Why Not Consider Well-Being Benefits In Life Policies?
Tired of talking about living benefit guarantees? Sad to see the features shrink under the pressure of the low interest environment? Want something else to think and talk about?
Consultants at PwC US have an idea: How about well-being benefits?
In a new report, Top Issues: The Insurance Industry in 2014, the consultants make a case for carriers to consider offering such benefits in their life policies.
This discussion is on the frontier. But maybe it’s not as incomprehensible as it first sounds. After all, a lot of the framework for developing such a benefit already exists.
As the PwC consultants note, ”the advent of wearable devices, real-time monitoring of exercise and activity levels, and advances in medical sciences have resulted in a large body of behavioral data and some preliminary results on how they impact life expectancy and quality of life.” There are also websites that help determine medical age based on a person’s physical, psychological and physiological behaviors and conditions.
The consultants’ idea is that insurers can tap into that data, link up the well-being behaviors with expected mortality, and use that information in designing new types of policies. In their view, this could “fundamentally alter the relevance and utility of life insurance by helping policyholders live longer and more healthily and by helping insurers understand and price risk better.”
Naturally, it would take a substantial overhaul of current approaches, and lots of deep-dive study. The consultants concede the point. “We realize that life insurers tend to be very conservative and skeptical about wholesale re-engineering.”
Still, the idea is worth some thought. Carriers have been unhooking from, or at least modifying, the popular living benefits features they’ve offered in the past decade. As they do this, some will want to offer new approaches and innovations instead of, or alongside, their living benefits features. At such carriers, innovations using some type of well-being strategy might gain traction.
In addition, over the past several years, many life insurance carriers have offered price breaks to new policyholders who quit tobacco use within a specified period. Certain company health plans “reward” employees for achieving specified health goals. The well-being benefit inside a life policy would take it to the next level.
According to the consultants, insurers could “engage with policyholders on a daily (or even more frequent) basis in order to collect behavioral data on their behalf and educate them on more healthy behaviors and lifestyle changes.” And, to encourage sharing of such personal information, insurers “could provide policyholders financial (e.g., lower premiums) and non-financial (e.g., health) benefits.”
Maybe it would take some other form entirely. The point is, it’s food for thought.