NICK HALL, EXPLAINS - THE DOG IS A DOG, AND NOT A CUDDLY INSURANCE POLICY
Written by Charlie Palmer on 16/01/2021

NICK HALL, EXPLAINS - THE DOG IS A DOG, AND NOT A CUDDLY INSURANCE POLICY

I have worked in this industry for a long time, and seen a lot come and go, and I think Vitality product will be a product to suffer massive levels of complaints, and is wide open to issues.

The product appears on research for guaranteed premiums.

And therein lies a problem. 

In the end column of the research results it states Low Start?: NO

And therein lies another problem.

And this is what the KFI shows for the premiums: 

 "You are in control of your premiums 

Your Vitality status also helps you control the cost of your premiums. You’ll have already received an upfront discount on your premiums – depending on your age and cover term. (Low start!)  Over the term of your plan you can control the amount your premium changes each year, when you look after your health and improve your Vitality status. The table below shows how your premiums may change each year depending on your status.  You start on Bronze: Bronze Silver Gold Platinum +2.5% +1.5% +0.5% +0%"

Check that?  Unless you improve your health and prove that as per the policy, your £30 premium for example increases by 2.5% per year!   That is, over 25 years, a lot of extra money!   Using Google search try the calculation of 30*(1+0.025)^25 and you get to £55.62 p/m. So much for low start/guaranteed.

It would make sense to recommend one of the policies that was guaranteed and costs £35.

(Vitality is usually a very similar price to other policies, it is not noticeably cheaper)

This is a low-start policy that Vitality manage to get on Guaranteed policy research and without a low-start note in the end column.  IFAC think advisers need to be very careful before advising on this range of Vitality products.  Non-advised firms need to state the material fact to their clients; this is not a standard policy and premiums may vary depending on the options you select.

And you thought you were arranging a cheap policy?

We put this article above to Vitality, who understandably were very shaken by our approach.  As ever with these large firms, I got passed from pillar to post until finally Distribution Director Andy Philo stated that he found the text "very disappointing".   But they were unable to counter the facts. 

IFAC say these policies are unlikely to meet TCF, being neither clear, nor fair, and, given IFAC struggle to understand the key features, we say they are misleading. 

Vitality instead issued the following reply in writing:

The press release we issued back in September might be helpful in explaining how our protection products - and in particular optimiser –see here - works    With all of our Life policies, the client has the option to add an ‘Optimiser’ to their plan. This opens up a number of benefits to the member, such as access to our best available premium (up to 40% off standard rate) which they can then maintain through engagement with the Vitality programme and keeping active.

Nick Hall is the chief file checker for IFAC.

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