The prospects of profit in good health had seemed mostly confined to the men and women who teach new tricks to old bodies and to those who sell the gear for fashionable exercising.
But the grand and mysterious forces of the Great American Marketplace have begun to make good health profitable for some innovative insurance companies and economical for fit policyholders. Here's how....
The old actuarial tables put about 90 percent of us into the same pool when the companies evaluated risks, calculated costs and set rates. The skydivers, human cannonballs and fireworks packers were specially treated in high-risk pools. Their prospects of longevity were predictably, statistically dim, so they paid higher premiums than the rest of us.
About 20 years ago, the more progressive companies began reading and believing what we were being told about smoking, so they began sorting their policyholders into pools of longer-lived, lower-risk nonsmokers who paid lower premiums, and shorter-lived, higher-risk smokers who paid higher premiums. Typically, those of us who had never smoked or who had quit were rewarded with premiums 5 to 15 percent lower than the smokers paid.
More recently, the innovators in the industry have determined that fitness is not a passing fad but a permanent condition for a large and growing group of Americans whose characteristics may be statistically defined and actuarially calculated. They are good insurance prospects. Their fitness keeps them healthy, so they stay at work and earn the incomes that pay the premiums without interruption. Their fitness gives them longer lives, so relatively few die each year, and their premium payments continue over longer spans.
So why not develop an insurance marketing strategy directed precisely at the healthy, vigorous, physically fit Americans?--precisely what such companies as ITT Life Insurance Corporation of Minneapolis have done. ITT, for example, created a new pool for the physically fit and offered them low premiums to swim in it, marketing-wise. ITT Life Insurance says its premiums can be 50 percent lower than the norm for ordinary, sedentary policyholders at other companies.
To qualify for the fit-nonsmoker policies that ITT and others are now offering, applicants must take a thorough physical examination and meet physical and medical standards that confirm that the applicant has been keeping to a regimen of vigorous physical exercise. ITT, for example, requires a ratio of total cholesterol to high-density lipoprotein cholesterol of less than 7 for men and 5.5 for women. The examinations may also give close attention to blood pressure, heart and pulse rates before and after exercise and to the other measures of fitness.
In his speeches, Robert W. McDonald, president of ITT Life, likes to say that too many insurance companies "are getting fat on America's longer lives. Many companies find themselves paying out less than they expected because, based on actuarial data 20 or 30 years ago, there was no anticipation that life expectancy would increase as much as it has."
He says that the conventional companies have kept their fit policyholders in the standard pool that contains 90 percent of all Americans--a pool that has been broadened to include more and more Americans who present serious risks.
This practice has presented an opportunity for the agile companies in a conservative industry--an opportunity to lure the best policyholders from the less-agile companies. This opportunity has also been created by computers and the explosion of statistically reliable information we have been collecting about ourselves.
In turn, the policies for physically fit nonsmokers (and, in some instances, nondrinkers) creates a substantial financial inducement that may encourage still more Americans to take up healthful lifestyles.
If you don't smoke and you do exercise--and you have the physique and the vital signs to prove it--ask your agent to give you a special low-premium policy for such physically fit lovers of life as you. If he doesn't, then maybe you ought to put yourself in different hands.
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|Title Annotation:||insurance for the physically fit|
|Publication:||Saturday Evening Post|
|Date:||Dec 1, 1984|
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