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3 Benefits of a VUL Insurance Plan

By Kendrick Chua, Brighterlife.com.ph

Comments (56)

bl_VULSix years ago, when my client Rod finished his maritime training, he looked forward to having a bright future as a seafarer. While only 21 at that time, his earning potential was enormous for his age, but he also knew the risks involved. Thus, he looked for something to help secure his earning potential for his and his family’s future. In 2008, Rod took out a Variable Universal Life (VUL) insurance plan to address his needs.

Six years later, his savings from the VUL policy saved his home from foreclosure. According to Rod, “(I)t was the best investment I ever made.”

VUL has become the most popular insurance plan in the past decade. In simple terms, VUL is a financial product that offers the best of both worlds – guaranteed insurance benefit and fund accumulation. Since the policy is linked to different asset classes such as stocks and bonds, VUL presents earning potential that may not be offered in a traditional policy.

If you’re considering a VUL plan to beef up your portfolio, these features of the VUL may convince you:

1)     Flexible premiums

With a VUL plan, a policyholder has the option of putting in more than the regular premium. Any amount in excess of the regular premium becomes additional investment or top-up. In effect, the fund value accumulates faster for the policyholder. This is great for those who are looking for investment options for their bonuses or windfalls.

On the flip side, in the event of unforeseen financial catastrophe, a VUL plan allows the policyholder to paying the charges only, thereby keeping the policy in-force. Furthermore, as long as there is enough fund value to cover the charges, a VUL policy will not lapse.

2)    Potential higher returns

Since the underlying assets are linked to stocks and bonds, the returns of the VUL plan –may exceed that of other types of insurance policies. Since its inception 10 years ago, the average returns for an equity and bond fund are 16.6% and 7.8% respectively* according to the Historical Investment Performance of Investment Funds of Sun Life‘s Variable Life Insurance Products. In contrast, dividends and accumulation rate are now down to just four percent. And with present economic conditions, all signs point to even lower rates in the future.

Although a VUL plan entails higher risk, the higher returns allows the policyholder to realize his goals faster. Or better yet, achieve a bigger fund than he initially set out for.

3)    Liquidity

Just like Rod, a VUL policyholder can access the fund value in case of financial need. Unlike in traditional policies, this is treated as a withdrawal rather than a loan. Thus, the amount withdrawn does not incur any interest. Better yet, the amount withdrawn is not deducted from the face amount. However, it is highly encouraged that whatever amount was withdrawn  be reinvested again so that the policyholder remains on track with his financial goals.

 

All told, VULs have helped Filipinos become savers and investors. Now, our financial dreams become much easier to achieve with the help of the VUL plan.

*Returns are not guaranteed. Past performances do not reflect future returns.

Kendrick Chua is a Sun Life Financial Advisor and a Registered Financial Planner. He regularly writes for Rappler, Business Mirror and Money Sense. He is also a Chinese Language Instructor, TV host of CHInoy TV, a violinist and a freerunner-wannabe. he can be reached via kendrick.c.chua@sunlife.com.ph.

 

Image used under Creative Commons from AlexanderStein

yham on

sir, how much naman po ang starting? thank u po

    bebs on

    Hi yham, it depends on the result of your financial needs analysis or FNA. FNA is done to understand what your financial needs are, your goals, and your capability at the moment. Age and health risks are also taken into consideration.

Red Azul on

Hi ma’m, im a sunlife financial/insurance advisor, to answer your question , it depends po sa decision ng magiinvest. Meaning 5% to 20% of your monthly income. If you know a finacial advisor po, and you are interested to know more i suggest po to consult with him/her po.

    yham on

    thank you bebs, and red azul for info

Ara on

Hello! I really want to save and invest while being insured. Possible ba lahat yun? And how and where will I start? Hope makatulong sakin ang sun life. Thank you. -ara from binan laguna

    Hermogenes Escala on

    Hi Ara, that it was VUL of Sun Life is, you will have saving, insurance, and investment all in one.

      Hermogenes Escala on

      oopss…sorry, I mean, Sun Life VUL is

Max Laurel on

You wrote on nr.2 Potential Higher Returns then on the last sentence you stated “And with present economic conditions, all signs point to even lower rates in the future”. It’s a bit confusing.

    Kendrick Chua on

    Hi Max There is an indirect correlation between an economy and interest rates. When an economy is robust, interest rates are low. That is because our government does not need to borrow a lot. And since interest rates are low, people are more prone to look for other alternatives of investments including businesses and capital markets (stocks and bond market). Henceforth this activity drives up the stock and bond prices.

zen on

is VUL & Variable Life Insurance the same?

    Zen on

    @zen Yes VUL or Variable Universal Life Insurance is the same, do you already have one?

Rattus Uy on

Does the insurance company like Sunlife experiencing Inflation on the premium of the insurer?

    Mika on

    Hi! Premiums are fixed throughout the payment period.

How to Spend and Invest your Christmas Bonus | Brighter Life Philippines on

[…] Invest for your future – Instead of spending for things that only matter today, why not put your money into something that have a lasting impact in your life? Find ways to make your money work harder for you. Pick an option that can beat inflation: You can invest in the stock market, mutual funds, or even investment-linked insurance. […]

erwin francisco on

I have observed because I have both, why is it the Unit price of one VUL cheaper than the Unit price of one UITF?kindly enlighten me. thank you.

miguel macoy on

I am a policy holder pero wala pa po sa akin yung actual na policy, tanong ko lang po kung kelangan ba ako ang mamili kung anung investment mapupunta yun investment ko e.g. uitf, security bonds, equities etc….

    Mika on

    Hi Miguel, you can follow up with your financial advisor to know when your policy will be ready. If you need help in getting in touch with your advisor, kindly message us your contact details via editor@brighterlife.com.ph. Thank you.

She on

Hi! If in the future, I decide to add/increase my premium, does that increase also the face amount or death benefit, o mag-aadd lang sya sa mage-gain mo sa investment? For example, the face amount now is 750K, madadagdagan ba yan or yung fund value lang ang madadagdagan?

    Mika on

    Hi She, it depends on the VUL policy you have. It is best to consult your financial advisor to know the details of your policy. You may also want to call us at our hotline (632)849-9888. Thank you.

JR on

Hi is Mr. Kendrick Chua still working at Sunlife? I’m Keen on getting a VUL / proposal from SunLife. Please drop me an email. Thanks

Dencio on

Hello guys! Ask ko lang kung may withdrawal charges ba ang VUL products ng sunlife. Sa axa kasi may withdrawal charges until the fifth premium paying year ung regular pay VUL nila. Thanks po!

    Glo on

    Brighter life, Dencio.
    There’s no withdrawal charges ang regular paying VUL of Sun Life. If it’s a one-time pay VUL there’s a decreasing charge of 5-1% of the fund withdrawn with 5years. Beyond 5 years, there’s no more withdrawal charge. Should you have further questions, you can talk to anyone of us (Sun Life Financial Advisors).

Michael on

Hi, Kendrick. I have a sunlife maxilink prime and pay a 3k premium per month (with a face amount of 500k). I would like to know how much (or what percentage) of my premium goes to the investment portion of the VUL. Thanks…

Helbert Zamora on

Good day,
May policy po ako sa Sun Life VUL. I started 4 years ago. Ngayun po pwedi ko bang dagdagan ang regulay excess premium ko. Gusto ko i increase ang excess premium ko para sa investment ko. Hindi kasi ako regular na nakakabyad dati.

Maraming salamat.

    Mika on

    Hi Helbert! Please note that the Brighter Life Team does not have access to private information such as our client’s policy details. What we can do is forward your inquiry to Sun Life’s Customer Service to assist you. Please email us your full name, contact details, policy number and email address at editor@brighterlife.com.ph so we can forward your concern. Thank you.

emil on

Hi po meron po akong vul sa sun life and i am paying my regular qrtly premium since inception jan 2012 to date, and this year i started to deposit 5k as additonal premium on monthly basis. What is the effect on my investment? thank you

    Mika on

    Hi Emil! Brighter Life team does not have access to private information such as clients’ policies. Kindly email your contact details and policy number to editor@brighterlife.com.ph so we can have Sun Life’s Customer Service answer your inquiry. Thank you 🙂

rubz on

If you have VUL, anytime po ba pwede mo decrease your premium?

Marius Dejess on

Let us imagine that I have right now 10 million pesos in an equity stock index investment fund with a bank, how is transferring the money into a VUL offered by Sun LIfe better for me and for my loved ones:

(1) how much more money will I make and
(2) when can I get the principal and gain; and tell me
(3) how it is going to exempt me from estate tax altogether on my demise?

Email me, at mdejess(@)gmail.com.

Domz on

Maam sa akin po. 30 yrs old na ako. magkano po yong babayaran ko na amount sa VUL

    Mika on

    Hi Domz, kindly email us via editor@brighterlife.com.ph your location and contact details so that an advisor can provide you a computation.

Heidi on

Greetings!

I had VUL sunlife right now, finished paying for one year, four more years to go, but my husband doesnt like my policy. He wants something different like pension insurance so i can enjoy my insurance at age 60. Can i withdraw my VUL fund at 60. Am 47 years young.

Can i divert/transfer my policy to mutual fund instead.

PLease enlighten me.

thanks

heidi

    Mika on

    Hi Heidi. The Brighter Life Team does not have access to private information of our clients’ policies. We can forward your inquiry to our Customer Service. Kindly email us via editor@brighterlife.com.ph with your name, policy number and contact details so we can forward your inquiry. Thank you 🙂

    Jose Lepiten on

    Hi Miss Heidi,

    There are some options of how you could go with your VUL policy. You need to talk with your advisor and raise your query so that your concern can be addressed.

What is a VUL Investment? | on

[…] Since the underlying assets are linked to stocks and bonds, the returns of the VUL plan –may exceed that of other types of insurance policies. Since its inception 10 years ago, the average returns for an equity and bond fund are 16.6% and 7.8% respectively* according to the Historical Investment Performance of Investment Funds of Sun Life‘s Variable Life Insurance Products. In contrast, dividends and accumulation rate are now down to just four percent. And with present economic conditions, all signs point to even lower rates in the future. Although a VUL plan entails higher risk, the higher returns allows the policyholder to realize his goals faster. Or better yet, achieve a bigger fund than he initially set out for. – See more at: http://brighterlife.com.ph […]

joanne on

is VUL considered a savings too? thanks!

chenyl on

Hello! I have a few questions about top ups.

1) Is there a form I need to fill out to make an official top up before depositing the amount or is it automatic that any amount over the premium is already considered top up?
2) If say for example the VUL premium is 10k/year, then say I top up with additional 10k. Will this addtional 10k go to the investment part or will this just pay part of my next premium earlier?
3) Is it possible to withdraw/redeem the full principal top up amount plus the earnings?
4) Is it more advisable to top up AFTER the premium for the year has been paid for?
5) For a short-term financial goal (<5yrs), which is the better option for extra money: top up existing VUL or open a separate Mutual Fund?

*values are hypothetical

    Mika on

    Hi Chenyl. Thank you for reaching out to us. Hope you can provide your lcoation and contact details so we can refer you to a financial advisor who can best provide you with detailed info on your inquiries. 🙂

Kevin on

Is it easy to claim your VUL insurance plan? How? What type of claim is called?

Nette on

Hello Good day!

I am not sure what to avail but I am sure that I want to have insurance and savings in one. Yung pwede ko din magamit in the future for my kid’s college fund and my retirement.

I can shell out Php 75,000 yearly that is payable for 5 years. Hindi pa kasi kaya ng long term payment period since meron akong existing home loan mortgage.

    Mika on

    Hi Nette! Thank you for your interest. A financial advisor can best help you figure out the best investment that will fit your goals. Kindly email us your location and contact details so we can assign an advisor for you via editor@brighterlife.com.ph. You may also use our online tool via https://moneyforlife.com.ph. Thank you.

Ernest on

Hi,

My VUL premium is 60k per year for 10 years. Is there a guaranteed amount that can be withdrawn on the 10th year?

In the quarterly breakdown, 9k of the 15k premium is the premium charge. Does it mean that only 6k of the premium are invested? Is that amount called the fund value?

Thanks

    Mika on

    Hi Ernest,
    What is withdrawable at X period is the non-guaranteed fund value. This may be withdrawn partially, min. of PHP5,000.00 or full fund value but will terminate the contract.
    For your second question, after deducting the applicable charges, the Net Amount (PHP6,000) in your given example is the amount invested to the chosen fund.
    Fund value is computed based on your total cumulative number of units (technically purchased out of the Net Amount) multiplied by the prevailing unit price.
    Hope this helps. Should you have further questions, you may ask your financial advisor directly or you may email us at editor@brighterlife.com.ph. Thank you.

clark on

Kasama ba sa policy ang ng vul ang halth insurance

jerom on

Hi, ask ko lng po about sa VUL sa sunlife.. first time ko po kasi.. My quarterly payment is 21,200 pesos then i notice po na every quarterly payment ko.. meron transfer charges na 6,259.88 pesos every transaction and my admin charge pa po.. OFW po kasi ako kaya nun ngavail ako ng VUL, d po mxado naexpalin ung mga charges..

    Mika on

    Hi Jerome, please note that the Brighter Life team do not have access to private information of our clients. What we can do is forward your inquiry to our customer service so they can properly respond. Please email us via editor@brighterlife.com.ph your full name and policy number so we can verify with our customer service team.

Ritchie on

Hello! Good Day! I already have VUL.I already paid premiums for 3 years totaled 120,000 pesos.Recently,I checked my account with the fund value of 67000 plus,What does 67000 fund value mean? Is it the amount that I will get if in case I will not continue my policy?Anyway,I don’t have plan to withdraw just to clear things out.Thank you!!!

    Mika on

    Hi Ritchie, your fund value is the investment component of your VUL since VUL is a combination of life insurance and investment.

      Trish on

      Hi, this is a follow up question on Ritchie’s question above. I also have VUL and I understand that the fund value is a combination of life insurance and investment. But, if ever I needed cash for emergencies, can I withdraw the whole total fund value amount reflected on my policy? Or just the investment part of the VUL (since the amount is partly insurance, partly investment)? Thank you in advance!

      Mika on

      You can withdraw part of the fund value, withdrawing all of the fund value will cause the policy to lapse.

rosalyn on

pwede po kaya mag-avail ng vul kahit 2years old kid?

    Mika on

    Hi Rosaly, as early as 7 days old a child can already be insured. Should you be interested, kindly email us your contact details and location so we can refer you to a financial advisor via editor@brighterlife.com.ph. Thank you.

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