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Financial Tip

The Rule of 72

You can easily see how the rate of return can impact your investments by applying the "Rule of 72." This is a simplified way to show how long your money takes to double at a fixed annual interest rate.

Dividing 72 by the following percentages shows the time needed:

# of Years
to Double
2% 36
4% 18
6% 12
8% 9
10% 7.2

Healthy Living Can Mean Lower Life Insurance Rates

In recent years, employers have begun rewarding employees for incorporating healthy habits into their daily lifestyle. These rewards may come in the form of lower rates within employer-sponsored health-insurance programs. To secure these discounted rates, employees are typically required to complete an annual health assessment which includes a series of questions about certain health risk factors such as weight, cholesterol level, smoking habits, alcohol consumption and more.

A new trend appears to be emerging in the United States: Life-insurers also are looking to offer rewards for healthy living. In fact, John Hancock recently introduced a new policy that allows some U.S. consumers to earn up to 15 percent off life insurance premiums. In addition, they can earn rewards from major retailers for taking such healthy steps as weight loss, flu shots, gym workouts and/or other physical activity, and completing online health courses.

This new policy is similar in many ways to policies already in place in other parts of the world, including Europe, Australia, Singapore, South Africa and the United Kingdom. Consumers who are insured by this type of policy must comply with various health screenings - for factors such as keeping their weight within a certain range - and activities that help them earn points to ultimately secure silver, gold or platinum status. Nonsmokers automatically earn points as do people with in-range blood pressure, cholesterol and glucose levels. The number of points assigned to someone's particular activity is determined by how it will affect that person's longevity, as well as its level of difficulty. For instance, complex behavioral changes - like stopping smoking - will mean more points than other activities.

Of course consumers who agree to participate in such a program must be comfortable with providing the personal information required to continually meet certain thresholds that will convert into worthwhile savings. This required information could include frequency of workouts, results of a recent physical exam or questions addressing such issues as mental wellness and blood lab results.

The John Hancock policy - which applies to both term and universal life policies - is being operated in the U.S. through a partnership with Vitality, a global wellness company that is currently working with employers and health insurers.

People who sign up for the new policy receive a free Fitbit® monitor to track and upload their physical activity. The most active customers can earn discounts off the price of a traditional policy, in addition to online gift cards, half-price stays at destination hotels and other perks. 

Although the financial benefits of such policies are worth considering, the real advantage comes in increasing your opportunity to live a healthier life with the opportunity to lower your future healthcare expenses.

Teachable Moments

Having a family discussion about the benefits of healthy living can lead to potential savings on insurance premiums and help children understand the benefits of making healthy lifestyle choices. Talk about the changes you could make as a family to be eligible for possible savings offered by your existing insurance carrier, as well as how changes to your health coverage might be more economical.

Have everyone identify something he or she can do to be more active as together you strive to become a healthier family.