John Hancock’s Bargain: Give us More Data, You Pay Less in Rates

April 19, 2015 CNBC

By Marqui Mapp

Have you hit your 10,000 steps today?

That milestone could earn you some reward points and major savings on your life insurance premiums, based on a new program from John Hancock and wellness company The Vitality Group. Thanks to wearable devices like Fitbit, the company can track their policyholders’ activity, using the information to provide what they say is more accurate pricing on their universal and term life insurance policies.

“We’ve been trying as an industry I’d say to get people to be more engaged with life insurance products. The program basically works by saying if you stay healthy, you’re going to live a longer, healthier life,” said John Hancock Insurance President Michael Doughty.

“That’s good for us as an insurance company, and it’s also good for you,” the executive told CNBC in an interview.

The program is set up similarly to frequent flier mile programs, with participants who exhibit healthy behaviors earning more points.

To get started, policyholders who opt into the program receive a free Fitbit that begins tracking their physical activity. The program also tracks other activities such as doctor visits, biometric results and flu shots.

The points then convert to a certain amount in savings on premiums and rewards from retail partners such as Hyatt Hotels, Apple and Starbucks.

Specifically, policyholders who reach 3,500 points are considered silver status and receive roughly 5 percent off their premiums. Gold is 7,000 points earned, with 10 percent off and platinum is 10,000 points, equalling a 15 percent discount.

This type of dynamic pricing could lead to lower costs for customers, but it raises the question of whether consumers are willing to relinquish more of their privacy to life insurers.

No sharing of data, Hancock promises.

Doughty explained that the additional information is actually a small sum compared to the amount of information the company already requires to underwrite policies. He insists customers shouldn’t fear providing more.

“We do not share that information with anyone that isn’t required to help us administer the program,” Doughty explained. “The data is designed to provide a good customer service experience to the end customer and to make sure that we can continually provide a program that is priced accurately.”

Meanwhile, privacy concerns and the fear of data breaches—the likes that banks, retailers and technology providers have seen recently—may not have the same resonance in the insurance sector.

[…]

Currently, his program is offered in more than 30 states for universal life insurance and over 20 states for term life insurance. However, John Hancock expects it to be available in all 50 states by the end of the year.

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