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This Life Insurance Start-Up Has Quietly Raised $81 Million To Give Cheaper Rates To Vegans, Runners And Yogis

Forbes logo Forbes 11/15/2017 Lauren Gensler, Forbes Staff

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When Munjal Shah was in his mid-30s, he found himself in the emergency room with chest pains. The serial entrepreneur had sold his company to Google the day before and his health hadn’t been a priority. That served as a wake-up call: He was determined not to suffer a heart attack in his 40s like his father and over the next several years, would lose 40 pounds and start competing in marathons.

Now Shah runs a life insurance start-up called Health I.Q. that rewards health-conscious consumers with lower rates. It has quietly sold $5.3 billion in coverage since January 2016.

“America is like a tale of two cities: 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,” says Shah, co-founder and CEO.

The San Francisco-based company announced on Wednesday that it has raised $34.6 million in a Series C funding round led by Andreessen Horowitz. That brings its total funding to $81 million. Previous investors include Foundation Capital, Ribbit Capital, Greylock Partners, Menlo Ventures and Charles River Ventures.

Health I.Q. partners with established life insurance companies to offer policies to marathon runners, vegans, weightlifters, cyclists and other health-conscious people with rates that an average of 4% to 33% lower than they could traditionally expect.

The business is built on a data-driven approach to underwriting that seeks to reward people for their healthy behavior rather than penalize them for red flags. For instance, Health I.Q. won’t automatically punish someone for their family history, a low resting heart rate (which is frequently found among athletic people) or a disease like diabetes (which can be well-managed).

“They’re addressing a fundamental unfairness of underwriting,” says Alex Rampell, a partner at Andreessen Horowitz. “Which is: Why is it that people who work out maniacally, eat well and have lower cancer rates are paying the same rates as people who don’t?”

Shah started Health I.Q. in 2013 to create an educational quiz that helped people understand how healthy they were. He figured most people lie to their doctors when asked how much they drink or exercise per week. Instead, he would ask questions that only health-and-fitness nuts would get right.

For instance, a consumer might be asked to identify vegan breads in a line-up, how much an Olympic barbell weighs or whether you’re supposed to drink water during Bikram yoga.

The basic 30-question quiz, which is generated from a bank of 3,000 questions, has been taken by over one million people. The results now underpins Shah’s business. He found that people who scored higher on the quiz were significantly less likely to seek emergency medical treatment, be obese or suffer from diabetes or high blood pressure.

Shah rewards people who score high enough on the Health I.Q. quiz with an average of 4% savings on their life insurance policy. Additional savings come when someone verifies their fitness level, such as the ability to run an eight-minute mile, and exhibits other health and fitness characteristics that are indicative of a lower risk.

Health I.Q. plans to branch into other types of insurance in the future, including disability insurance and long-term care insurance.

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