One of three new products launched on VitalityLife’s launch towards the end of last year, this product is an add-on to Vitality’s whole of life plan. That plan can also include serious illness cover, income protection and other optional add-ons and can also be written as term cover (though not with this option).
Adding this option creates a separate benefit that accelerates some or all of the sum insured if the customer is diagnosed as needing long term care (LTC). The plan is also coupled with Vitality benefits to encourage and reward good lifestyle choices.
Benefit is paid out if the customer suffers either a Level 1 or Level 2condition.
A Severity Level 1 condition is where the customer has irreversible Alzheimer’s disease, Parkinson’s disease or dementia, and the plan then pays out 20% of the LifestyleCare Cover sum insured. The balance of the life sum insured is then paid on death or on suffering a Severity Level 2 condition (although if LifestyleCare Cover Protector is chosen, the full sum insured is paid on death).
If the customer suffers a Severity Level 2 condition, the whole balance of the LifestyleCare Cover sum insured is payable. A Level 2 condition is one where there is a persistent confusional state, a severe stroke resulting in permanent symptoms or a permanent inability to perform three out of six tasks ‘designed to assess whether you can look after yourself ever again’. In effect those six tasks are the old activities of daily living (ADL) definitions that used to be common on pre-funded long term care insurance (LTCI) plans, albeit slightly modified and renamed.
The customer must usually survive for 14 days after meeting a Level 2 claim definition.
The plan is available from age 16 to 74 at outset. The maximum sum insured is £250,000 and the minimum is £10,000.
The third element of the plan is the Vitality incentive and reward scheme, which enables customers to build up points for positive lifestyle choices, coupled with discounts for a range of items including gym membership.
What They Say
CEO Herschel Mayers said: “LifestyleCare Cover is a new category of protection. The whole of life market has seen resurgence since we launched our revitalised product in 2012. However, we recognise that for many people the need for cover in their later years is during ill health and this LifestyleCare Cover has been designed to protect people when they need it most.”
What We Say
"VitalityLife is the first modern insurer to get to market with LTC benefits built into a whole of life plan (it won’t be the last though, so look out for other LTC launches in 2015 too).
"Back in the 90s, pre-funded LTC insurance (LTCI) plans were launched to great fanfare, although the experience rather turned sour towards the end of that decade for many insurers and advisers. It is a long time since any major new pre-funded LTCI plan was launched and modern plans look to be quite different from the previous generation plans.
"Then, most plans were similar in concept (if funded by regular premiums) to income protection (IP) plans, in that they paid out a monthly benefit if the customer needed care. As that benefit was usually paid every month until death, such plans were expensive- average premiums being typically more than twice as much as an average IP plan.
"Today’s plans look to be more akin to critical illness insurance (CI) in that they pay a cash lump sum on diagnosis of a care condition. The new definitions are a little different too, albeit look still not to effectively cover situations where an elderly person almost fails a number of tasks but does not quite meet them, even if they clearly do need care.
"The issue with lump sums too is that they may not cover many months of care. That will be less of an issue from 2016, when Government care funding rules will be changed to introduce an element of capping, so a lump sum makes a lot more sense now (or at least will from next year) than it did in the 90s. That said, anyone with, say, Alzheimer’s may still find that they have a long term need for care but a benefit that runs out long before they do.
"However, if insurers were to try to meet all needs fully, the cost would be prohibitively expensive, younger people would not be interested in buying and LTCI could again fail.
"Ultimately, new whole of life with accelerated benefit plans will probably always be something of a compromise. Within that, VitalityLife’s solution looks to have merit, although we could not see mention of any care service for customers. That is important because getting good official (NHS or social care) advice is somewhat hit and miss and most people’s families simply go through a rather painful and frustrating learning curve. Some other benefits popular in the 90s plans look to be absent too.
"If the cost is low enough, people in their 50s and 60s could find it well worth adding this benefit. Younger people should consider it too, but demand is likely to be lower (although LTC can be needed at any age – especially if it is injury-related, although short-term care needs are not generally covered).
"It is difficult to judge at this stage how popular the new plans will be or indeed how they will develop to meet people’s needs. For example, the website says ‘Our LifestyleCare Cover pays out if a doctor agrees that you can’t look after yourself’. In practice, it’s more complex than that, but VitalityLife has improved on the old ADLs plus cognitive impairment definitions of the 90s. Perhaps though a simple overarching definition as set out on the website would help allay any fears there that some care needs may not be covered.
"Finally, the plan itself offers very wide cover and a wide range of other benefits, so the new LTCI option is just one element of that (our rating just covers just that too rather than the whole plan)."