Insurance Companies Are Rewarding Good Health

When you setup a life insurance policy, your premium is decided by a number of factors. The rate you will pay is calculated based on your age, sex, smoker status and a number of other personal and medical underwriting criteria.
A 30 year old non-smoking female with no major health issues will pay a whole lot less than an overweight 25 year old male who smokes for the same amount of coverage. Here’s the interesting thing though – once your insurance is underwritten and approved, you can change countless aspects of your lifestyle, take up risky activities and develop serious health concerns and there’s nothing the insurance company can do to change what you pay. Once the policy is approved and in force, the premiums are guaranteed (in almost all cases other than mortgage insurance) for the length of the term that you agreed to.
This means that the healthy 30 year old female I mentioned above could start smoking, go bull-fighting every weekend, gain a lot of weight and develop any number of illnesses without seeing her premiums change.
Insurance companies have to assume that a certain percentage of the policy holders they insure will make negative lifestyle choices and they price this into their insurance premiums. One of the major Canadian insurers has come out with a new product to change this though.
This insurer is about to bring out a new life insurance product that rewards plan holders for making healthy choices and being active. The insurer will offer policyholders a free Garmin “activity device” that will track how much exercise they attain each day. Policyholders will earn “points” for completing many healthy living activities such as exercising, taking health education courses, getting a flu shot or even an annual physical. The more points they accumulate each year, the greater the status they attain in the program which provides them with rewards and benefits including reduced insurance premiums.
It sounds like a win for everyone right? The insurance company will create a larger portfolio of healthy insured individuals which should result in lower death claims, Garmin is going to ship a whole bunch of their devices and the individuals insured will get a free device, potentially lower their premiums and get some great incentive to take better care of themselves.
Sure there will be some people who feel this is an invasion of their privacy but remember that the program is purely volunteer. The insurance company will still sell their regular life insurance product line that won’t involve this activity tracker. The choice will be entirely up to you if you’d like to participate.
My guess is that this is only the beginning. Other life insurance providers will likely follow suit and I can really only see this benefitting those who commit to a healthier lifestyle. The vast majority of Canadians need life insurance and many are currently under-insured. I hope that this new program and the others that follow will be the extra nudge you need to get yourself properly insured and maybe even a little healthier at the same time!