VitalityLife Mortgage Plus Plan
VitalityLife is the new name for what was PruProtect and to mark the occasion it launched no less than three new plans on 19 November.
This plan is a combination of life cover and mortgage incapacity cover and is designed to protect a mortgage. The sum insured can be either level or can decrease in line with a capital and interest mortgage over the same term as the plan and with an interest rate of 7% (so if the actual mortgage interest rate paid is lower, there should be a surplus on death).
The life cover element pays off the mortgage on death during the policy’s term. The mortgage incapacity element pays out up to 24 monthly benefit payments if the customer is unable to work following diagnosis of one of 29 specified conditions such as cancer, heart attack and stroke. Cover can be single or joint life.
Customers can also add serious illness cover for themselves and/or their children and can also add the Vitality Optimiser option. This gives upfront premium discounts, the ability to control premiums and rewards for healthy living, including annual cashback.
Comment: The mortgage protection market is still suffering from having little that is new or that appeals to now cautious homebuyers since MPPI hit the rocks, so VitalityLife is to be commended for coming up with a new cover variation.
However, its mortgage incapacity cover is in some ways puzzling. It pays out a monthly income if someone can’t work because of illness or disability (when many might prefer a lump sum) and only pays on being diagnosed with a critical illness, whereas most people who can’t work due to illness have mental health or musculoskeletal problems.
For example, looking at Aviva’s IP claims (a typical IP insurer with a large ad mature IP book), in 2013, 31% of its IP claims were for mental health conditions and 19% for musculoskeletal, with a further 19% for neurological conditions and 9% for rheumatological. How many of those would be a claim under this new plan? To be fair, some would, but that still leaves a substantial percentage that would not. The danger is that a customer might like the concept of critical illness benefits to in effect pay their mortgage, but be disappointed if the reason they can’t work is because of a condition that pretty much any IP plan would have covered.
On the plus side, there is no limit to how many claims may be made, and the plan is not underwritten on occupation or financial circumstances. We also expect the plan to be competitively priced and it does include the powerful Vitality lifestyle reward tool.
Overall, is this a better solution than term plus ‘pure’ IP or even term plus typical (lump sum) CI? It’s hard to be convinced that it is.
Our review has focused on the Mortgage Incapacity Cover element of the plan, but the product also includes a number of other elements designed to appeal to and protect mortgage borrowers.
Plus points: A plan that combines elements of life, CI and IP cover; An alternative to MPPI; Includes Vitality Option; Multiple claims may be made over the years.
Not so plus points: The mortgage incapacity cover does not pay out on most mental health or musculoskeletal conditions: Benefit limited to 24 monthly payments; No unemployment cover option.
Website: http://www.pruprotect.co.uk.
Rating (max 10): Innovation: 8. Overall: 6. Bronze
Tags: VitalityLife; Term; Other