VUL vs. BTID (Term Life + MF)

[pahmee]

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Hello,

Pa advice unta ko ninyu about going for VUL or BTID. Actually, I have VUL with Pru Life for 11 months na. However, sa akong research about personal finance, na find out nako na murag mas better approach kung mag buy term, invest the difference (BTID) lang. I want to stop my VUL which covers only me, bahala ug ma TY nalang to akong mga na contribute na, to go for term life to cover my partner and I and then invest the difference sa mutual fund. (Eventually, we're thinking of venturing into stocks investment). Siguro kung daghan pa kaau mi ug extra funds kay ok ra dunganon ni tanan pero limited man unya kelangan i prioritize labi na kung naay batang gamay.

What do you guys think? Ug unsa kaha ang best term life insurance, preferably from Sun Life, Pru Life or Insular Life?

Thank you. And please, no sales talk, kay nabuhong nako ana. hehehehe. DAGHANG SALAMAT PAGUSAB.

[makie29]

VULs and BTIDs have their own advantages and disadvantages but the best plan, regardless if its VUL or BTID, is the one that suits your needs and goals. But basically, let's run down some advantages of both.

VUL

-VULs are "packaged" products so in just paying a single premium, you get a life insurance and investment in one. In BTIDs, you will have different plans, a separate insurance (term insurance) and a mutual fund investment. VULs are very convenient since its just a single product, BTIDs are not

-VULs are cost friendly in the long run. VULs have premium charges which are being charged in the early part of the plan, normally in the first 3 to 5 years. After the 5th year (the most), wala na kay charges mabayran hence everything that you put in goes to your savings, investment, or premium for insurance depending on the kind of VUL that you got. Sa BTID, you will pay premiums within the term and you will be charged with an entry fee every time you add to your mutual fund investment. In the long run, mas dako ka ug charges mabayran sa BTID.

-VULs are way cheaper than BTIDs if you just shop around. Let me give you an example. For just P1,500 a month you can get a coverage of at least P1.5M and at the same time have savings on the side. The good thing is that once you have built enough savings, you will still be covered by the same amount (P1.5M) even if you stop paying the premiums. In BTID, if you stop paying premiums, your life insurance coverage will be terminated not unless if it is bundled with the mutual fund enabling the mutual fund to pay for your premiums once you stop paying it. If you bundle it, why not go for VUL? It's basically the same thing.

BTID

-BTID's main advantage over VUL is diversification. You can choose the life insurance and mutual fund of your choice hence you can get the best of both worlds, the best life insurance provider and best performing mutual fund company. Since VULs are "in-one" products, you won't have the luxury of picking the insurance and mutual fund companies of your choice. Also worth noting is the fact that the investment portion of VULs are not necessarily handled by mutual fund companies.

-BTIDs are very simple. BTIDs are what you see is what you get products. Life insurance will provide protection and you get an investment with mutual funds. It's not really that hard to understand. VULs are complicated especially in computing and determining the amount that goes to the insurance premiums and investments. Some VULs give free insurance while some get a bulk for insurance coverage.

-BTID is very flexible. If you decide to cut your life insurance coverage, you can easily do so without harming your investment (mutual funds). You're not also mandated to add to your investments regularly (but you're required to pay regularly for your insurance). In VULs, you're required to pay on a regular basis.

Sun Life, Insular Life, Pru Life and if I may add, there's also AXA, Philam Life, and Manulife. These are very good and reliable companies that can provide term insurance. I suggest you do some window shopping in these companies so you can see the best plan for you.

Regarding your plan, try to assess the reason why you got that plan. Did you get it for a certain purpose? Or you just can't say no to your agent or your agent never disclosed some things to you? If you got it for a purpose, then I strongly suggest you continue paying for it until it will serve its intended purpose. You can open another one (either a VUL or a pure term insurance and mutual fund) if you wish. But if you got it just because you can't say no to your agent, try to see whether you could salvage some account value in your plan. But you can quote me for this, it is not advisable to quit paying a savings plan especially if you opened it for a purpose.

[lorenzoleo]

Me as IMG broker, I can recommend you PhilAm Term Insurance + Philam Mutual Fund.

[koikox]

@makie

sir, what could be the cheapest premium for term life and pila ang corresponding coverage? any ideas?
Thanks!

[makie29]

@makie

sir, what could be the cheapest premium for term life and pila ang corresponding coverage? any ideas?
Thanks!

I really can't say kung unsa gyud ang cheapest since I'm not familiar with the plans of other life insurance companies. Sa Philam Life man gud ko. Anyway, premium will depend on the amount of coverage and age so if modako imong desired coverage and/or age, the premium will increase as well. Just to give you an idea kung pila, for P1M coverage then below 30 years of age, mga around P3T to P5T a year lang ang premium. Barato gyud kaayo ang term insurance.

[koikox]

Oh ok. thanks! atleast naa ko idea. dali ra ba makakuha ug life insurance? i heard lisud daw? sakto bah?

[pahmee]

Oh ok. thanks! atleast naa ko idea. dali ra ba makakuha ug life insurance? i heard lisud daw? sakto bah?

From what I've read, lisud lang if dako na ang age ug dako imung risk (since di naman sila maka earn sa imuhang plan if magamit nimu ila money). Hehehe. Otherwise, dali lang man.

[koikox]

ahh.. ok.. makes sense.. hehe

[cHa_Ka]

It depends really on what your goal is and why in the first place you bought your VUL Plan. However, personally, i would advise to continue nlng your VUL and open a mutual fund account. Sayang man gud ang imong insurance coverage with your VUL plan..at least in VUL, whole life naka insured (or for some companies until age 8 and you will only be paying for 5 years at the least (well depende sa imong plan and premium holiday option) and more or less the same ra imong premium every year (except if you have critical illness benefit in w/c every 5 years mu increase ang premium). The thing man gud with term insurance is that every year ka mag renew and every year muchange ang amount sa imong premium and if you will stop paying your premiums, goodbye na imong policy and dili naka insured --- imagine having to pay for an insurance policy your whole life and every year nag increase ang premium?! That would mean that even if retired naka you still have to pay for insurance coz if you stop, masayang ra all those years na nagbayad ka..and in our retirement age na bya nato needed gyud kaayo ang insurance (mao na ni time manggawas mga sakit or the time na daghan na kau ta assets that we need to protect, ex. estate planning).

Ang VUL although naa cya'y investment component is still insurance and iyang main objective is to protect you and your family against life's uncertainties. Ang naka nindot lang sa VUL is that naay chance na mugrow imong money because of the investment component, thus pwede nimo mawithdraw anytime if enough na ang value sa imong funds to fund your life goals (education, retirement, etc.).

Mutual fund is purely investment. If you aim for wealth accumulation and appreciation, then this is also a good option. One good thing with MF is that mura ra gyud cya ug bank where you can deposit or withdraw anytime and ang starting investment is very affordable at PHP 5000 and subsequent is only PHP 1000. Wala lang jud cya'y insurance, so you need to buy gyud seeparately and your VUL is already a good start.

But at the end of the day, it's still your call...

[makie29]

Oh ok. thanks! atleast naa ko idea. dali ra ba makakuha ug life insurance? i heard lisud daw? sakto bah?

If you don't have any preexisting illnesses or if dili risky imong occupation, dali ra kaayo makakuha ug term insurance.
Even older people can easily get one but will need more requirements such as medical examinations.

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From what I've read, lisud lang if dako na ang age ug dako imung risk (since di naman sila maka earn sa imuhang plan if magamit nimu ila money). Hehehe. Otherwise, dali lang man.

No, its not really because nga dili sila maka earn sa plan but because the insurance company is absorbing a lot of risk.
For example, if ang coverage is P1M then ang premium lang is P5T, the insurance company shoulders P995T just in case naay mahitabo sa insured so dako gyud risk sa company.