Share at Your Own Risk! The Murky side of Wearables & Life Insurance

Whether we like it or not, we live in a world where everything is changing at such a rapid pace that’s it’s easy to lose track…

…and the life insurance business in Canada is no different. Insurers are always searching for ways to make their underwriting processes more accurate. Hey it’s a business after all, which means that the fewer claims insurance companies have to pay out, the more profitable their business model is.

Your physician’s approach to medical issues is constantly evolving, which means that underwriters are regularly updating their policies to reflect those changes. It’s exhausting to keep up with and one of the main reasons you should work with a seasoned independent life insurance agent. We know the ins and outs and it’s our business keep our fingers on the pulse of medical research and innovation.This translates into the best possible premiums for you.

Using Technology to Mitigate Risk

So of course technology is going to play a huge role in the future of life insurance coverage. In my humble opinion the use of “wearable” fitness monitors is going to change the face of this industry forever. Those little “fitbits” people are wearing to monitor their fitness levels provide a staggering amount of information that would be otherwise unavailable. These devices monitor everything from your food intake, activity levels to your sleep cycle. Hmmmm.

Now let’s take a moment to really think about this. Sure, being aware of your lifestyle choices is a wonderful thing. Hey, exercise and healthy living assures the best possible life insurance rates. So on the bright side fitness “wearables” are a wonderful tool to help you become a better version of yourself.

It’s Not All Roses

…but there’s a dark side to this equation.

Did you know major carriers are already asking questions about the availability of your fitness data? Here is a sample:

Are you using a wearable fitness tracker to track calories burned, steps taken, heart rate measured, hours slept, etc? If “yes”, would you be willing to share this data with______ (insert insurance Company name)? if willing please upload data collected to your insurance application.

Sounds simple — or maybe not!

Too Much Transparency Can Work Against You

Underwriters love forms and data, the more the better! On the surface of things, this may seem like great idea. If you’re in top form and your life insurance company can easily access this information then voila! Your premiums will go down when it’s time to update your coverage. Right?

Hey, you’ve proven to them that your willing to provide the ultimate in transparency. A deep look into your overall physical health and lifestyle. The thing is people who shell out this sort of information voluntarily do so at their own peril.

As wearables become more sophisticated along with companies’ algorithms to farm the data, there is a potential for mischief on the side of the insurers. As it stands now, when you’re underwritten, whatever rating you receive (standard, preferred, etc) is locked in for the life of your policy. As long as you’re paying your premiums, the insurance company can’t modify or revoke your coverage in any manner, it’s guaranteed. That’s a pretty good deal if you ask me.

Uncovering Medical Issues May Result In Higher Premiums

If your insurer get access to your personal “wearable” data after your life insurance policy has gone into force with the promise of possible lower premiums, you might be in for a surprise.

Let’s say you bought a short term policy, $250K of Term 10, while you were young and healthy. 8 Years later you’re married with children and have a mortgage. You want to bump up your coverage to $500K and you’re thinking about a 30 Year Term. To get some sweet rates, you’ ve decided to provide fitbit data to your life insurance company. Hey, you’re a runner, you eat well and your only 38 for goodness sakes!

Ok, now it’s time for you to apply for your shiny new policy and surprise, your data uncovers an anomaly that indicates you’re a stronger candidate for a heart condition like Mitral Valve Prolapse.

Whomp, whomp.

This data has gone from being a positive thing to a negative one. Your life insurance company can and will use this information to hike up your premiums or you may even be declined. Sigh. It’s also very likely that your medical information will be shared with 3rd party aggregators so this information is no longer your own.

The cold hard truth is life insurance companies don’t care about incentivizing healthy behavior as much as they care about mitigating risk, making money and paying out fewer claims. Anyone sharing their wearable data should know it’s risky business.

Is It Too Late?

I’m afraid so…the cat’s out of the bag — tech dependent millennials are most surely jumping on the participatory data sharing bandwagon, whether they’re looking for life insurance or not. Hey, don’t forget to read the fine print when you use a company to track your health. Who has access to this information? You might be surprised to find out.

It’s my firm belief that the day is surely coming when it may be impossible to get life insurance coverage without a wearable. Read more details at policy architects

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