Is Vitality Life insurance worth it? – an unbiased view

17 min Read Published: 30 Jul 2018

Is Vitality Life insurance worth it? - an unbiased viewIts bright pink branding and innovative approach to insurance are certainly catching the attention of the public and the industry alike, but is Vitality life insurance really worth it?

The big discounts and incentives (including 40% off gym membership and a free Apple watch) certainly sound appealing but in this article I look beyond the benefits to take a closer look at the insurance products themselves to explain:

  • What Vitality offers its customers
  • How Vitality life insurance compares to other insurance solutions available in the market
  • How Vitality ‘critical illness insurance’ differs to the rest of the market
  • Who should consider Vitality life insurance and who shouldn't

After all, it’s the life insurance that will protect customers financially should they be faced with illness or death. While Vitality provides other insurance products this article focuses on the Vitality life insurance product and its critical illness policy. For a full road-test and review of Vitality, including showing how the benefits work and who should and shouldn’t consider Vitality life and health insurance read my full Vitality review.

What is covered by Vitality Life Insurance?

Looking at the life insurance products offered by Vitality, in the main they are similar to the products offered by other companies; namely life insurance, income protection insurance and whole of life insurance. The one exception is Vitality’s version of critical illness insurance, which it calls Serious Illness Cover. Serious Illness Cover was Vitality’s flagship product when it entered the UK insurance market in 2007. I will look at the Serious Illness Cover in more detail in the next section.

So what does Vitality Life insurance cover?

  • Life insurance - this type of policy pays out if any of the lives assured die within the policy term. The amount of life insurance can remain level (known as level term assurance), decrease over time (known as decreasing life assurance) or remain level but paid out in instalments rather than a one-off lump sum in the even of death (known as family income benefit)
  • Whole of life - this type of policy has no term in which you have to die in order for it to pay out. It will pay out whenever you die and therefore tends to be more expensive.
  • Income protection - this will pay out a regular income which equates to a percentage of your salary in the event that you are unable to work due to an accident or ill-health.

As an add-on, or as a standalone policy, Vitality offers an innovative version of critical illness insurance, called Serious Illness cover.

What is Vitality Serious Illness Insurance cover?

As mentioned above Serious Illness Cover is Vitality’s version of critical illness insurance. To understand how it differs from traditional critical illness insurance here is a quick reminder of how critical illness insurance works.

What is critical illness insurance?

The first ever critical illness insurance product was launched in the 1980s, and would pay out the value of the insurance if the customer was diagnosed with one of a handful of critical illnesses covered, such as cancer. The customer could then use that payout as they wished, perhaps to pay off the mortgage and their policy would come to an end. Back in the 1980s, if you developed one of these illnesses, say cancer, you would sadly have had a greater chance of dying from the condition than you would do today. Cancers were detected at later stages because we didn’t have the advanced screening approaches that we have now and the treatment methods weren’t as effective, so survival rates were low. It made sense for critical illness insurance to work in the way that it did, paying out the full value of the insurance on diagnosis of an advanced illness, or most likely death, and then terminating. Most modern critical illness policies still work in the same way although the conditions covered will be different. They are therefore expensive as a result.

How does Vitality Serious Illness Cover differ?

Vitality’s approach to critical illness insurance differs from traditional critical illness insurance in two key ways:

  1. Vitality Serious Illness insurance pays out amounts that match the severity of an illness, rather than the full value of the insurance. Vitality pays out on the diagnosis of an illness based on a severity scale, for example, a Stage I cancer sufferer might receive 25% of the cover amount, and a Stage IV cancer sufferer might receive 100%. This is because Vitality takes into account the fact that the financial impact of illness today is less than it was historically due to improvements in treatment methods.
  2. Provides the ability to claim multiple times on the policy. Most critical illness policies pay out just once and then expire. Vitality believes that because we are living longer and surviving illnesses that were once life-threatening a policy should reflect this and be able to pay out more than once.

Vitality offers two levels of Serious Illness Cover; Primary and Comprehensive:

  1. Primary is the more basic product, covering the higher severity illnesses only (from 15% payout up to 100%)
  2. Comprehensive covers the same illnesses as Primary with the addition of cover for some earlier stage illnesses, therefore covering the full spectrum of severities (from 5% payout up to 100%).

Vitality prides itself on offering the most extensive critical illness protection with their Comprehensive product covering over 170 conditions, compared to around 50 for a typical critical illness policy. Vitality strongly believes the product delivers more value to customers as it is up to 3 times more likely to provide a payout than traditional products, simply because of the sheer number of conditions covered.

When a customer takes out Serious Illness Cover with Vitality they will receive the Vitality life insurance terms and conditions which will list all the conditions covered and at what severity level they will be paid. As someone who has taken out a Vitality life insurance policy with Serious Illness Cover I can confirm that this is quite a lengthy document!

What is not typically covered by Vitality Life Insurance & Serious Illness Cover?

I like what Vitality are trying to achieve with their life insurance and serious illness cover policies by designing a product that differs to the more traditional products available. However, it’s worth being aware of a few shortfalls of the product which could possibly make other life insurance / critical illness insurance products more suitable for you.

Vitality’s severity-based payments (for their Serious Illness policy) mean that there could be cases where you receive a smaller payout from the policy than you would have done with a different critical insurance product.  For example, you might receive a 50% payout from Vitality for a heart attack, where you would receive 100% from another insurance company. But, remember that once the 100% is paid out on the latter policy it would cease. With Vitality, in this scenario, you’d still have 50% of your cover amount remaining if you needed to claim again.

Back in 2007 Vitality’s Serious Illness Cover was miles ahead of the other critical illness products in terms of the number of conditions covered and the early stage payouts, however over the last few years many of the other insurance companies have improved their critical illness products significantly, closing the gap on Vitality’s product and offering great alternatives which cover a large number of conditions, while also paying out 100% of the cover amount for most illnesses.

It all comes down to why you’re buying the life insurance and/or serious illness cover, if the sole purpose is to pay off your mortgage in full if you die or are diagnosed with a critical illness then perhaps the more traditional products would be more suited to your needs because they are more likely to pay out the full value of the insurance.

If you plan to just take out a Vitality life insurance policy without the Serious Illness Cover then the policy works in the same way as other life insurance policies out there (i.e in terms of what is and isn't covered). However, you can benefit from a range of rewards if you take out a Vitality life insurance product as described below.

What Vitality Life insurance benefits and rewards do you receive?

Customers can add Optimiser to their Serious Illness Cover or Vitality life insurance policy  (which I did), that gives them an upfront premium discount and the ability to control their future premiums by earning Vitality points and building a Vitality status (bronze, silver, gold, platinum) through living a healthy lifestyle. Their status determines how their premiums change over time, so the higher their status, the lower their premiums will be. Vitality makes it easier for customers to live healthier by offering discounts on wearable fitness devices like Apple Watch and Fitbit, and incentivise healthy living by awarding weekly cinema tickets and Starbucks coffees. You can also get 40% off British Airways flights, Eurostar tickets and gym memberships (as I have).

While Vitality’s Serious Illness Cover isn’t cheap, a product that is up to three times more likely to pay out than its peers is naturally going to be at the more expensive end of the market.  But this is where Vitality has been clever by offering a way for customers to buy their Serious Illness Cover at a more affordable price by bringing in the idea of healthy living, as described above

Of course, if you don’t start earning points, your Serious Illness Cover and/or life insurance premiums could go up by as much as 4% each year with the Optimiser. So although your premiums may appear cheaper at outset you could find that over the course of a few years your Vitality policy becomes more expensive than other critical illness or life insurance products available in the market.

How much does Vitality Life insurance cost?

Vitality life insurance does sit at the more expensive end of the market, particularly if you’re considering their Serious Illness Cover. However, it is possible to buy Serious Illness Cover for as little as £8 a month with Vitality.

However, if you want to add Optimiser to access to all of the big brand rewards, like the Apple Watch, you will need your Serious Illness Cover premium to be higher than £30 a month. Add on the £3.80 monthly fee and you’re looking at a starting premium in excess of £33.80.

Of course, you don’t have to take out Serious Illness Cover, you can just take out Vitality life insurance and still benefit from the Vitality rewards programme. To fully understand how this works read my full Vitality review. However, in short, your monthly premium Vitality life insurance premium needs to be over £38 and you would have to opt to have Optimiser included on your policy for a cost of £3.80 per life insured.

This is certainly more costly than other insurance products for the same level of cover, however if you factor in the savings you can make through the Vitality discounts and rewards it’s very easy to see how the Vitality product can pay for itself.

Summary - Is Vitality Life Insurance worth it?

I like the Vitality product, I have my own life insurance and serious illness cover with them and benefit from the various discounts and rewards I get with my policy, having saved over £1,000 in the first year of my policy.

Having said that, I can see that the product isn’t for everyone. Being quite young and fairly fit, I find it easy to engage with my Vitality policy, earn my fitness points and gain rewards using my Vitality app without changing my daily routine that much. I’m therefore able to save a significant amount of money with my policy and control my annual premiums.

I imagine if you’re older, perhaps less able to exercise, less tech-savvy, the value of the Vitality policy becomes less obvious.  And what if you live in the Scottish Highlands, or a similarly isolated region? Whilst that won’t stop you exercising it may restrict your access to some of the discounts and rewards, like the cinema tickets or gym discounts, simply because of the travel time involved.

Add to this a desire to have a simple life insurance policy in place to pay off a mortgage should the worst happen, other more straightforward products available elsewhere could offer a better solution, and in fact be more cost-effective for some customers.

Vitality is transforming an arguably stagnant market, entering as innovators with a vision that extends far beyond the realms of insurance, trying to drive the health and wellbeing of the nation. But the big question is, does Vitality offer the best life insurance?  For the right kind of customer, it is definitely can be.

If you’d like to find out more about Vitality please read my full Vitality Review

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