I am a lifelong penny pincher, and yet there are many things I won’t do to save money.
We’ve become a nation of discount hunters. Sale signs have become like a drug. We can’t resist the high from snagging a sale item.
But in our bargain hunting, we can lose more than we gain.
I was thinking about this as I read news accounts that John Hancock is adding a fitness-tracking feature to all its life insurance policies. Under its “Vitality” program, policyholders can earn discounts for exercising and reaching certain physical-activity goals.
“For centuries, the insurance model has primarily provided financial protection for families after death, without enhancing the very quality it hinges on: life,” said Marianne Harrison, John Hancock’s president and chief executive, in announcing the change. “We fundamentally believe life insurers should care about how long and well their customers live.”
Sounds so altruistic.
But, of course, John Hancock makes more money when people live longer, because they keep making payments on their premiums. Yet there are also benefits to customers who live healthier lives — including lower health care costs.
All policies will come with a basic level called “Vitality GO” at no additional cost. If they choose to, customers can log their healthy activities through an app or website. At this level, people have access to fitness and nutritional resources and can set up personalized health goals. They can earn points toward various discounts, the company said.
Pay an extra monthly fee — a cost that varies depending on the policy — for “Vitality Plus,” and a policyholder can receive up to 15 percent off his or her annual premium, as well as a free Fitbit Alta or an Apple Watch for as little as $25, plus shopping and entertainment gift cards.
What’s the downside?
So what’s the downside of this discount bait?
I have an Apple Watch and try my best to walk 10,000 steps a day. I also use the device to track my swim laps and heart rate. There is a lot of physical and medical data on my device that I don’t want to hand over for a 15 percent policy discount or free fitness magazine.
Let’s say I stop exercising regularly. Or maybe my physical activities are considered too risky. Will the company punish me with higher insurance rates? Or, at some point, could the company use the information to deny me coverage?
It’s for these reasons I don’t opt to let my auto-insurance company track my driving. There’s a premium discount if I allow the company to download information about how fast I’m driving, how hard I brake or even how late at night I drive. The company offers up to 25 percent cash back every six months for its safe-driving reward program. This isn’t an insignificant savings.
Still, I’m concerned that eventually such data could cost me more in higher premiums if the company deems my driving reckless based on its dictated norms. I get that the company wants to reduce claims, but I would rather pay the regular premium than sacrifice giving out more of my personal data. Companies already know way too much about us.
And there are the ubiquitous retail discounts if you sign up for a credit card. However, you can ding your credit score by accepting a discount in exchange for signing up for the card.
If you’ve got a super high credit score, applying for the new credit may not matter much. But if you’re in subprime territory — meaning you have a low credit score — or you fall just below the threshold for being considered a prime-lending customer, the discount isn’t worth it in the long run.
Not all discount deals are worth the savings. In your quest to save money, think carefully about what you’re giving up.
