At least one life insurance company is beginning to offer customers financial incentives for working to stay healthy, and others may follow suit.
Under this program, customers can reduce their annual life insurance premiums by as much as 15% if they improve and report on their eating, drinking, and exercise habits.
This innovative program benefits insurers and their customers alike. Insurers get healthier customers, which ultimately reduces their payouts and helps them become more profitable.
Customers, meanwhile, get reduced premiums, and they could end up living longer as well. According to an insurer that currently offers this incentive, the program’s policyholders take twice as many steps as the average American. More steps mean more exercise, which could mean more years of life!
How much could you save with such a program? It depends.
If you are a 50-year-old woman, a $1,000,000 30-year term life insurance policy will cost you $2,349 annually, according to NerdWallet as of September 2018. Saving 15% would reduce that by $352 a year.
But the numbers are even more compelling if you buy a $1,000,000 whole life insurance policy, which costs $17,760 annually, according to NerdWallet. In that case, you would save $2,664 a year.
This kind of benefit could inspire more people to buy life insurance. Around half of Americans (172 million) have some form of life insurance coverage, according to LIMRA, an insurance industry research group. And according to a survey by LIMRA and the nonprofit insurance group Life Happens, 63% of Americans who have not purchased coverage say it is because they believe coverage is too expensive. This kind of discount could make life insurance more affordable for many.
It could also encourage healthy lifestyle choices. Perhaps a financial incentive is just what some people need to make healthy foods and exercise look more appealing.