What is a VUL Investment?

A lot of people I know are allergic to insurance as an investment. Believe me, 6 years ago when I was just starting out as an employee, I was one of them.

“I’m still young and healthy, I don’t need an insurance yet.”

“Insurance is an expense, I have a small salary, I’m not sure if I can pay for it.” 

I hear myself say. And that’s what I also hear from some people.

I regret saying those 6 years ago coz I should have started out early and wished that I’ve learned earlier how insurance can act as my safety net in case anything happens.

Gone are the days when insurance only accumulates dividends and cash values with the existence of the VUL (Variable Unit Linked) Insurance and Investment plan. It has been popular in the last decade so basically, it allows an individual to be protected and at the same time, a part of their payment is invested in mutual funds which is not offered in a traditional life insurance policy.

See how it works in this video as clearly explained by Mr. Aya Laraya of Pesos and Sense

Life Insurance + Mutual Fund Investment = VUL

If you are considering the VUL plan as an additional income generating investment, take note of the following benefits:

– With the VUL, there is FLEXIBILITY as YOU being the policy owner can decide on the amount you will place and the type of fund investment where your money will be invested depending on your financial goals and risk tolerance. You may increase or decrease your premium payments and decide whether to make the policy investment driven or insurance based.

– You as a policy owner have the option to pay more than your regular premium. Any amount in excess of your regular premium will be added to the investment or also known as “Top-up.”

– You as a policy owner may choose whether to invest it in a Balanced Fund, Equity Fund or aBond Fund, again depending on your risk tolerance which I will explain in a separate blog post.

– In a VUL plan, guaranteed cash values and dividends of traditional insurance policies are replaced with the FUND VALUE that varies depending on the amount of money invested and the performance of the chosen investment fund. Since the underlying investments are linked to stocks and bonds, there is a potential for a higher return* as compared to time deposits** and savings in a bank, giving you more earning potential for your investment.

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

– In a VUL plan, in case anything happens to you and you are taken out of the picture, your beneficiaries or your family/loved ones will receive a guaranteed lump sum of money. This way, your dreams for them don’t die with you because you leave them with a fund that will cover for your final expense and your dreams for your family will still live with them.

– In a VUL plan, you as a policy owner may access your FUND VALUE in case of a financial need arises as you may withdraw money from the fund. The amount withdrawn is not deducted in the face amount of the plan and does not incur any interest rate. However, I highly encourage that you do not withdraw the whole fund value as your policy may lapse and to re-invest whatever the amount you’ve withdrawn so that you can stay on track of your financial goal.

With this plan, you don’t need to die just to enjoy the proceeds of your life insurance, you can enjoy it while you are still alive while securing your family’s future.

VUL is like having the best of both worlds! For you have guaranteed protection benefit through insurance and wealth accumulation through investment in your chosen mutual fund vehicle!

Life insurance is like a spare tire, It’s not something that you would want to use in the middle of the trip, but it sure does give you peace of mind to know that it’s there. 

Ready to talk about this kind of investment? Schedule an appointment with me so I could personally discuss it to you and help you evaluate your investment personality and assess your financial goals.

*According to the Historical Investment Performance of Investment Funds for Sun Life’s Variable Insurance Products, the average return for equity and bond fund are 16.6% and 7.8% respectively. Returns are not guaranteed as past performance do not reflect future returns. Dividends and Accumulation rate in a traditional insurance is 4% conservative average.

**List of Current Time Deposit Rates

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