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Life Ensurance Part 2 - The Chronicles of Jack [entries|archive|friends|userinfo]

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Life Ensurance Part 2 [Nov. 21st, 2009|08:56 am]
(Continuation of Part 1 from last night)

I was thinking about this some more and realized that funding research would be the hard way to increase life expectancy. Sure, it would work, but if you want the most life per dollar, then focusing on preventative measures would be better, at least up to a certain point.

For example, it would be in the best interest of life insurance companies to lobby for a tax on unhealthy food. There's already been talk about this from nutritionists, but they don't have the monolithic financial backing to make it happen that Sunlife, Manulife, and insurance wings of big banks have. That would again require cooperation between competing companies because a tax on junk food helps all the companies and not just the ones paying to make it happen.

There are some incentives that could only be offered to policy holders of participating companies though. What about fitness, swimming, saftety, food-safe, and first-aid classes with a for-profit or break-even price to join for people that are not policy holders and a discount for those that are. What about a discount card for participating grocery stores for healthful food like fresh vegetables that only policy holders had? How about a coupon deal with participating healthful fast-food franchises like Booster Juice and Subway?

This is doubly effective in reducing financial risks from life insurance: First, it encourages current policyholders to live a more healthy lifestyle and therefore live longer and pay into the policy longer before cashing out. Policies like this are more attractive to people that already live healthier than average lifestyles, and would be willing to either pick up a policy or switch policies when they wouldn't have before because of the added incentive of savings to their lifestyle. Bringing someone into your policy who's already living healthy may result in a larger risk reduction than making someone already in your policy more healthy, so this might be a major selling point or focus of such a program.

If it works well, other companies might do the same and the companies that don't will be left insuring the high-risk fat lazy slobs. Sounds like a good way to lose money in a hurry unless you can get a lot of large premiums out of them first.

Furthermore, the cost to the life insurance company for promoting other companies through coupons and specific discounts could be quite small if the life insurance companies shopped around for retailers willing to chip in for a portion of the cost. The incentives would also be a fair excuse to increase premiums slightly to cover the incentives ($50/year increase for a potential $300 savings?)

A lot of this also applies to healthcare insurance, whereas my first post on life insurance companies funding research didn't necessarily spread like that. That means that an even larger (MUCH larger in the States) part of the corporate world could either get together or start competing with each other to make us healthier.

We live longer and better, and they save a lot of money. If it hasn't been done yet, there has to be a flaw right? So where is it? I imagine that people don't want to be controlled by their insurance companies, but how invasive are discounts?