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Insurtech Startup Looks to Lower Life Insurance Premiums for Active Individuals

by Precise Leads

February 14, 2018

In just 22 months, Health IQ has provided a total of $5.3 billion in life insurance coverage to healthy people.

Life insurers have traditionally set rates based on historical data compiled in actuarial tables, demographic information, and the applicant’s medical background and family history. If those data points suggest that the applicant leads an unhealthy lifestyle or presents a greater risk to the insurer, the applicant will be charged a higher rate.

A San Francisco-based insurtech startup is defying that long-standing practice by offering healthy people lower life insurance premiums. Launched in 2014, Health IQ asks applicants a series of detailed questions designed to uncover their true fitness level and determines rates in accordance with their responses. Its most recent Series C investment round garnered $34.6 million from Andreessen Horowitz, Charles River Ventures, First Round Capital, Foundation Capital and other investors, bringing the firm’s total venture capital haul to $81 million since its founding.

CEO and Founder Munjal Shah told Venture Beat that Health IQ has provided “tens of thousands of individuals” with a total of $5.3 billion in life insurance coverage in its first 22 months. The policies are supplied by Health IQ’s insurance partners, which pay Health IQ a commission whenever it sells a policy. Some of these collaborators include SBLI, Ameritas, Assurity, and Swiss Re.

Health IQ Test

Most life insurers reward healthy policyholders with significantly lower rates, but buying coverage through Health IQ could save them even more. According to the company, healthy and more active individuals can reduce their life insurance premiums by 4% to 33% by purchasing a policy from it.

To get those reduced rates, however, applicants must prove just how healthy and active they are by taking an online quiz. Instead of delving into a person’s medical history, Health IQ asks specific questions that only a person leading a healthy lifestyle could answer. For example, applicants might be quizzed on the weight of an Olympic barbell or whether a person can drink water during Bikram yoga.

Health IQ developed its own mortality tables after collecting answers from a million people who took its health quiz on Facebook. By analyzing three years of data, it found that people whom it deemed “health conscious” had a 41% lower mortality rate than all other respondents.

Health IQ CEO Shah told Forbes that people who score high on the test save an average of 4% on life premiums, with more savings possible if they can meet certain fitness standards such as the ability to run an eight-minute mile.

Inspired to start Health IQ after a health scare prompted him to follow a healthier lifestyle, Shah said that despite all the attention paid to the country’s soaring obesity rates and other public health issues, most Americans take their health seriously and should be rewarded with a lower rate.

“America is like a tale of two cities,” he added. “It's gotten less healthy as we all know, but there's also a group of 40 to 50 million people who have gotten more health conscious.”

Life Insurance Premiums on the Rise

Recent statistics from life insurance trade association LIMRA revealed an uptick in life insurance rates in 2017. In the first half of this year, new annualized premiums for individual life insurance rose by 4% compared to the same period in 2016. In the second quarter alone, premiums increased by 3%.

While premiums climbed, LIMRA also reported that the total number of policies dropped by 4% in the second quarter and 3% in the first half of 2017. Offering vegetarians, runners, and weightlifters a break on their premiums might be a way to boost life insurance coverage.

According to LIMRA, 37 million, or 30%, of U.S. household lack life insurance. Insurtech startups like Health IQ are betting an easier, more individualized approach to life insurance will get more Americans to buy it.

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