Will AI and Digital Health Monitoring Change Life Insurance Rates?

Technology is transforming the way life insurance works

AI (Artificial Intelligence) and digital health monitoring are leading the charge. From faster approvals to personalized pricing, insurers are tapping into data from wearable devices, electronic health records, and advanced algorithms to assess risk more accurately than ever before.

What does this mean for you?

While these innovations could lead to lower premiums for healthier individuals, they also raise important questions about privacy, fairness, and how personal data is used. In this article, we’ll explore how AI and digital health tracking are reshaping life insurance rates, what it means for applicants in Canada, and what you should be watching for in the near future.

In this article:

• How Do Life Insurance Companies Use AI Today?
• How Can Wearable Devices and Digital Health Monitoring Affect Life Insurance?
• Will AI and Digital Health Make Life Insurance Cheaper?
• What Are the Privacy Risks of AI and Digital Health in Life Insurance?
• Frequently Asked Questions (FAQs) About How AI and Digital Health Monitoring Changes Life Insurance Rates

How Do Life Insurance Companies Use AI Today?

Artificial Intelligence (AI) is transforming the life insurance industry, making processes faster, smarter, and more personalized. Insurers are using AI-driven technology to improve risk assessment, fraud detection, and claims processing, leading to more efficient operations and potentially better pricing for policyholders. But with these advancements come important questions about data privacy and fairness.

How Do Life Insurance Companies Use AI Today?

AI isn’t just a buzzword anymore—it’s a tool that life insurance companies are using every day to streamline underwriting, detect fraud, and personalize coverage. Instead of relying solely on your age or a single medical exam, insurers can now use AI to look at a fuller picture of your health, lifestyle, and habits.

Here’s how AI is showing up in today’s life insurance landscape:

1. Smarter Underwriting and Faster Applications

Traditional life insurance applications often involved bloodwork, medical reports, and weeks of waiting. AI changes that. With access to digital health records, prescription histories, and even wearable data (like fitness trackers), insurers can assess risk in minutes, not weeks. This makes it easier for healthy applicants to get coverage—sometimes even on the same day.

2. More Accurate Risk Assessment

AI algorithms analyze massive amounts of health data to identify patterns. This allows insurers to match you with a policy that reflects your actual risk, not just the risk of someone your age and gender. For example, if your health data shows that you live an active lifestyle, get quality sleep, and maintain a stable heart rate, you could qualify for better pricing—even if you’ve had minor health concerns in the past.

3. Better Fraud Detection

Unfortunately, insurance fraud is real—and costly. AI helps insurers detect red flags like inconsistent application details or suspicious patterns in claims. By reducing fraud, companies can keep premiums fairer and more stable for everyone.

4. Streamlined Claims Process

For beneficiaries, filing a life insurance claim is already hard enough. AI-powered systems are helping insurers verify documents, cross-check policy details, and process claims faster—sometimes without needing human review. Some companies are even using AI-powered chatbots to support families through the process, answering questions and providing updates in real time.

How Can Wearable Devices and Digital Health Monitoring Affect Life Insurance?

Wearable devices like smartwatches, fitness trackers, and continuous glucose monitors are changing how we track health, and life insurance companies are taking notice. These devices provide real-time health data, giving insurers new ways to assess risk and personalize policies. While this can lead to discounted premiums for healthier individuals, it also raises important questions about privacy, fairness, and the future of health tracking in life insurance.

Fitness trackers and smartwatches monitor daily activity levels, heart rate, sleep patterns, and even oxygen levels. More advanced wearables, like continuous glucose monitors and ECG-enabled devices, track ongoing health conditions like diabetes and heart disease. By collecting this data, life insurers can get a more accurate picture of an individual’s overall health beyond traditional factors like age and medical history.

Some life insurance companies are now offering discounts or rewards to policyholders who share their fitness data. If your wearable device shows that you have an active lifestyle, good sleep habits, and a healthy heart rate, you may qualify for lower life insurance rates. This approach, often called behavior-based insurance, encourages healthier habits and allows policyholders to benefit from real-time health tracking.

Potential Concerns About Wearable Health Data

• Could Sharing Health Data Lead to Higher Rates?: While insurers may reward healthy behaviors, there’s concern that less active individuals could face higher premiums. If data shows someone has low activity levels or poor sleep patterns, could they be penalized with higher life insurance rates? The industry is still navigating how to balance risk-based pricing with fairness.
• Will Insurers Eventually Require Health Tracking?: Today, sharing wearable data is optional, but as technology advances, some worry that insurers might require health tracking to determine pricing. This raises ethical questions about privacy, consent, and the extent to which insurers should have access to personal health data.

Will AI and Digital Health Make Life Insurance Cheaper?

AI and digital health technology are transforming the way life insurance companies assess risk, making policies more personalized and potentially more affordable for healthier individuals. By analyzing real-time health data and streamlining underwriting, AI could help reduce premiums, eliminate unnecessary medical exams, and make life insurance more accessible. However, these advancements also raise concerns about how high-risk individuals may be affected by AI-driven pricing.

Traditionally, life insurance rates are based on broad categories like age, gender, and general health history. AI-powered personalized risk assessments take this a step further by using real-time health data, wearable fitness tracking, and lifestyle habits to determine risk more accurately. If an applicant leads a healthy lifestyle, exercises regularly, and has stable vital signs, AI can recognize these factors and offer lower premiums as a reward for good health.

One of the biggest advantages of AI in life insurance is its ability to speed up and simplify the underwriting process. In many cases, AI can assess risk using electronic health records, prescription history, and data from fitness wearables, eliminating the need for time-consuming medical exams and lab tests. This not only makes the application process faster but also lowers administrative costs for insurers, which could translate to cheaper policies for consumers.

While AI may help healthy individuals secure better rates, there is concern that those with chronic conditions or higher health risks could face increased pricing or difficulty getting coverage. If AI detects patterns indicating potential future health issues, insurers may charge higher premiums or classify applicants as high-risk, even if they haven’t been formally diagnosed with a condition. This raises ethical questions about how much personal health data should be used to determine life insurance costs and whether AI-based underwriting could unintentionally lead to discriminatory pricing.

What Are the Privacy Risks of AI and Digital Health in Life Insurance?

As AI and digital health tracking become more integrated into life insurance, questions about privacy, data control, and fairness are growing. While AI can make life insurance more personalized and efficient, it also raises concerns about who controls health data, how insurers use it, and whether it could lead to discrimination against high-risk individuals. In Canada, privacy laws regulate how insurers handle personal data, but the increasing role of AI still presents ethical challenges.

One of the biggest concerns with AI-driven life insurance is who owns and manages your health data. Many insurers collect information from electronic health records, prescription databases, and wearable devices to assess risk and price policies. While this data can improve accuracy and even lower premiums for some, it also means insurers have deep access to personal health details. The question remains: How much information should insurers be allowed to use, and should applicants have the right to limit access?

AI is designed to assess risk, but critics argue it could unintentionally discriminate against individuals with pre-existing conditions or genetic risks. If AI identifies someone as high-risk based on family history, prescription patterns, or wearable data, they could face higher premiums or policy denials, even if they are otherwise healthy. This raises concerns about fairness in underwriting and whether AI-driven risk assessments reinforce biases in the insurance industry.

How Canadian Regulations Protect Your Health Data

In Canada, privacy laws such as PIPEDA (Personal Information Protection and Electronic Documents Act) regulate how insurers handle personal data. Life insurance companies must obtain consent before collecting and using health information, and they are required to keep data secure. However, AI-driven underwriting is still evolving, and there is ongoing debate over whether current laws are strong enough to protect consumers from unfair data use.

AI and digital health technology bring new opportunities to enhance life insurance pricing and accessibility, but they also introduce risks related to data privacy and discrimination. As AI becomes more influential, the industry must balance innovation with ethical responsibility, ensuring that health data is used fairly and transparently. If you’re considering a life insurance policy that incorporates AI-driven assessments, working with a trusted life insurance broker can help you understand your options and protect your privacy.

Frequently Asked Questions (FAQs) About How AI and Digital Health Monitoring Changes Life Insurance Rates

Find a solution for what you’re looking for 

AI and digital health monitoring are transforming life insurance, making policies more personalized and accessible, but balancing innovation with privacy and fairness will be key to ensuring a future where technology benefits everyone. At Protect Your Wealth, we work with and compare policies and quotes from the best life insurance companies in Canada to ensure the best solution for you and your needs. We provide expert life insurance solutions, including no medical life insurance, critical illness insurance, term life insurance, and permanent life insurance to build the best package to give you the protection you need. 

Contact Protect Your Wealth or call us at 1-877-654-6119 to talk to an advisor today! We’re proudly based out of Hamilton, and service clients anywhere in Ontario, British Columbia, Alberta, and Manitoba including areas such as Kitchener, Victoria, Edmonton, and Winkler.