How Technology Can Save You Money on Insurance
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Would you be willing to wear a tracking device on your body, monitored by your insurance company, in order to get a better rate on life insurance? What about installing a tracking device in your vehicle for lower car insurance rates? An increasing number of insurance companies are offering policyholders the option of being tracked in exchange for lower premiums.
Discounts on Life Insurance for Wearing Fitness Tracking Devices
As reported in a CNN Money article, John Hancock is offering a 15% discount on life insurance in some cases to individuals who are willing to wear a small, pill-shaped device known as a Fitbit monitor so the insurance company can track their exercise, the calories they burn, and the quality of their sleep. The healthier the lifestyle of the individual, the higher the discount on life insurance, up to around $91 a year, according to the article. Fitness points could also qualify individuals who wear these devices for discounts with Whole Foods Markets, REI, Royal Caribbean Cruises, and Hyatt Hotels.
On the downside, the maximum discount available is not a great deal of money for wearing a tracking device all year and having your personal information monitored and recorded. The tracking device can also work against your efforts to save money on life insurance. If you skip your gym workout or other exercise for any reason, whether by necessity or choice, the device reports it to the insurance company, and you could lose your discount.
Discounts on Car Insurance for Installing a Tracking Device in Your Vehicle
An increasing number of car insurance companies, including Allstate, State Farm, and Progressive, are offering discounts to policyholders who are willing to install tracking devices in their vehicles, as reported by the New York Times. In theory, drivers who sign up for these programs will be entitled to car insurance rates based more on their safe driving habits and less on other factors such as gender, age, and credit history. These programs are known as “usage-based insurance.”
As discussed in the New York Times article, a device that plugs into a port under the steering wheel is provided by the insurance company. The device transmits data about the vehicle’s operation and movements wirelessly to the insurance company. Per the article, State Farm, for example, grades drivers from A to C in five different categories: speed, acceleration, deceleration, turns, and the time of day they are driving. As reported, program participants on average earn a 10% to 15% discount on their premiums.
Besides the fact that lower driving scores could be used against participants at some point in the future, privacy issues are the main disadvantage with these programs. The technology could easily evolve to tracking latitude and longitude in addition to the driving behavior it currently reports. If this information is obtained and stored by the insurance companies, it could be subpoenaed and used in divorce cases and for other purposes at some point in the near future.