from leading retailers," the insurer said.

Not an Apple products user? John Hancock brings you into the loop by strapping on a Fitbit Activity Band and dutifully following a healthy regime. The Boston-based insurer will even give you the Fitbit free when signing up for a policy.

Insurance broker Mike Gorlick, president and CEO of Zenith Marketing Group, which has a Wayne office, says the Vitality rider on new Hancock policies "has all the makings of a game-changer." He calls it an "incentive program" akin to a credit card that builds up frequent-flier miles or hotel loyalty points, "which have been proven to increase customer loyalty and engagement."

Lots of potential customers may be predisposed to the plan. Parks Associates' Wearables Research study found that 52 percent of the 8.5 million U.S. broadband households now planning to buy a smart watch will then use it to track their fitness activities. So why not share the good news and benefit?

The company estimates that a 45-year-old couple of average health buying Protection UL (universal life) policies of $500,000 each could save more than $25,000 on their premiums by the time they reach 85, via Vitality.

Some car insurers have been dangling tech-tracking, "pay as you drive" sales pitches for a decade, digging in with it the last four years. Their more "Big Brother"-ish monitoring is most often done with a palm-size tool that plugs into the diagnostic port of a car. (All cars made after 1996 have one.) The device then pulls data from the car's computer - tracking the time of day you drive, your mileage, and your acceleration and braking rates — and sends that to the insurer via a cellular network. GPS (global positioning system) also is built into the device, but is used only for "research and development purposes," the insurers say.

Fast-adopted by more than a million customers, Progressive's "user-based insurance" plan Snapshot benefits customers (10 to 15 percent) who "avoid hard braking or stop-and-go driving, drive fewer than 30 miles a day or avoid driving between midnight and 4 a.m.," states an FAQ for customers.

Allstate's Drivewise program collects the same data as Progressive, plus the number of times you exceed 80 mph. GMAC Insurance and State Farm's Drive Safe and Save programs track customers with GM's OnStar monitoring built into cars. (Most new vehicles will have onboard connectivity within a few years.)

The downside is that a bad driving report can cost you. Allstate notes up front that it will raise the premiums of newly monitored customers who previously underestimated the actual number of miles they drive annually.

Hancock's Vitality program doesn't penalize policyholders who fall short and turn off the tracking. "The program focuses on positive health activities only," spokeswoman Melissa Berczuk said. "We don't award negative points or take away points for having biometrics that are out of range."

But you will miss out on all those valuable prizes.

©2015 The Philadelphia Inquirer. Distributed by Tribune Content Agency, LLC.