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Is VUL or Investment-Linked Insurance a good investment? | BTID vs VUL | Insurance

BTID or VUL? Is VUL or Investment-linked Insurance worth it? Is VUL a good investment product?

Intro (0:00)
Definition of terms: (1:35)
♦ Term Insurance: insurance with only pure protection, meaning only death benefit is guaranteed. This is without investment.
♦ VUL or the Variable Unit Linked Insurance is insurance with an investment component
♦ Premium is the amount being paid to the insurance company.

Disclaimer: I am not an insurance agent so I am not promoting any insurance company here. This is just for educational purposes.

I know it sounds cool to have insurance, especially if it is coupled with investment. But is VUL better than term insurance because it has an investment component?

In this video, we will evaluate VULs in 2 perspectives, as an insurance and as an investment and we will also compare it with term insurance.

1.VUL as an insurance (2:22)

a. Amount of Coverage: in order to have high insurance coverage, you need to pay higher premiums too. This is a sample quote for a 26-year old with 1 million insurance coverage:
Term: P3,260 per year
VUL: P25,000 per year

b. Critical Illness: You can add this rider to both Term and VUL insurances. This is a sample quote:
Term: P9,600 per year
VUL: P30,000 per year

c. Payment duration and the amount of premium
Term: Usually premium payment increases as you age:
VUL: Fixed amount of payment for a limited period

2. .VUL as an INVESTMENT (5:08)

♦ Investment Allocation
The first 3-5 years, the premium usually goes to the insurance part. Meaning to say, during the first year, no amount is allocated yet to the investment so your money is not yet growing.

♦ Fees
Since it is not directly invested, there are a lot of fees associated with this insurance from the agent, insurance companies, fund manager and brokers.

What is a better strategy for investment? (6:38)

BTID (Buy Term Insurance and Invest the Difference)

For example, Instead of buying a P25,000 worth of VUL, buy a term insurance of P3260. Then invest in the difference of P21,740. So you can choose where you want to invest the fund and also at year 1, the investment will already start growing.

The argument na hindi kami marunong mag invest sa stocks kaya VUL nlng is a big NO. You can go for Mutual Funds in which your money will be managed by fund managers para di na makikihati ang insurance companies sa investment mo. If you do not want to invest in stocks, go for Modified pag-ibig 2 or MP2 where you can invest as low as P500 for 4-8% annual dividend.

WHEN should you buy VUL (8:05)
♦ If you know and understand the fees
♦ If you already have enough insurance coverage
♦ If you have more than enough budget and just want diversification

WHEN should you buy Term Insurance (9:33)
♦ If you have limited budget
♦ If you want higher amount of coverage at a low cost
-breadwinner, with dependents,for estate planning
♦ If you want to allocate more money to investment
-if you get term insurance, be sure to invest the difference

Personal Opinion (11:26)
It would be better if more Filipinos would be insured; however, the majority of the population really could not afford expensive insurance. I am addressing this to the insurance agents, let us help these people. I believe kailangan nila ng cheaper insurance like term insurance.Do not introduce VUL as an investment product just to sell the product because in the first place, it is an insurance which is mainly for protection.

To the client, make sure that you understand what you are buying. Make sure you have enough budget. Make sure it fits your financial needs and most importantly, make sure that it gives you peace of mind.

Link to the previous videos:
Do you really need insurance:    • DO YOU REALLY NEED INSURANCE | Life Insurance  
How to get out of debt and be financially free :    • HOW TO GET OUT OF DEBT AND BE FINANCIALLY ...  
How to make a budget and stick to it:    • HOW TO MAKE A BUDGET AND STICK TO IT | Bud...  
Is money good or bad:    / @stephsasa2722  

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