Life Insurance  

Tech will bring down life insurance premiums


The increasing use of technology in the life insurance industry will ultimately lead to cheaper premiums, Herschel Mayers, chief executive at VitalityLife has told FTAdviser.

Mr Mayers said: “I think technology is going to continuously expand in its use for life insurance.

“We’d be able to, in the not too distant future, take people’s heart rates, blood pressure all remotely on these wearable devices and that translates into giving people who are managing their health… by taking in physical activities, cheaper premiums.

“Because it’s not equitable to lump the population group, let’s say all 35 year olds, and charge them the same rate because most of the factors that affect illness are really lifestyle related and these are controlled by these activities we can monitor, for example, physical activity.”

At the start of this year, Vitality launched its Wellness Optimiser product which offers health-linked protection premiums, with members given an upfront discount and annual premium discounts if they monitor their health.

“What we do is we track someone’s activities and give them rewards, encouraging them to continuously partake in those wellness activities to actually improve their overall health,” he explained.

But Mr Mayers insisted the industry would not take over from the state.

“I think there’s always a need for the private sector, the insurance industry in this case, to supplement the state to be able to provide for a greater level of care in disability or in old age to give you the flexibility and your choices in terms of what type and what level of cover you actually wish to provide for yourself,” he replied.

Social care funding became a battleground during the recent general election campaign as the Conservatives’ so-called “dementia tax” came under scrutiny. 

Prime minister Theresa May faced criticism after the party’s initial manifesto proposed elderly people should fund the entire cost of their social care, until they were down to their last £100,000 which forced her to do a u-turn on the policy.

Mr Mayers acknowledged the difficulty advisers have in broaching the subject of life insurance with their clients, and in particular younger clients.

He said: “Unfortunately people don’t like talking about insurance. I mean it’s a pretty macabre subject, talking about death or ill health or disability.”

But he added, despite people living longer there was still a need for life insurance

“People generally are living longer so I suppose that is one argument to say the need for life insurance may be reducing. But if you analyse that just a bit deeper we find people are living longer but generally they are living longer in ill health,” he noted.

“So insurance is crucial for those people to provide protection for their families in those difficult circumstances.”