Vitality income protection review – the best cover at the right price?

24 min Read Published: 24 Jun 2021

Vitality income protection review – the best cover at the right price?We are often quick to insure our homes, possessions, travels and even our pets but rarely do we think about insuring ourselves. Yet we all face the risk of illness within our lifetimes which could impact our ability to work and earn an income.

What is income protection?

Income protection cover is an insurance product that replaces part of your income should you become unable to work due to illness or accident. The product starts paying you a monthly income after a specified time (called the deferred period), and will continue to make these payments until either you return to work, your insurance comes to an end, or you die.

All income protection plans will have a definition of incapacity, which is how the insurance company assesses your illness and determines if you qualify for a claim on your policy. Typically this definition will be based on your ability to continue working in your current occupation.

For more detail on income protection insurance, how these policies work and what you should consider when taking out your own policy, please read our guide to income protection.

How to decide if you need income protection?

Income protection is one of the most underbought insurance products, despite it being arguably the most valuable. Often people don’t think they need income protection, whether that’s because they don’t think they will fall ill or they believe they could rely on state or employer support if they did become unable to work for any period of time. However, research by LV shows that someone in their mid-30s has a 45% chance of being off work sick long-term. Furthermore, any state benefits payable in the event of being off sick long-term would be insufficient to maintain most people’s standard of living. If your employer doesn't provide an income protection policy for its employees (most don't) and you have dependents then you should seriously consider arranging a policy yourself.

Before taking out income protection insurance you will have to make a number of decisions, such as:

• How much income do I need?
• How long can I get by for before needing income support?
• How will my incapacity be assessed?

In the conclusion of this review I discuss the best way to answer these questions.

What is Vitality Income Protection Insurance and how does it work?

Vitality is an insurance company that takes an innovative approach to insurance by encouraging its customers to live a healthier lifestyle while offering huge discounts with major brands such as Apple and Amazon.

Depending on which type of Vitality income protection product you choose you could receive between 50% and 60% of your income, tax-free, if you were unable to work due to illness or an accident. In the event of a claim the monthly benefit will be paid for up to 2 years, or up to the end of the term of cover. You’ll also have access to a range of extra benefits that are built into your policy, designed to help you make a recovery and return to work (which is of course in Vitality's best interests).

There are three things that make Vitality income protection different from the other products available in the market:

Full earnings guarantee

This feature comes as standard with Vitality income protection. If you verify your earnings when you take out your policy, Vitality will pay you a benefit amount based on your earnings when you applied for your policy, rather than your earnings at the time of claim.

Why is this innovative? If you fall ill you may choose to reduce your hours or change occupation before you eventually stop working altogether. This could mean that your earnings are reduced before the point that you actually claim. Most companies will base the amount they pay you on the level of your earnings just before you claim, so you could receive a lower level of benefit than you expected.

There is also a guaranteed benefit level of £1,500 per month that does not require evidence at the claim stage as long as there is evidence that your income has stopped. This gives further security to the policyholder against a change in their circumstances in the lead up to being completely unable to work due to incapacity.

Permanent disability uplift

With Vitality’s Income protection cover plus you will receive an additional 10% increase to the monthly benefit amount if you become disabled and permanently unable to perform 3 activities of daily living (tasks such as washing and getting dressed). This feature is designed to give you additional financial support at a time when you really need it.

Healthy discounts and rewards

Vitality income protection comes with access to various discounts and rewards designed to help you have a healthier lifestyle. Whether that’s providing access to 40% off gym memberships or a heavily discounted Apple Watch (including the new series 6) to track activity, the company’s focus is to help customers to improve their health and reduce their chances of illness. The Vitality reward system also allows you earn up to 75% off Champneys Spa Breaks and even money off food shopping at Waitrose & Partners. I personally have a Vitality Life Insurance product which I use to save over £1,000 a year as shown in my Vitality life insurance review.

How do the optimiser and Vitality programmes work?

Vitality used to offer a Vitality or a Wellness Optimiser but in October 2020 this was replaced with one optimiser called the Vitality Optimiser.

The Vitality Optimiser provides an upfront premium discount of up to 30% and the ability for customers to control how their premiums change over time depending on how healthily they live. For example, if you aren’t very healthy your premiums will increase by a set amount each year - increases happen if you reach Bronze, Silver or Gold status through your activity and health checks. However, if you engage with your policy, earn Vitality points for activity and health checks and reach Platinum status your premiums will stay the same each year.

Vitality Programmes:

Vitality Programme How it works
Vitality Select
  • Rewards package available for policy premiums under £45 per month with some rewards requiring a minimum premium of £25 per month
  • Vitality select includes a large list of rewards including discounted Bluecrest health screenings, Champneys stays, Runners Needs footwear and Garmin devices
  • Premium changes can occur at each policy anniversary based on the Vitality status reached through activity and health checks.
  • At Platinum status the monthly premium will stay the same each year and increases apply each year at Gold status - +0.5%; Silver - +1.5%; Bronze - +2.5%
Vitality Plus
  • Your premium has to be at least £45 per month then you pay an additional £4.75 monthly to unlock Vitality Plus rewards
  • Extra rewards within Vitality Plus include Vitality American Express Credit Card cashback, Odeon & Vue cinema tickets, Virgin Active gym discounts and free Amazon Prime subscriptions
  • Premiums are more heavily discounted upfront
  • Premiums can change by between +4% and -1% each year
  • Premium changes are based on your activity and wellness recorded over the 12 months leading up to your policy anniversary
  • Wellness is based on your overall health, such as BMI, blood pressure, blood glucose and cholesterol levels.

What are the key features of Vitality income protection insurance?

Vitality income protection insurance offers three levels of cover:

Cover Level Monthly cover limits Payment Term Features & Benefits
Income Protection Cover Plus Up to 60% of your gross earnings capped at £5,000 then 50% of anything over this, capped at £16,666 per month Pays an income until you are able to return to work or reach the end of the term of the policy
  • Recovery benefits of up to £2,000 to pay for specialist treatments, counsellors & training courses.
  • Hospitalisation benefit of £100 per day if you stay for more than 6 days.
  • 10% uplift to your benefit if you are permanently disabled
  • Upon return to work you'll receive a 'Back to Work' benefit of 50% of your benefit the 1st month and 25% the second month to help you make the transition
  • A proportionate / rehabilitation benefit that tops up your income if you return to reduced hours or lower-paid work.
Income Protection Cover Up to 60% of your gross earnings capped at £5,000 then 50% of anything over this, capped at £10,000 per month Pays an income until you are able to return to work or reach the end of the term of the policy
  • Recovery benefits of up to £2,000 to pay for specialist treatments, counsellors & training courses.
  • Upon return to work you'll receive a 'Back to Work' benefit of 25% of your benefit the 1st month and 10% the second month to help you make the transition
  • A proportionate / rehabilitation benefit that tops up your income if you return to reduced hours or lower-paid work.
Short Term Income Protection Up to 60% of your gross earnings up to £5,000 then 50% of anything over this, capped at £10,000 per month Pays an income for up to 2 years per claim - multiple claims possible as long as you return to work for at least 6 months between them
  • Recovery benefits of up to £1,000 to pay for specialist treatments, counsellors, training courses.
  • Upon return to work you'll receive a 'Back to Work' benefit of 25% of your benefit the 1st month and 10% the second month to help you make the transition
  • A proportionate / rehabilitation benefit that tops up your income if you return to reduced hours or lower-paid work.

Income protection cover plus

This is the most comprehensive version of the product, offering the highest maximum benefit. It also provides the most generous recovery support, including access to up to £2,000 worth of rehabilitation services, designed to help you get back to work quicker. They also offer a Back to Work benefit which pays 50% of your benefit amount for your first month back at work and 25% the second month, to make the transition that bit easier.

Income protection cover

This is the standard version of Vitality income protection cover which can cover a similar percentage of your earnings but at a lower cap than is available with Income protection cover plus. It doesn't include the extra perks for hospitalisation and permanent disability but provides similar return to work and rehabilitation benefits to support you as you get back to work.

Short term income protection cover

This product offers everything that the standard Vitality income protection cover offers but only pays your monthly benefit for up to 2 years per claim. You must return to work for at least 6 months before you can make another claim if you reach the 2-year limit. This is the cheapest income protection insurance that Vitality offers.

Occupation definition for claims

The definition that is allocated depending on the type of work you do will determine how your claim is assessed if you become incapacitated to work.

Vitality offers two different definitions of incapacity; ‘own occupation definition’ or 'special definition’.

The own occupation definition of incapacity is offered to people in lower-risk jobs, such as office workers, and the policy pays out if the person insured becomes unable to do their normal job. For people in higher-risk occupations, Vitality will offer their special definition of incapacity, which will pay out the benefit amount for the first 12 months if the person insured cannot do their normal job. After this initial period of 12 months Vitality will measure the person’s incapacity against basic activities of daily living or work tasks such as getting dressed, lifting, writing or getting in and out of a car. Vitality only continues to pay the full benefit amount if the person cannot complete three of the basic activities. If they are able to complete these activities but still can’t do their normal job, Vitality will half the benefit amount after this 12 month period.

All Vitality customers will receive a Vitality income protection key features document which will contain all the information they need to know in relation to their new policy.

Vitality also has an impressive payout record, having confirmed that it paid out on 96.4% of income protection claims in 2019.

What isn’t covered by Vitality income protection insurance cover as standard?

Vitality will cover most people for income protection insurance provided they’re in reasonable health when they apply for their policy. The policy also does not have any exclusions as standard unlike a number of other income protection insurers. For example, Zurich’s income protection policy does not cover HIV/AIDS or a claim connected with hazardous activities.

Where Vitality may not provide the best solution, is for people in higher-risk occupations. It falls short of some extra benefits such as carer's cover, fracture cover and additional death benefits which other policies can offer.

The higher risk your job is, the more likely you are to claim on your policy and therefore the more expensive your insurance premiums will be. For certain risky occupations, it may even prove difficult to get income protection insurance at all.

If you’re in a higher-risk job there are some specialist insurers that should be able to offer you income protection cover, where more mainstream companies like Vitality won’t.

It is therefore important to speak to an independent insurance adviser* who has knowledge of the entire market and can recommend which income protection insurance policy suits your needs. In the conclusion of this review, below, I discuss this in more detail.

What extra options and benefits can be added to your Vitality Income Protection cover?

You can choose to add a number of different options or additional benefits to your Vitality income protection policy:

Indexation

This option will ensure that the benefits from your income protection plan keep up with increases in the cost of living, and will increase by inflation (RPI).

Life and serious illness insurance cover

You may decide to add some life and/or serious illness insurance to your Vitality income protection policy, ensuring that you’re financially protected in a wider range of circumstances.

Optional serious illness cover for children

This additional benefit pays out a lump sum, up to £100,000, if your child develops a serious illness.

Disability cover

This Vitality benefit pays out one or more lump sums if you become disabled due to an accident or illness

Optimiser

You can add the Optimiser to your Vitality income protection insurance if you want to make your cover more affordable upfront and are comfortable to engage with your policy and live healthily to control your future premiums.

How soon after taking out cover do they start paying out if you need to make a claim?

If you make a claim on your Vitality income protection policy they will start paying you the monthly benefit after your chosen deferred period. Your deferred period can be typically anything from 4 weeks to 52 weeks. The longer your chosen deferred period, the cheaper your income protection premiums will be. Vitality provide a choice of 4 weeks as well as 2, 3, 6 or 12 months.

How much does Vitality Income protection cost?

Vitality income protection insurance can cost as little as £8 per month, but if you choose to add an Optimiser and want access to all of the Vitality Select reward partners, your starting premium needs to be greater than £25 per month and for Vitality Plus rewards the minimum monthly premium is £49.75 per month.

Conclusion - does Vitality Income Protection offer the best cover at a competitive price?

Vitality income protection insurance provides a good solution if you’re fit and healthy or are keen to get more active and engage in a healthy lifestyle. The Vitality Optimiser can help to make your income protection insurance more affordable, while also providing access to fantastic discounts and rewards designed to help you live a healthier lifestyle. As described in my Vitality Life insurance review, I managed to save over £1,000 in rewards in the first year of the policy and received £250 cashback. Vitality has an impressive payout rate, approving 96.4% of income protection claims in 2019.

However, income protection insurance is quite a complicated product and there are lots of things to consider when researching the various products available. It’s for this reason that I’d recommend that you speak to an independent income protection adviser (not an adviser from Vitality as they can only advise on Vitality's products) who will be able to assess your needs and recommend the best income protection policy for you, whether that’s with Vitality or another insurance provider. Few independent protection advisers give whole of market advice and understand the Vitality product in order to tell you whether the latter is the best income protection policy for you. The insurance specialist who I used (can be contacted via this short form*) will tell you whether Vitality income protection insurance will work for you without any form of pressure selling and also how to get the maximum from the product. I wouldn't recommend them unless the service had been excellent. Just put your contact details in the form and choose the time of day to have a quick chat. They can also advise you how much income protection you need, what deferred period to choose and what definition of incapacity to select.

As a Money to the Masses reader you can receive up to £100 cashback if you buy your policy through the insurance specialist.

 

If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses and do not wish to qualify for the cashback referred to in the article - LifeSearch