The Impact of Wearable Tech on Life Insurance

According to the International Data Corporation, an estimated 125.5 million wearable devices were shipped worldwide in 2017 and doubled by 2021 to 533 million units. ^[4] Wearable technology includes smart watches, fitness trackers, smart rings, glucose and heart monitors as well as other devices that have sensors and can be worn. Wearable devices can be used as a tool to help people with chronic health conditions secure a more affordable life insurance policy, if the device determines better-than-expected activity and sleep levels as well as a healthy heart. On the flipside, the use of wearable tech in insurance is also under scrutiny for increasing denials in coverage too. ^[2] Here’s more on what’s happening with interactive life insurance, its underwriting and pricing.

The Pros and Cons of Wearable Tech and Life Insurance

Some devices can analyze heart functions on a deeper level and track smoking. ^[1] Health insurance companies are already using fitness tracking devices. There is a partnership between United Healthcare (UHC) and Fitbit, called the UnitedHealthcare Motion program, which allows policyholders to earn up to $1,500 toward health care services each year.

Here are the pros to wearable tech in life insurance:

1. Speed. Underwriting a life insurance policy requires quite a bit of work and wearable tech would improve capabilities by providing new and actionable data at a faster rate.

2. Savings. Wearable devices can also help consumers demonstrate a higher life expectancy based on their true fitness levels than standard underwriting methods would indicate. This would mean cheaper rates and more personalized policies.

3. Improved health. The new technology may even encourage policyholders to make healthier decisions, like exercising as well as abstaining from smoking tobacco and drinking alcohol.

Here are the cons:

1. Inconsistency and inaccuracy. The device used is key, as studies show that Apple watches were the most accurate of all devices at analyzing heart estimation and nearly all of them were less accurate with walking heart rate but more accurate with cycling heart rates. ^[1]

2. Increased rates or denial. It’s a chance you take when you agree to having your health monitored using technology, because it will increase your rate if you are inactive or exhibiting other high-risk signs. ^[2]

3. Privacy. You will surrender some privacy rights and some security if opting to wear devices with sensors that transmit medical information. ^[4]

Which Life Insurance Companies Use Wearable Technology?

Wearable tech is still new so few life insurance companies have yet to utilize it fully. Here are two of the pioneers.

John Hancock’s Vitality Program

John Hancock partners with Fitbit and Apple to offer the John Hancock Vitality program, which uses wearable devices to track activity and reward healthy behaviors with discounts and incentives.

Prudential

Prudential is partnering with Vitality Global to allow policyholders to use a smartphone and/or fitness tracker to track their physical activities in the Latin American markets. Prudential is offering similar options in the Asia markets. It’s expected that they will introduce it in the North American markets in the future. ^[5]

What Metrics and Data Does Wearable Technology Share With Insurers?

One in five Americans already has a smart watch or Fitbit that tracks the following. ^[3] See how these metrics fit in determining risk for a life insurance policy, were a customer to use wearable tech for underwriting purposes. ^[1] Here are some kinds of data that are measured and why.

• Steps: There has been a proven relationship between mortality and higher average daily steps.

• Physical Activity: At least 75 minutes of rigorous physical activity or 150 minutes of moderate physical activity is recommended. There is a lower risk of mortality in individuals who are physically active.

• Inactivity: Sitting or being generally inactive has long been associated with higher mortality risk. A decline in resting heart rate is associated with reduced mortality risk.

• Sleep: An average of seven hours of sleep a night is associated with a low mortality risk while too little or too much sleep is associated with a higher risk of death.

Emerging Wearable Technology

1. VO2 Max: Measures how much oxygen the heart can use during exertion. ^[1]

2. Pulse Wave Velocity: Measures blood oxygen levels and arterial stiffness, which is associated with cardiovascular disease. It measures how the body withstands exertion and how well it recovers. ^[1]

3. Smoking Detection: So far, scientists have been able to create devices that are alerted to the physical movement of bringing a cigarette to the wearer’s mouth, but there is a large margin of error, as many types of activities can mimic smoking. ^[1]

4. Disease Detection and Monitoring: Not only can illness like diabetes and heart disease be detected early and treated swiftly, but illnesses can be monitored more consistently using a device. ^[1]

5. Mental Health Monitoring: Soon, devices will be able to detect stress levels and other mental health issues. ^[4]

6. Environmental Exposure: Devices may be able to report pollution, strong UV rays and other environmental hazards that may affect your health. ^[4]