Healthy living

“[We’re] creating a new type of insurance – an insurance that rewards you for healthy living,” says Blake Hill, head of Manulife Vitality. The concept, he adds, transforms the way the insurance company assesses policyholder risk into an ongoing process conducted over the life of the policy rather than a one-time event.

“If you think about the way insurance is sold today and how we classify risk,” Hill adds, “that’s done on a static basis – we look at the risk factors that you’re bringing to us at the time of underwriting. We really need to be thinking about this in an ongoing fashion.”

For financial advisors such as Joe Carpenter, certified financial planner with Investment Planning Counsel Inc. in Guelph, Ont., the concept is an innovative way of motivating clients to adopt healthy habits. “I like the idea,” he says. “Someone can improve their lifestyle and their insurance premiums at the same time. For the people who are interested in improving their lifestyle and improving fitness, [Vitality] will give them another incentive.”

Some advisors, however, are wary, citing the prospect of higher premiums for clients who don’t earn as many points as expected.

“I would be very cautious about [Vitality], understanding typical human behaviour and knowing that it’s kind of a slippery slope when giving insurance companies the ability to raise and lower premiums,” says Ryan Unruh, an independent representative with Primerica Life Insurance Co. of Canada in Fort St. John, B.C.

Still, Unruh predicts, the program will be popular among Canadians, and he anticipates that other insurers will follow with similar initiatives. “I do see [Vitality’s concept] as something that might get a good foothold in Canada.”

The Manulife Vitality program is being offered in partnership with Chicago-based wellness program provider Vitality Group Inc., which offers the program in other countries through partnerships with insurers, including Manulife’s Boston-based subsidiary, John Hancock Life Insurance Co.

Clients who sign up for Manulife’s Vitality program will receive a Vívofit 3 wearable device from Olathe, Kan.-based Garmin USA Inc., which they can use to track their physical activity. That’s one way in which clients can earn Vitality Points. For example, taking at least 5,000 steps a day, as measured by the device, will earn a policyholder 10 points a day.

Policyholders can earn points for physical activity without using the wearable device. By spending at least 30 minutes at a health club, as verified by a policyholder’s Vitality mobile app, which uses the GPS in his or her smartphone, the policyholder can earn 20 points.

Policyholders also earn points for undergoing various annual health tests, such as tests for glucose, cholesterol and blood pressure, with 125 points per test simply for participating. If the results are within a certain healthy range, the policyholder can earn additional points. Other items that can generate points range from getting a flu shot or a dental screening to using online tools such as mental health reviews.

Depending on the number of points a policyholder earns each year, he or she will fall into one of four status levels: platinum (10,000 points or more), gold (7,000 points), silver (3,500 points) or bronze (less than 3,500 points).

All policyholders begin the program with gold status, and those who maintain gold status will see their premiums remain the same year-over-year. Policyholders who reach platinum status will see their premiums decline slightly each year, until they reach a predetermined floor outlined in the insurance contract. In contrast, policyholders whose status drops to silver or bronze will see their premiums increase each year until they reach a specified ceiling.

Policyholders who achieve and maintain platinum status could see premiums drop by 6% (from the 10% discounted starting point of the Vitality program) over the life of the policy. But policyholders stuck at the bonze level may see premiums increase by 12.5% over the life of the policy.

Policyholders who already are healthy and active are likely to have the best shot at qualifying for lower premiums under the program. However, these policyholders run the risk that if their health changes in the future, they could lose the discount on their cost of insurance, causing their monthly payment to increase within the pre-determined range outlined in their contract. Although the savings could be significant for clients who are able to maintain platinum status, Unruh says, many clients are likely to prefer the peace of mind from a policy with guaranteed level premiums.

“If health-conscious people are going to buy into the Vitality program, they may be able to find a more level product that’s going to be the same throughout the life of the product,” says Unruh.

The Vitality program is, in part, a tactic to make life insurance more engaging to Canadians, says Rob Hollingsworth, vice president, insurance sales and retail account insurance, with Manulife.

“Life insurance still ranks [at the top] among the things that people just don’t want to talk about,” says Hollingsworth. “[This is] the first time that I think we’re going to be able to get people interested in, excited about, engaged in and participating in their life insurance program.”

By getting clients more engaged, the concept could help advisors sell more products, he says: “The more interactions that you have with a provider of services, the more likely you are to buy again and to buy more products. [This] will certainly drive sales and drive revenue for [advisors].”

A key concern with the initiative involves privacy and the use of the data collected. Says Lorne Marr, director of new business development with Markham, Ont.-based LSM Insurance Services Ltd.: “They’re gathering a lot of information on policyholders.”

However, Hill says, the data collected under the program is managed by Vitality Group and is not accessible to Manulife: “When you check in at the gym, when you do your [annual health] screening, all of that information is stored with and captured only with Vitality, a third-party company from Manulife. All that Vitality shares with us is the points you’ve earned in the program; not how or when the points were earned.”

Still, Marr expects that privacy concerns will deter some clients from embracing the concept.

Vitality is available initially on Manulife’s term-20 and term-65 life insurance policies, with coverage amounts of $500,000 to $20 million.

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