For sure, unang beses mong narinig ang VUL sa insurance agent mong kaibigan na chinat ka sa Facebook after niyong hindi mag-usap for years. Kidding aside, the product has its benefits, but of course, your friend won’t tell you everything.
So in this post, pag-uusapan natin ang Variable Universal Life Insurance, ano ito, at mga pros at cons nito.
What is VUL?
Ayon sa Investopedia, a VUL is “a type of permanent life insurance policy with a built-in savings component that allows for the investment of the cash value. Like standard universal life insurance, the premium is flexible. VUL insurance policies typically have both a maximum cap and minimum floor on the investment return associated with the savings component.”
Sa madaling salita, insurance plan ito na may halong investment. Once you get it, may choice ka kung saang fund mo gustong mag invest, and it depends if you are a conservative or aggressive investor.
You can invest in bonds if you want your money to grow slowly but surely, or you can opt for a stock market fund na mataas ang potential gain, but mataas din ang risk na magkaroon ng paper loss.
Once you secure your own VUL account, you can rest assured that your beneficiary/ies are already in good hands. After all, it’s insurance, and in the event that something happens to you, there is money waiting for your loved ones. What’s more, hindi taxable ang perang ito.
Also, if you are the type that doesn’t want to get into the nitty gritty of investing, then this works for you as well. A fund manager will be managing your money, and it depends on the portfolio’s performance how much your money will grow over the years.
What may surprise you is the high cost of fees. Kinakaltasan ang account value ng policy mo every month to keep it active, plus, another fee is deducted as payment for the fund manager who is managing your account. So if you are very particular with your investments, this policy is not the best way to maximize your earnings.
At kung ikaw din yung tipo na nakikita ito as an investment for just 3-5 years, stay away from it. Because malaki ang penalty for early withdrawal.
For the record, all forms of insurance policies have their advantages and disadvantages. For savvy investors, they are better off with the BTID strategy (buying term insurance while investing the difference). This means the budget you have for a VUL account will instead be allocated to a term insurance, and the rest will be invested into a purely investment fund like a mutual fund or UITF.
Speaking of insurance with very minimal risk, vice president Leni Robredo is pushing for unemployment insurance – where unemployed Filipinos would be able to receive 80% of their three-month salary to help tide them over. This is part of her job recovery plan called “Hanapbuhay para sa Lahat” that will be implemented should she win the 2022 presidential elections.