Red Bull star Vettel, 24, ensured his place in motorsport history at Sunday’s Japanese Grand Prix when he became the youngest man ever to win consecutive drivers’ titles.
The German’s landmark season has seen him compared to Formula One’s very best, including compatriot and seven-time champion Michael Schumacher.
But Hill, who beat Schumacher to the 1996 title in an era dominated by their fierce rivalry, believes the true test of Vettel’s quality will only come when he is subjected to a similarly protracted duel.
“In Formula One you do need some sort of personal rivalry to find out what is going on within each competitor,” said Hill.
“It seems to be that any time there is another driver and the question is ‘which one of these two is better?’ – that spurs them on to push themselves to greater heights.
“It’ll come because he’s so young. He’s obviously going to be driving for a few years yet and there are going to be much tougher times ahead.”
Hill believes there is no shortage of potential rivals already on the grid, should they be furnished with a car equal to the Red Bull that helped Vettel wrap up the championship with four races to spare.
Jenson Button, Lewis Hamilton and Fernando Alonso are all former champions, while the latter two also have experience of intense rivalries – with each other.
“I wouldn’t like to guess what would happen if you put him up against a Hamilton. It might fire Hamilton up. He might need to get some sort of rivalry going,” Hill added.
“Button has shown he’s better than we ever thought he was. Alonso is the sort of fiery character who you can imagine it being interesting them coming together.”