Should Your Health Insurance Get Cheaper for Healthier Behaviour?

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Those of us who’ve taken the plunge into the complicated world of health insurance know it can be overwhelming.

First, there’s the dizzying array of companies pushing sales deals down our throats and competing for our hard-earned dollars.

Finally, there’s the underwriting. That series of health questions apparently necessary but also oh-so-invasive.

You wonder to yourself, “is it really important that this company knows about a sprained ankle from fifteen years ago?’

And to top it all off, you find out that your occasional cigarette has slapped a 15% cost loading on your policy!

Of all the hoops you feel you need to jump through, perhaps one of the most frustrating aspects of the health insurance application process is learning that you’ll need to pay higher premiums due to certain aspects of your health history or lifestyle.

Which begs the question…

If insurance companies are willing to punish bad behaviour, why not reward good behaviour?

If you’re a young, non-smoking, non-drinking, active person with a clean health record, couldn’t you get an insurance policy for a cheaper premium?

After all, it’s far less likely that you’ll develop diabetes compared to your obese, pack-a-day second cousin. That makes you significantly less of a risk to your insurance provider.

Imagine if walking an extra 1k a day bought you a half-price trip to Bali at the end of the month? Or if losing 5 kilos gave you gold-class movie tickets?

It’s a win-win situation, really. By meeting your fitness goals you reap financial rewards. The result? A healthier and happier you.

If you think this wouldn’t happen in a million years, think again.

Insurance companies are using this logic to entice customers – not only into buying their policies but into improving their health and quality of life.

For example, U.S.-based health insurance giant John Hancock has recently announced their ‘Vitality’ program. The program not only discounts premiums for customers who meet their fitness goals, but also hands out a range of exciting rewards.

Qantas Health Insurance (NIB), MLC and AIA are among the Australian companies who have begun to offer financial rewards for active Australians.

But not everyone’s on board. As other insurers begin to incentivise healthier behaviour and promote the use of wearables among their customers, some commentators have voiced their concerns.

One potential problem is that disadvantaged groups, who are often at a greater risk of health issues, may be left unable to afford their premiums.

A second problem is that corporations may soon be able to listen to our heart rates, track our sleep patterns or even in the future – monitor our dietary choices.

While this empowers our insurance companies, it could leave us at the mercy of a very scary new “Big Brother.”

Even FitBit has recently launched an app that makes our data from wearables available to doctors and insurers.

But for the active and healthy among us (or even just the aspiring), cheaper premiums may be a welcome incentive for good behaviour.

Regardless of your opinion on this new hot topic, it’s important to provide full disclosure during the underwriting process. This will achieve two things:

1) Your chosen company can sell you the most suitable policy.

Without having a clear idea on who you are, what sort of premiums to charge and what you’re eligible for, your poor broker won’t have a clue what to sell you. As times are tough (and sales are bread and butter for these folks), they may end up overselling you a policy that you don’t even need. Or worse, short-selling you a policy that fails to pay out when disaster strikes.

And what good is insurance if it’s not insuring you?

2) You have a better chance of lodging a successful claim.

By telling the truth in the underwriting process, the company has less of a leg to stand on in rejecting a potential claim – meaning you can sleep better at night, knowing your insurance is the contingency plan you’re paying for.

There’s almost nothing more devastating than the stories we hear of families who’ve gone without after their insurance companies have failed to pay out.

But this can be avoided.

Read through your policy word-for-word, and ensure you understand the ins and outs of where you’re covered and where you’re not.

That way, “healthy” or “unhealthy”, you’ll have peace of mind that you’re protected regardless of the price of your premiums.

And that’s, after all, the point of insurance.

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