This may sound trivial, but behavioral economists say short-term rewards drive long-term results.
“The main thing we’ve seen in a variety of studies looking at health incentives is that healthy people are very interested in being in these types of programs,” said Justin Sydnor, associate professor of risk and insurance at the University of Wisconsin at Madison. “One, it’s about money, but two, healthy people don’t like to fail at getting the incentives. People who know they’re going to struggle aren’t as interested in programs like this.”
For John Hancock, a division of the Canadian insurer Manulife Financial, the program is good for business. “The longer people live, the more money we make,” Mr. Tingle said. “If we can collectively help our customers live just a bit longer, it’s quite advantageous for us as a company.”
The market for life insurance is vast. About half of Americans own some form, but only a third own individual policies, which are more profitable than group policies they could get through work. The most common reason people list for not buying life insurance is cost, according to Limra, an insurance industry research group.
What John Hancock is trying to do is not easy. The pilot program, started in 2015, has not been a roaring success: Only about 20 percent of customers signed up that year. Three years later, the company said it had doubled that figure, which experts said was below expectations.
“It’s a great idea to extend it to their full line of products, but they have not had spectacular success with the product so far,” said Steven N. Weisbart, chief economist at Insurance Information Institute, a trade group.
“People do respond to incentives,” Mr. Weisbart added. “But the question is, do people respond to these incentives? The answer seems to be, not really.”
Mr. Tingle said that what drove the decision to make Vitality mandatory on all new policies was not the adoption rates but how customers used the offering. Over the past three years, use of the software has increased 706 percent.