By Ben Mattlin, FA-mag.com
In late-September, the news nearly sent shivers through the insurance world. “Strap on the Fitbit,” read a headline over Reuters newswire. “John Hancock to sell only interactive life insurance.”
This came after the insurance giant itself issued a press release titled, “John Hancock Leaves Traditional Life Insurance Model Behind to Incentivize Longer, Healthier Lives.”
What did it all mean? Readers could be forgiven for getting the impression that, henceforth, all Hancock life insurance policies would be based on interactive health-related data: what policyholders had to eat, how much they exercised, whether they took the stairs or used the elevator, and so forth. The implication, it was assumed, was that the 150-year-old provider would stop underwriting traditional life insurance and instead sell ONLY policies that tracked such fitness and health data through wearable devices and smartphones. What would happen to those less athletically inclined was anybody’s guess.
But this was not exactly the truth.
“Using a wearable device or smartphone is completely optional,” Brooks Tingle, president and CEO of John Hancock Insurance, explained later. “There are no penalties for not participating in the program. The customer simply will not earn rewards.”
Optional? Yes. The option is a rewards program called Vitality, and it’s been available to some Hancock policyholders since 2015. Some, but not all. That’s what’s about to change.
“Moving forward, all John Hancock life insurance policies will come with Vitality,” said Tingle.
He defined Vitality as “a tech-enabled wellness program that rewards customers for the healthier choices they make linked to fitness, mindfulness and nutrition.” There are two tiers:
1) Vitality GO, a free version that will come with every life insurance policy from now on, offers online fitness and nutritional advice. Users can set personalized health goals and, if they reach them, they are rewarded with “discounts at major brand outlets,” Tingle elaborated.
2) For $2 a month, policyholders can sign on to Vitality PLUS, in which the rewards include vouchers and coupons for even more products, and discounted premiums.
“How much a customer participates will be up to them,” stressed Tingle. With either version, participants are “rewarded for the everyday steps they take to live longer, healthier lives—including walking, eating well and visiting a doctor for a health screening.”
Perhaps most important of all, participation will not affect eligibility or base rates. “Our underwriting practices are entirely separate from Vitality and will not change,” he stated
So why did Hancock make this move? Tingle said it’s “the right thing to do for our customers, our business and society.” By incentivizing customers to maintain a healthy lifestyle, the insurer is plainly trying to help policyholders live longer, and therefore pay premiums for longer before receiving benefits. But in fairness, it does seem a win-win proposition.
“It makes wellness more accessible and helps Americans live longer, healthier lives,” insisted Tingle. Moreover, he noted a significant shift from “infectious to lifestyle diseases,” diseases that can be prevented or even reversed through healthy habits. “America’s health is at risk,” he said.
Since its inception, the Vitality program has helped policyholders achieve some impressive milestones, he said. They’ve taken nearly twice as many steps as the average American and, in general, logged more than 3 million “healthy activities” such as walking, swimming and biking.
What happens to those who don’t take advantage of the program, either because of lack of interest or because of a health change? Nothing, Tingle said. “The life insurance policy doesn’t change if an insured’s health changes. If someone has a policy with Vitality and their health changes, they may choose from a variety of ways to continue to participate in the program, or they may qualify for a waiver. Or they may simply choose not to participate in Vitality. They won’t lose anything except the chance to earn rewards.”
Of course, this means that John Hancock is collecting a lot of personal data about its members. But for those concerned about civil liberties and privacy issues, Tingle responded, “Our customers can choose how little or how much data they share with us through Vitality. Their data is private. We do not sell it to third parties.”
Whether or not this expansion proves successful remains to be seen. But if it does, you can bet other insurers will follow suit — a tracksuit, swimsuit or business suit, to be determined.