Why I Don't Like Variable Universal Life (VUL) Insurance

Why I Don't Like Variable Universal Life (VUL) Insurance. VUL is a sub-optimal investment which benefits the provider more than the customer. It might seem like a 2-for-1 deal. But it's really a 2-for-2 deal. You can do better by getting a term life insurance and investing the difference in a high-performing mutual fund or UITF.
I personally don't like VULs (Variable Universal Life Insurance) because I see it as a sub-optimal investment which benefits the provider more than the customer.

For one, most employees already have health and life insurance from their employers. So why not just invest the money instead of paying for another life insurance?

Some might not have life insurance, or the coverage is lacking, while some might want a life of insurance of their own that isn't dependent on their employment status.

But even if that's the case, you can still do better by getting a term life insurance and investing the difference in a high-performing mutual fund or UITF.

And that's the second problem I have with VULs. It might seem like a 2-for-1 deal. But it's really a 2-for-2 deal.

Just look at the premiums of a VUL with the premiums of a comparable term life insurance without an investment component. A VUL is more expensive, maybe even considerably more so. In effect you really are paying for a life insurance and paying for an investment.

And that's my third objection with VULs. I'm already paying for an investment (since it's not a 2-for1 deal like it seems), and yet my investment is tied to my provider.

What's wrong with that?

First, there are several factors in choosing an investment fund. By getting a VUL, you're effectively bypassing those choices.

And second, even if it turns out that the insurance company's fund is a good fit for you, it can take a long time before you can withdraw it. While I advocate long-term investing you should consider if the fund's timeline aligns with your goals.

And even if it aligns (say it's for retirement), I personally prefer versatility and mobility in my investments. Plans change, life throws curve balls, and in general I think it's much better for a financially literate person to have full control of his investments - including choosing which fund to invest it in (including the company/provider, not just the type).

Lastly, a VUL has two supposed strengths - you get money when you die and you get money when you grow old.

We've already established that for a significantly more affordable premium (in term life), you can get the same coverage. So there's no need to over pay.

If it's money when you grow old, investing the difference can net you more returns (as I pointed to earlier). So, again, there's no need to over pay.

The only "advantage" left is that as life insurance, the money can be claimed without hassle by your beneficiaries.  But again, term life is insurance too and enjoys the same benefit.

And if you invest directly in stocks, mutual funds, or UITFs, you can make your beneficiary a secondary on your account. (thanks to +Carlo Mercado for the tip). That means that after you use the proceeds from the term life to pay off the estate tax, redeeming or continuing your investments can be as easy as a few clicks of the mouse. (update: An earlier version of this post implied that simply setting up a secondary will let you avoid estate taxes on your investments. I sincerely apologize to everyone who read the previous version.)

If your UITF and settlement account is enrolled online, they can click a few buttons and withdraw from the nearest ATM. Even if it's not a UITF, and it's not enrolled online, they can just inform the stock broker and/or mutual fund company of their intent to withdraw and then get the money. It can be just as convenient as claiming your insurance money.

(A point can be raised abut your secondary withdrawing without your knowledge. But then, beneficiaries are usually spouses, parents, and children. And I've never met a person who was going to make one of those a beneficiary without trusting them - and without that person having earned their trust.)

So once you really think about your choices, it's very clear that a VUL is not a good investment at all.

But of course, that's just my personal opinion. Life is complex, and I readily admit that a VUL can potentially be a decent investment.

It's not right for me, and in my opinion, not right for the vast majority of people. But my opinion isn't necessarily the best. After all, personal finance is personal.

Update: But If you already bought a VUL, you may want to read my other article: So I've Got A VUL, What Now?

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  1. I second the motion! I dont like VUL at all. Why dont we do a little research and do our own investing instead, right? I'd rather buy term insurance and ride investment vehicle separately. I dont get why insurance agent push VULs to their clients, ugh! thanks but no thanks!

    Great post, btw!

    1. Did you consider the Estate Tax?
      Because VUL product all your investment can be Estate Tax Free.
      No hassle on your beneficiaries and they don't need to pay the BIR for the Estate Tax. If you put all your money in Stocks, Mutual Funds, UITF's.
      These are subject to Estate Tax when something happen to you.
      Anyway it is also great Idea if you diversify your funds.. But for me VUL still a good product and you don't need to be expert in market or any investment strategy because the Fund manager will manage your money.
      Just pick the right Insurance company that provide VUL products.
      Basically these are all the same and it happened that the writer is knowledgeable in investing. But he has a point. For me I choose all of these just to diversify my funds. God Bless..

    2. Even considering Estate Tax, VULs isn't automatically a best bet.

      For one, you can get a relatively cheap term life to cover all estate taxes and even funeral expenses and any other after death expenses.

      Even if stocks and UITFs are covered by estate taxes, you can pay the tax from the face amount of the relatively cheaper term life insurance.

      VUL is a good product beacuse you don't need to be an expert to invest? If so then UITFs and Mutual Funds are equally great products. Maybe more, since they can return more over the long term depending on the fund.

      I do agree I learned about investing before being lured into a VUL. And lure is the right word. A lot of the selling points sound exceedingly great, until you realize you can do the same thing yourself, sometimes at cheaper cost.

      But you have a point. It may not be as bad as I paint it to be. But it also may not be as good as VUL salesmen paint it to be. We all just have to make up our minds ourselves.

    3. Good point! That lure though :)

    4. please note however that term insurance has a certain coverage period , it does not have a lifetime coverage. sad thing if the insured outlives the coverage period.

    5. If you choose a good insurance provider, not one that is simply maximizing profit by pushing VULs, you can get a term insurance that is renewable up until you are 60.

      What happens if you die or are uninsurable after 60? By that time, unless you became a father really late, you don't really have that much responsibilities that would make insurance a financial priority. At 60 you should probably be more concerned with health coverage (which VUL only tangentially provides via hospital-related riders).

    6. VUL is not all bad. I believe at any point in your life, you need some kind of insurance even after retirement, if you want to leave a legacy for your heirs, if you have businesses, for estate purposes. the thing is, if you decide to live just up to 60, then I guess term would be good. but if not, get a VUL or a whole life. get living benefits as well if you plan to be treated if you get sick. Term is best for time specific coverage, like existing loans, working abroad, etc.

  2. May advantage and disadvantage ang VUL para sakin. Tama si Sir Carlo kelangan yung kukunin nyo ay tailored sa needs nyo. Personally kumuha din ako VUL for insurance purposes para may income replacement yung beneficiaries ko just in case may mangyari sakin habang binibuild ko yung wealth. tuloy pa rin ang buhay ng pamilya ko. Pero para di masayang as cost only kung pure insurance lng yun naman ang nasasagot ng investment side ng VUL. para meron ka nman lumalagong pera pagdating sa huli. magagamit ko naman ang pera na yun for estate tax ng stock market investment ko sa COL. Tama po ba?

    1. If you're getting VUL as purely insurance, meaning the investment part is meant to be a tax-free additional benefit to your heirs, and not for something else while you are alive - then it's probably the right move.

      But mainly because it's so tax-efficient for estate planning purposes.

      If you got it as a 2-in-1, investment-plus-insurance product and intend to use the money... if it makes sense for you, then sure it's probably the right move.

      Personally, I'd go a different route. I also know some people who have similar thinking. And the people I usually hear promoting VUL are insurance salesmen called financial advisers.

      But it's up to each one to decide. I maybe totally wrong. We'll only find out for real after life plays out and we get the benefit of hindsight. So it's always best if we each make decisions we can feel comfortable with.

  3. Hmm It's a good read.. Well I have 2 VULs one is Prulife UK one is AXA.. Running 1 and 3 months approximately for both.. I really wanted to invest in stocks same as Sir Carlo Mercado but since I don't have the time yet to learn it I tried these insurance-investment. Hopefully by next year I can start investing in the real stock market. is COL the abbreviation for Citisec Online?

    1. I think so, yes... although they did also change their name from Citisec Online to COL FInancial.

    2. Hi Sir Carlos,

      Can you please give me an advice regarding a very cheap VUL quoted to me by Insular Life?

      I initially asked for a quotation for Term Life, and the Financial Advisor from Insular gave me a Term Life and a VUL.

      The VUL is 10k/year for 10 years, and the face amount for my age of 25 is 800k, plus a critical illness rider of 500k.

      I can withdraw my investment anytime but I was advised to do it after 5 years to properly give my invested amount the time to grow.

      Is it a good deal, or should I stick to my original plan of getting term?

      Thank you very much in advance sir Carlos

    3. Your question seems a little one-sided. Where's the info about the term you got a quote for? It's impossible to compare something to nothing...

      Let us know how much the term insurance is, and what the face amount is. Critical riders, as the name says, is a rider, so you would be able to get it no matter the policy you took out. Also ask how much the pre-termination fees are; they don't advise waiting 5-years just because of the investment.

  4. Oh when I saw this post shared by a friend in FB it sent alarms!(No need to apologize for that)
    Im 24 years old,just graduated and just got employed in my 1st job. I receive a salary of P7800(its in the province). I have a sunflxilink VUL with a face amount of 500,000-I have it for almost a year now. I have also invested in buying/accumulating/trading stocks directly online(atleast 15k). I allocate my monthly salary like this:
    1k for my VUL(I pay my premium quarterly)
    and 1k-2k for Stocks

    After reading this and watching the vids from the links above, I was quite anxious since I want to maximize my money. I actually don't need a VUL since if you think about it I'm young; I currently see that the chances of me having my own family are slim, its just my 1st job, and there's a high chance that my salary can still go up or I find a different job that pays more. And though this is one of two places where my current savings go, it won't be like that forever since I'll definitely be also investing in a MF or UTIF in the near future. I realized that my VUL will eventually be a "minor" investment, and you're right-is best for insurance(well in my case, it's gonna be additional retirement funds)!

    Thanks for the post!

    1. Ah! that explains why this post suddenly active all of a sudden.

      Thanks for dropping by!

  5. great article.. im also having some regret after more than a year of paying my VUL, i initially got it because of the insurance part, the package looks attractive then, hehe and also to "diversify", I also had UITF and some stocks - but after seeing the monthly charges aside frm premium, COI & admin fee.. i just find it too expensive for policy holders..

    i actually wanted to dispose my investment portion but i was told its not possible within 2 years or if i choose to stop, everything will be terminated, means Zero value.. so i am left with no choice but continue.. unfortunately.

    comparing with mutual funds/uitf, though there are minimum holding periods, you can still sell the fund but with surcharges.. still better than nothing..

    i personally think that its better to buy a pure insurance for protection and invest the difference.. :)

    1. Hi Anonymous,

      Sorry to hear that. Could you tell us more about those charges? It's never mentioned in the first sales pitch, and the only way I can ask is to waste an agent's time by pretending I'm going to buy...

    2. I feel bad for that person as well. It actually depends on the agent. There are agents who are just after the sales and don't really care about the client, and there are agents who are really transparent from day one. Everything is disclosed and explained especially the charges

    3. @Anonymous : I agree with you.. some Agents were just after the commission. I had an agent from Sun Life and when I cancel my policy he asked for surcharge for cancellation. Whereas there is no surcharge stated in the policy...

  6. My comment is based on experience dealing with middle and high income earners.

    Almost all clients of mine who had vul or eiul run out of guaranteed when they reach the age between 60 and 70 for a number of reasons. And mostly it is how the plan designed.

    The sad part is almost all of them wants to have a life policy to leave behind for their love ones. Especially when they realized that ss and pension will not be there for their other half when they pass away.

    If you are on the process of buying a policy always check the guaranteed part of illustration.

    If you can afford, purchase a permanent policy you will never regret it. Even a small coverage. Again this is based on experience dealing with retirees.

    Good luck. And I hope this helps.

  7. "(A point can be raised abut your secondary withdrawing without your knowledge. But then, beneficiaries are usually spouses, parents, and children. And I've never met a person who was going to make one of those a beneficiary without trusting them - and without that person having earned their trust.) "------ about this; just like in banks, joint accounts with stock brokers have "AND" and "OR" types, "AND" accounts need both signatures of the account holders so it has an extra level of security compared with "OR" accounts, unless your signature is forged.

  8. Maraming salamat sa post! I find this a very valuable post kasi napaka popular na ng VUL and it sounds like the best solution when that may not be the case. Esp for middle income ppl? I mean ilan lang ba ang my estate? I've been asking online (via The Filipino Investors Group) if anyone has a copy of a VUL policy and still cant get a hold of one. I understand agents probably won't take the time unless you will buy from them. They're quick to offer proposals pero in the end kahit ano sabihin ng agent, it all boils down to the policy. I badly want to read one kasi nandun yung fine print. What's guaranteed and what's not? Parang simple lang kasi ang VUL na it's insurance and investments but it really is hard to understand for the consumer or at least for me! Hehe. Coz 1) it's marketed as 2 in 1 insurance and investments but when I asked if I withdraw my investments, they say the policy will be terminated. In effect u can only get one or the other. If that's the case id rather buy term and invest separately. Tama ba pagkakaintindi ko? 2) getting VUL I do have something to leave for beneficiaries but am I not also exposing this amount to market volatility? Why should I expose my insurance to this and the whims of the company if they decide to change or increase insurance charges?
    3) supposed advantage of VUL re estate planning which you have explained well kung anong puede alternative. Thank you!

    Sa tingin ko these questions will be answered by reading an actual contract/policy. So if anyone is up to it, pa share naman. =)

    1. Hi Yin,

      Good points. Plus, estate law allows form some hefty deductions, and since the tax rate starts low (i.e. not 20% from the get go), it can be smaller than it's made out to be during the sales pitch - at least for middle income people.

      About the policy, that's very true. It's mostly generic (customized only by your age, sex, and some habits), but they never just give you a sample. It's always got to be accompanied by the sales pitch. And the pitch only focuses on the selling points; you'd have to be well-versed to begin with in order to be able to ask about the nitty gritty stuff.

  9. I think the main advantage of VUL over term is that the premium does not increase with age. Plus, before getting insured with another term, you'll have to go through underwriting if you're still eligible to be insured. If you're not as healthy as you used to be and if you get older, premium increase will be significant. Sa vul, kung ano premium mo when you started, constant na yun for either 5 years or 10 years depending on your plan. Then you have the option to stop paying premiums and you get covered as long as fund value is sufficient to cover the minimal maintaining charges. Or, you also have the option to keep putting in more money to buy units which will be alloted for investment. Any thoughts? Thanks guys

    1. That's not an "advantage"

      VULs start off with a much higher premium. Sometimes more than twice the premium of term insurance (something like 5k per year for term vs 20k per year for VUL; though that depends on the provider and the specific plans compared).

      So "staying the same" for VUL means staying high for years on end.

      Rising premium for term means eventually paying a little bit less than the VUL.

      However, there's also such a thing as level term insurance. That means you pay the same premium for 10 or 15 years (or maybe more; again it depends on the provider).

      Term insurance plans can also have auto-renewal features. That means you just keep paying, they keep renewing. No medical screening for eligibility. Think about it: you're already their customer, why risk loosing your business to a competitor?

      "The option to stop paying" is exaggerated as an "advantage". All that means is that the profits of the investment part is used to pay for premiums. That's not such a big deal; you can do the same with the profits from the UITF or mutual fund.

      The reason those "advantages" are always brought up, but term's counter-points are almost never mentioned is because insurance salesmen are more interested in selling VULs (from which they get higher commissions).

  10. My thoughts exactly! I'm currently preparing for my initial VUL payment, but had this bright idea of investing in Philequity, which suddenly made me rethink my options. VUL can be luring at first because of the millions that you can get, but then I realized, all those millions will only to be available to me when I'm old and cranky! I mean come on, I don't wanna be traveling the world when I'm 65! If I invest consistently in a separate MF, I can probably live a good life by 40!

    I agree, Term can do the trick in terms of coverage too So why shell out 20k annually when you can get the same coverage for 5k? Besides, 10-yr pay is too long! What if you're suddenly out of your job and you can't pay the policy anymore? 1 missed payment can get your future down the drain! Agents would tell you that you need to know your goals. I say my goal is to retire early, and not work and wait for my VUL money until I'm dead.

    High five for this article!

    1. True. I want an early retirement din. Agree with everything you said. :)

    2. Like missus, I invested in Philequity too. One month pa lang nabawi na yung sales load + kumita pa. I'll keep my money with them for a long time, so okay lang kahit magkabear market. I also bought term life from Manulife, only less than 7k a year for 1m coverage. I think the face amount is more than enough considering wala pa akong family. I think BTID can help me focus on maximizing my income and reap the fruits of it at an early age, while making sure na wala akong iiwanang problema should something happen to me.:)

    3. Hi, ano pong product ung kinuha nyo sa manulife, kung ok lng po. Thanks po!

    4. Naku Missus, Here's the deal. VUL can cover you until you are 88[sunlife] and 100[axa] without premium charges increasing. My question is how much would a term insurance be for someone in their 70's, left alone 80's?

    5. That's always a selling point. But it's actually not.

      The premium charges for a VUL covers the cost of insurance as well as other admin fees. That's why it's twice as expensive (or even more) as term insurance.

      With term, you feel the increase because that's practically all you're paying for. With VUL, the cost of insurance increases but the other components of the premium decrease.

      So if you think about it, you are paying more for VUL, no matter if it's at the start or towards the end of the policy. It's still much cheaper by comparison to get term for a 70 or 80 year old than to get VUL (with the caveat that some insurers may choose not to insure people over a certain age).

    6. Thanks for the reply sir carlos. :)

      I think it's totally the same. It would be too expensive or impossible to get a term for a 70 or 80 year old. Most insurers set 65 as a limit to approving term insurance[sunlife charges 31000php for a 2m face amount term for a 60 year old. My point is,[taking whole life protection as a consideration while growing money for retirement] wouldn't it be better to pay high premiums for 5 or 10 years and then pay minimal admin, asset managment and cost of insurance charges after to be insured until you are 88 to 100?

      There is Trad whole life but it usually only doubles your total investment as your face amount. [Sorry for my grammar mistakes sir. hehehe.]

    7. 31k a year to insure a 60 year old for 2M? I'm assuming that for a 1M face amount, that means around 15.5k a year?

      One commenter here has said he is paying 30k per year for 10 years for a VUL with a 600k face amount. He didn't specify his age, but I'm assuming he's not 60 yet.

      We can say that maybe that's from a different company. And sure their rates do differ. But they are in competition with one another, so it wouldn't be be too far apart. I think it's safe to say that VUL is the more expensive option.

      Of course if we're going to say that being insured your whole life is a factor, then maybe VUL is the better option (as it's only competition is Whole Life).

      But at that point we also have a fundamental difference. Personally for me, there's no point in being insured your whole life. If your dependent is only your spouse and all your children have jobs, then you'll typically only need the insurance if you need to cover a sizable estate tax (i.e. you're politician/tycoon-level rich; At that level of wealth though, the rules for handling money are a little different.)

      But the point I'd like to stress is that with VUL, you also still pay premiums until the end. It's just that profits from the investment part can pay off the premium, so it seems like you can "stop" paying after a certain number of years.

      In reality though, you're just dipping in to your investment fund to pay off the insurance, which you can also do with BTID. And the cost of insurance isn't computed any differently, so you're still paying what you otherwise would with term insurance. Your profits are just "subsidizing" it. So you're still paying the same amount to insure your life, they just got more money out of you to make you think you didn't.

      But yes, if you're looking for "lifetime" insurance, then maybe VUL is for you.

  11. I agree with you. An agent of some VUL provider also works in our company and she has convinced a lot of people to go invest into VUL. Kaya I am kind of worried for my friends. With VUL, you have to pay a hefty amount of money for such a loooong time, tapos you can't control it easily. Plus, you're risking your insurance and investment more kasi you put them in one source lang. What if the company shut down? Or have gone broke?

    I am glad that I was able to learn other ways on how to do it. I've read a lot of anti-VUL articles from financial experts, one of them is Suze Orman. I'm taking the BTID route. :)

  12. Maganda naman ang article mo sir pero we have known people who invested on both. VUL have its own advantages. The idea of VUL is protect your family in case the investor is taken away of the picture with investment part kung wala namang nangyari sa investor he still got the money na pwedeng lumaki. Compaerd sa TERM insurance, eh what if hindi naman namatay si investor? Eh di nagtapon ka ng pera! Now balik tayo dun sa kilala naming tao. He invested in top 4 insurance companies in VUL. In less than a month, nakuha na ng family nya lahat ng death benefits in all of those companies plus fund value kung magkano na tinubo ng money nya. Then he has also investment in stocks and MF. More than a year ng patay si investor, till now wala pa ring kasiguraduhan kung kelan makukuha yung mga investment nya sa mga ganun. So you see.. it has its own uses. Depending on your goal. Is it a bad investment? Not at all lalo na kung security ng family mo ang priority mo. Pero kung pera pera talaga ang goal mo, go for stocks or MF.

    1. Hi Vien,

      You bring up good points, however some of them are straight off a sales pitch and seem incongruous.

      First: If you buy term and you don't die then you are throwing money. But towards the end, you mention that security of family is a priority and can decide if an investment is bad or good. With such thinking, a term insurance is then a good "investment" since what you are paying for is security - that you don't get wiped out financially in case the breadwinner dies. That you do not die and get money is a knee-jerk, loss-aversion reaction.

      For a fraction of the cost, you get the same or more insurance in terms of face amount. That's "better" security for less of the cost.

      A clear will, as well as documents clearly identifying assets (stocks, MFs, etc.) and other necessary information can make redemption of the same easier.

      And since for the same cost, your term will shell out a much higher face amount, then your family can pay off burial expenses, estate taxes, and other necessary expenses while waiting to claim the investments left behind.

      The waiting is typically painted as bad. However, liquidating the entire investment right away (as happens with a VUL), is not necessarily better. What if the face amount is enough to pay off the urgent expenses and the stock market is currently crashing? What if there's value in remaining invested, even if the principal takes a hit, as can be the case with dividend investing?

      Sure, such consideration are not what we think of when someone dies, but that doesn't necessarily mean that liquidating everything right away is better.

  13. Hi Carlos, great site, great articles. Just wanna share my views on this topic.

    Before I became a Financial Advisor, I have been an investor in Mutual funds and UITF, and have attended seminars on financial instruments. I also trade forex.

    VUL has its advantages too for some reasons. The BTID (Buy Term Invest the Difference) has its own too. VUL seem to impose a more "disciplined" approach. Why? Because most of the investors in the BTID method have their own free will to invest regularly or not. Thus, if you compare the VUL investors with the BTID investors, more likely it would end up that the VUL investors get more in the future. If BTID investors don't have the discipline, they would end up spending their money on Mall Sale or gadgets, etc. Also, a handful of investors have busy sched with their day job or business. They simply prefer to pay their VUL premiums Annually or Semi-annually. Some don't like to bother themselves in getting a term policy and then allocating another time for investing, especially for the Peso-cost-averaging method.

    Let's not give VUL the poor image. Hindi naman scam yan, or cheap networking. VUL is a legitimate financial instrument. The VUL investors just have to keep in mind to do a little homework too. One CRITICAL factor here is to check whether the Insurance Company offering the VUL has a Great-performing Mutual Funds arm. Remember, the growth of the funds will rely on the MF arm of the company. Are they always on the top 10? Have they been performing great for the last 10 or 20 years? How stable or how big is the company? At maghanap ng transparent advisor.

    Another thing, VUL has many variants. May mga products na mas malaki ang insurance side. Meron din yung mas malaki ang investment side. Kung mas malaki ang investment side, greater chance na mas lumaki ang fund growth. And the chance of getting the policy wiped out because of units cancellation will be very slim.

    Now, what I'm saying here about VUL will not be great for everyone. If the investor thinks he has enough discipline to invest regularly, then he will surely maximize the BTID method. Kung hindi naman, consider the VUL. And in both methods, kailangan ng konting homework.

    Godspeed everyone!

    1. Discipline is always tagged as a factor. Financial advisors and other proponents of VUL will readily point to VUL removing the potential stumbling block of lack of discipline.

      However, regular subscription plans are widely available for different funds. Just enroll your account and you don't even need to remember to pay. It just gets taken from your account. It's just as convenient, you can also choose when, and does not require having that much discipline.

    2. I am 49 years old and have started contemplating on investing. My primary purpose is to ensure the education of my son who is in high school still. Im not MF, UITF or stock savvy and I am afraid I will not have the time to monitor in any of it if I do choose to invest in any of those. Im thinking of VUL? does this make sense?

    3. Hi Samantha,

      To be blunt, no that doesn't make any sense if that's your sole reason.

      VUL's investment component is just another managed fund, like UITFs and MFs. If you're confident you don't need to monitor your VUL, then the same is true for MFs and UITFs.

      You maybe thinking that because you have a financial adviser, they will be the one doing the monitoring for you. That's not the case. Once they sell you the policy, some will happily provide after-sales service (like answering your questions), while some will ignore you. Everyone of them however, will focus on selling to more clients. That's their job.

      Granted, having someone to answer your queries is indeed a nice perk.

      However, UITFs and MFs are actually meant for the not-savvy investor. If you're thinking you need even a little expertise to be able to invest in them, you might want to read more about to them.

      And while I'm being very blunt (but hopefully not rude), please allow me to give some unsolicited advice.

      If you're saving for tuition (whether college or highscool), and your son is already in highschool, it maybe best to go with moderate risk investments like a bond fund (if for college) or a low-risk investment like money market fund (if for highschool).

      It's tempting to go with stocks, but over the short-term (5 years or less), it's hard to be sure that you'll really gain a profit before you need to withdraw your money.

      Whether you choose VUL or MF/UITF, the same logic holds true.

      Also, financial advisers may say that the VUL has an insurance component, which can be used in case the unthinkable happens - in which case the proceeds can be used for your child's education. However, getting a term insurance and investing in an MF/UITF can achieve the same result with less money.

      However, whichever option you choose, all I have to say is that it's always better to invest than not to do so. So whichever option you are more comfortable with, go ahead with that and rest at ease knowing that you're doing the right thing.

  14. In my case, VUL seemed to be the better choice vs whole life insurance.

    For my VUL, my annual premium of 30k for 10 years nets me a coverage of 600k, or the value of the premium, whichever is higher.

    For whole life insurance, the same 30k/yr for 10 years only gets me coverage of 800k so it's not that much larger, and will surely be eclipsed by the VUL after a decade or two.

    For term insurance, I'll be spending about 5k per year for the same coverage, but if I don't claim, it'll be 50k wasted at the end of 10 years. When I renew, surely the premium will be higher since I won't be as young.

    Would like to know your thoughts on this, some dialogue from a different vantage point.


    1. Hi Justin,

      I always find it ironic when people talk paying higher for term insurance each year as a negative, but then propose as their answer paying much, much higher right now for a VUL.

      In ten years, do you think your potential term insurance premium will double? If so, how much cheaper would that still be, compared to the VUL? That VUL premium is roughly 600% more expensive right now.

      With regards to "wasting" 50k... It's easy to say that, but the same happens to VULs. Obviously you know that your premium does not go 100% to the investment part. Part of it is still to pay for your insurance. That part is just as "wasted" as the 50k. It just so happens they pair it with something else to make you oblivious to it.

      You could get the same effect with BTID. Just get term, invest the rest. You could even get better returns, depending on which fund you invest in. And in time, profits from that investment can also be partially liquidated to pay for insurance if you want.

      Another thing I find curious about these arguments of VUL vs BTID, is everyone just compares them straight up. But in reality there's a bit of background activity that can give further context.

      For one, you can get insurance at any age.

      Insurance salesmen (masquerading as financial advisors) will encourage you to buy while young, get a VUL, and get a coverage that can pay for future needs. It sounds like a good idea (especially to them, as they get more commission this way).

      But then, if you're young and not a bread winner, you don't need insurance yet. Worse, what you pay as premiums, you could instead accumulate and invest. Even worse is if you are young, have no dependents, employed and your company provides life insurance.

      Without dependents, you could be focusing on building wealth first. And by the time you do have dependents, you could then get a term life.

      That's not to say everyone who chose VUL should switch. My goal with this article was never to "expose" VUL as some sort of "scam". I just wanted people to get a different view point; currently they all believe in VUL because practically everyone talking about the benefit of getting insurance, and the type of insurance to get, is someone making money off commissions on those same plans.

      They all claim to be unbiased, and perhaps they are. But it doesn't hurt to hear the other side. Unfortunately, the other side is so rarely heard it seems it hardly exists.

  15. Hello! This is a very nice post. I am an agent of a VUL. But I am not one of those who's just after the commission. I also believe that it is better to separate investment from insurance. That is why i really do not sell high premium (lagot ako sa manager ko) because i want them to diversify their funds. In the first place, if they want insurance, then the savings is only the by-product. I believe VUL is much better for people who have no spare time or let us say no idea on how to invest in mutual funds or stocks. Instead of leaving them no savings or investment at all, better yet sell them VUL.

    1. Hi Jackie, do i get it right? if I have VUL of say 100K and the insurance is 125%, the beneficiary gets 100K + 125K = 225K?

    2. unfortunately 125% means 100k + 25k

  16. The key is diversification, I also sell VUL and I have my own VUL on top of that I invest in Stocks, UITF and MF. At the end of the day it's based on the need of the person and also how fluent the person is investing his money. Why put all your money in one basket? Hopefully your advisors/agents are giving you this advise rather than just baiting you too buy VUL for bigger commissions. At the end of the day my money in VUL is still earning and keeping up with inflation rate but I have bigger money in my other investments because it can accrue more in the long run.

  17. Term insurance doesn't cover critical illnesses, it is just TERM (regardless of cause of death, beneficiary gets money), That is death benefit only. How about the getting sick and not yet dying part? Yes, we can get the funds from the money we invested (UITFs/mutual funds, stock market, etc.), but then for sure 'ubos yan', if not, 'laking bawas' if a serious illness like cancer, or heart attack/stroke, etc. In our current environment, and lifestyle, can we really say we will not get seriously sick? I am speaking from experience. A family member got cancer. Huge expenses while alive (ubos ang investment funds plus interest earned by those investments, dukot pa sa regular income). Yes, companies cover illnesses (maxicare, etc.) but to what extent? What if the sickness hits after working years (retirement)? Instead of getting all of those medical expenses from investments (non-VUL, from UITF/mutual funds, stocks, etc.) intended for living expenses beyond working years (retirement) or for other financial priorities, would it be lighter on our part if critical illness expenses are covered by an insurance (covering beyond working years)?.. Again, I know it is so easy for most people (experts and non-experts alike) to say 'buy term and invest the rest', however it is still a case-to-case scenario.

    In UITFs/mutual funds, stocks, etc., we still pay fees (management, loading, etc.), as with VUL. With this article, it's more of an expression of not wanting to pay for services offered by the VUL company (insurance company) or so termed 'over pay'. The 'over pay' covers for something, not just TERM insurance.

    I have mutual funds which I regularly top-up. When I learned of VUL, I was appreciative. I invested also in VUL because there are things the VUL covers which the mutual funds/UITFs can't. I also top-up my VUL from time to time. I withdrew all my investments in the stock market (because I have decided that I can make better use of my time fulfilling my life goals than manage my portfolio and monitor the stock market. I would rather let someone else do it and pay them to manage, share the profit in that manner. I do not mind. We all come out compensated.

    VULs are very flexible, as in very flexible (depending on products/insurance companies offering such products), it could be minimal insurance coverage and more investment, and vice-versa.

    In my opinion, TERM insurance is not enough (especially if you are not really well-off financially). It can only cover for expenses for whatever purpose, IF AND ONLY upon death, a DEATH BENEFIT.

    We also hear often from experts and non-experts alike "don't put all your eggs in one basket" or "diversify". This I agree. I don't mind having a VUL, a mutual fund/UITF, other investment instruments, invested in diversified portfolio managed by selected and different fund managers/management teams. Enjoy the passive income generated from these investments, be covered when sickness (minor or major) hit us, live comfortably, fulfill goals, smile on our deathbeds.

    1. This is a good example of the oblivious and fear-mongering mentatility that exists in the relentless push for VULs.

      I'll happily agree that VUL can be the right choice in some cases; and I've already done so in the article. However, your points are totally irrelevant.

      Why? Because contrary to what you said, Term insurance can contain those benefits. What you mentioned are supplementary benefits or "riders" that anyone getting insurance can avail. Simply choose the riders you want, and the cost will be reconfigured as appropriate.

      And as you subtly pointed out, in such cases healthcare/HMO is more important. If you have healthcare/HMO, you can get yourself checked regularly and treated early. The "rider" will then act as a "buffer" or lifeline in case the healthcare/HMO benefit limit is reached.

      Such a "safety net" is indeed valuable; but VUL is not necessary to get them. As always, it's best to make informed decisions.

      And your comment about withdrawing from mutual funds and investing in VULs to have more time fulfilling life goals is extremely misleading.

      VULs are a manged fund. And so are mutual funds and UITFs. Fund managers of UITFs and MFs may even be more experienced and skilled when it comes to handling your investment portfolio. Just look up the historical performances.

      So if you're losing time with UITFs and MFs, the problem lies in your behavior - not the managed funds.

  18. kaka receive ko lang nung policy ko about 2 weeks ago, nakapag down na ako ng 12,000 para sa VUL, then nung nabasa ko ang policy, ang dami kong hindi nagustuhan, hindi inexplain ng mabuti nung agent yung buong policy, puro ung benefits lang..

    tapos di ko pa mahagilap yung nagbenta sa akin, kung hindi ko macancel ung policy, okay lang ba na wag ko na bayaran (wala naman ako na issue na check or any auto debit na naka enroll)? masyado nang maraming oras ang nasasayang ko pabalik balik sa branch nila...

    1. Hi John,

      That's very unfortunate. However I would not advice to just stop paying.

      Depending on your policy, there might be penalties or fees for termination of the contract.

      It's best if you contact their main office. The big insurance companies typically have websites and show their trunkline. Try to start there if the agent or branch still does not respond to you.

      I advise asking for your options. They may let you not continue, though I'm not sure what happens with your down-payment.

  19. I bought 2 VULs for my kids that I intend for their college fund. Do you think it is a good idea? I am just worried that I will be charged 125% for every partial withdrawal and the death benefit for each is 500% of the premium. Will I have debts for instance I withdraw 4x or more to meet their college education needs? By the way the premiums will be spent on balanced fund as indicated in the proposal. My boys are only 8yo and 3yo. Give me some guidance, please. Thanks. I'm quite anxious reading posts here that VULs isn't really that good.

    1. Hi Anonymous,

      Hi Anonymous,

      The short and simple answer is: Personally I may have chosen a different approach. But if you have VUL, you might as well continue. In your case, it can only be bad if the VUL will not meet your sons' tuition needs.

      The long, complex answer:

      That you get 500% of the premium doesn't exactly sound bad. Is that on top of the face amount?

      125% for partial withdrawals? 125% of what? You'd have to check your policy. However, if you intended this for college tuition, then you may not need to worry about this. Once they get near college, you'd typically want to lock in profits - withdraw the fund in it's entirety and place it in a secure and accessible place (savings account, short-term TD, or very consercative money market uitf). That is so you avoid the risk of a market crash or financial crisis diminishing your fund to the point that what was once enough is now lacking.

      (I have to say though, such restrictions on withdrawing are typically not present in UITFs and MFs)

      Will you have debts (I assume you mean charges/fees) if you withdraw 4 times or more (in a year, I assume)?
      Again, you'd have to check your policy to make sure. If it has such a clause/penalty then, yes you would incur charges.

      (again such limitations on your money are typically not present in MFs and UITFs)

      And if you don't mind me offering unsolicited advice: You may want to check if a balanced fund will really earn enough to cover future tuition needs. Typically, equity funds are chosen when the goal is college tuition. That's because tuition can increase by ~10% each year.

      But if you have a large enough starting capital, earning less than 10% a year could suffice. Again, you'd really have to check and crunch numbers.

      (side note: most VULs allow one "free" fund switch a year - meaning you can change between Equity, balanced, bond, or money market. Outside of the "free" allowance they give you, it will cost you money to do the same.

      Again, such restrictions and penalties on your money is typically not present in MFs and UITFs.)

  20. Hi Carlos,

    Great post! The argument here is really good and very informative.

    I was about to start investing in VUL + MF from Sunlife this coming week until I saw this post. I got really anxious knowing the difference of investing with VUL's, from MF an UITF. I'm on my early 20's and I already have a COL account and doing the penny cost averaging method and I thought that I wanted to diversify then I saw that Sunlife's becoming popular so I set up a meeting with one of their financial advisors. She told me to get MF as a short term investment and VUL as a long term investment. Then after reading your post and what others here have been saying and their opinions, I thought that I'd rather invest with UITF and MF instead since my main goal is being financially free and I'm still young and don't need insurance yet and I'm currently insured by my company. And maybe I'll start investing in VUL when I get in my 30's and have children and needed insurance. I would really like to hear your thoughts about this before starting next week.

    Another question, what companies do you recommend for opening an MF or UITF account?

    Thank you!
    More Power!

    1. Hi Romano,

      If you're young, single and have no dependents, and no one will be "left out" financially if you pass away, then insurance isn't very critical. Some will say otherwise, and I'm not too averse to their logic.

      But if you're insured by your company, it's best to check if the coverage is enough. If it can pay for funeral expenses and such, then that should be enough.

      Insurance salesmen usually caution that this insurance ends with your employment. However, in practice, employees don't just resign or switch to companies that doesn't give similar benefits.

      So just periodically check the face amount if it's still enough and you should be fine for the time being.

      A side note: I'm not sure who you're financial adviser is, but Equity Fund UITFs/MFs are not short term investments. (And I'm assuming she's not comparing VUL with money market uitf/mf). If she says this and believes it, better to read up on the different types of funds and casually quiz her the nest time you meet. Bottom line is you better get advice from someone who knows their stuff and can communicate it clearly.

      Getting additional insurance by 30 seems like a smart move. By then, you'll have acquired more assets and quite possibly have dependents.

      Insurance salesmen typically tell you to get it early, when you don't need it. It's up to you if you want to believe them. All I'll say is I've read one RFP say that even children need insurance, which is really silly.

      If I were in your shoes, I'd stick with my employer's insurance and invest in an equity fund. An when my assets increase and I have dependents, I'll get a term insurance. Ask how much the difference is. Some VULs require as much as ~20k per year for the same coverage as a term insurance that needs just ~5k per year.

      Also, don't be blinded with what comes with the VUL. Most of those are riders you can also get with your term insurance.

      As for equity funds: The best MFs I hear about are PhilEquity and FAMI. The best UITFs I hear about is BDO. UnionBank (though I personally don;t like them) also seems to offer great returns.

      The worst I've read is PNB.

      BPI, though I have investments in them, seems mediocre. Not bad, just not in the running for best in class.

      I have to say though, if you do decide to get a VUL, I might not personally think its optimal, but it's entirely up to your judgement. If you think it fits your needs, then it's already a good investment.

  21. Hi Carlos,

    Thanks for the very detailed reply, I really appreciate it. I'll follow your advice on not getting a VUL yet until maybe I reach 30. My company's insurance by the way covers 1M so I think its not bad. I also asked her if hospitalization and critical illness is covered and she said there'll be additional premiums with that and when she computed my age with the regular investment that I deposit its about 4.6k every quarter totaling to more than 20k/year but that's with investment +insurance but still I think its expensive knowing that term investment is only 5k/year. I'll do a homework regarding those companies you suggested. Thanks for the great info!!

    1. Hi Romano,

      At 1M, yeah that's definitely not bad. Thanks also for dropping by. Happy investing!

  22. Wow! Thank you for the very enlightening article, Carlos! I've always thought that VUL is not as good as how broker paint it out to be. Your article details this.

    Just a question. I hope you don't mind. You mentioned that the commissions that an agent gets is higher in VUL than in term insurance. Do you know how much is the insurance for each product?

    1. Hi anonymous,

      Unfortunately, I don't know how much the insurance is for each product. I made that statement because commissions go up as the sale goes up. The bigger ticket item you sell, the bigger the nominal commission is, even though it is a set percentage (say 5% of every sale/renewal; the commission is higher if they sell 20k worth rather than just 5k worth).

  23. Hi Carlos, thank you for this post. I have also been researching about VUL vs BTID. Both have advantages and disadvantages. For me, the main disadvantage of VULs are the fees:

    1. Premium charges range from 172% to 220%, depending on the insurance company. This is spread out in 3 - 5 years, of even 10 years depending again on the company.
    2. Admin charge equivalent to P100 per month. So far from the insurance companies I have asked, all of them charge the same amount.
    3. Insurance charge to pay for the insurance coverage.
    4. Fund management charge equivalent to 1% to 2%, depending on the fund.

    Premium charges are meant to be commissions of the insurance company/broker/agent. Term insurances I guess also have premium charges (they still have to pay agents commissions after all), but maybe it is not as large as in VULs, especially because for term insurances, there is a definite number of payment terms (ex. payable for 10 years, covered for 20 years, or payable for 1 year for 1 year terms, etc). In VULs however, it depends on the person. They have what they call premium holiday, so you need to pay for at least 10 years. Afterwards you have an option not to pay anymore, or pay as long as they want.

    Admin charge is something unique for VULs. I checked my VUL insurance, and it states that it is the fee of the insurance company for "coodinating" with the mutual fund companies. Hopefully an insurance agent reading your blog can correct me if I am wrong.

    Insurance charge is something common for both VUL and term. I do not agree with some people saying that:

    a) You are throwing away money when you buy term insurance while your money grow in VUL. -- You are actually "throwing away" money on both, due to the insurance charge. VULs also have similar insurance charges.

    b) Annual cost for term gets expensive as you grow old, unlike in VUL. --- actually , both term insurance and VUL get expensive in the long run, since insurance charge increase as you age, depending on the age bracket. For 20 year term insurances, the insurance charge is just averaged down. For VUL, it is just a small expense deducted from your total VUL investment fund.

    Lastly, fund management charge is common for both UITF and mutual funds. That's how they get paid, though it differs depending on the mutual fund/ UITF company.

    I think the only advantage of VUL is for estate planning. I know you have already mentioned that you get a term insurance to pay for that, and that's correct. However, if you accumulated a lot of assets, it is great to have a portion of them as insurance so you can lower the estate tax more.

    Also with VULs, you can get "self-insured" progressively. For example:

    1. You start with 30K premium annually, with a 300K insurance coverage (since you don't need much insurance coverage yet)
    2. After 10 years, investment grew to 500K. Your insurance need shoots up to P1million. You can ask for an increase of insurance coverage to 500K.
    3. After 20 years, investment grew to P2million. Your insurance need is also P2million. You can decrease the insurance coverage to the minimum (which I think is 500% of annual premium or in this case, 150K)

    Of course, this is just an option. Another option is to get a term insurance, let's say for 10 years, invest the difference, and reassess your insurance need after 10 years. If your insurance need increased, you can get a single pay VUL, which has a small premium charge (I think 5% for some insurance companies), and then renew your term insurance with a smaller insurance coverage to cover the difference between your single pay VUL amount and your insurance need.

    If the person wants to get a VUL, I suggest he invest as long as possible so that premium charges can be averaged down. So for example the person got a VUL from age 22. If he pays until age 60 (or for 38 years) it average to 4.5% per year (172 / 38). Other mutual funds have the sales load on the same range. For example, Philequity has a 3.5% sales load. I think PAMI has 5%.

    1. Hi Anonymous,

      Thanks for the info!

    2. By the way, I do not want to exaggerate about estate planning and estate taxes. As you know, estate taxes can go to as high as 20% of total estate, but this is for amounts P10 million and above. There are ways to lower the estate. For example:

      - Your estate is half if your money is in a joint account (with your wife)
      - Standard deduction of P1 million
      - Deduction for funeral and medical expenses, not exceeding I think P200 thou and P500 thou, respectively
      - Transfer properties gradually, though this is still bound with taxes

      Also, people invest because they have goals, and those goals will eat up on the persons estate. For example, education funds, hobbies and vacations, etc.

      Then again, if the person plans well financially they can accumulate a lot. This is especially true for those working abroad, for entrepreneurs, or are just really good investors. So it pays to be prepared and do estate planning early on. Again, VUL is not the only option, but I think is convenient for some. If the person does not foresee their estate going as much (let's be realistic, some people have low salaries or have multiple children or relatives to assist and will have bigger financial responsibilities, therefore will eat up on their estate. Others also need a smaller retirement fund) then they should not get VULs and do BTID instead.

      By the way, I researched about VULs vs BTIDs in other blogs and forums, and found comparison in terms of insurance charges. They say that insurance charge is lower for VULs than term over time. I am not sure of their credibility, but they did post the proposals they created as proof. Of course, their are other charges to consider (especially the premium charges), but like I said earlier, as you pay longer, you are averaging down. Also, with the option to lower your insurance coverage as your VUL investment grows, you can also save on the insurance charge

    3. Hi Carlos,

      Just want to comment on the following:

      "Did you know that to keep paying for the insurance portion, you are actually liquidating shares/units of your investment? Think about it how else can stocks generate income in a pooled fund? Even if it has dividends, they are re-invested."

      This is correct, you are liquidating shares to pay off insurance. However, it is not really as high as others may think. To continue enjoying the insurance coverage of the VUL, you will need to pay for the insurance charge. The insurance charge depends on the insurance coverage and are deducted monthly. I requested a quotation for Insularlife, for example, for a P1.5 million insurance coverage. Insurance charge is P90 per month (or P1,080 per year). Of course, the cost is painful especially in the first 3 to 5 years, with the premium charges. However afterwards, the only monthly charges deducted to you is the insurance charge (P90 per month), and admin charge (P100 per month)

    4. Hi Sir Carlos,

      Thank you for the informative post.

      I have a VUL from Manulife. I would like to ask if you know if such policy can be converted to an investment plan (solely)?

    5. Hi Anonymous,

      Thanks for dropping by. I would not know for sure.

      But I'm relatively sure that isn't possible. However, it doesn't hurt to ask.

  24. hi,

    Iam being offered by a PRU LIFE agent here in the middle east. both insurance and investment are covered. 5,000 pesos monthly for 5, 10 or 15 years. 1million pesos ang pwede makuha for the death benefit if ever may mangyari.. as for the investment part this will fall on an equity funds, yung 5k na hulog ko for 15 years eh maaring lumago ng hanggang 5-10%. napapaisip lang ako kasi i thought of opening an COL account pero malabo kasi sobrang busy din ng work ko. guys please give me some advice. thanks!

    1. If the choice is VUL or a savings account... Well, it's better to have an investment than none at all...

  25. Hello Carlos,
    Thanks for all your post and being a good adviser.
    Can you share as well how to have account in COL?

    1. Hi Catherine,


      I'm assuming you're an OFW? If so, you can check out Burn's guide to opening a COL account: http://burngutierrez.com/how-can-ofws-invest-in-stocks-online/

      Even if you aren't an OFW, all the steps still apply...

      Sorry for not giving an "original" detailed answer, I just thought you'd appreciate a quick response more.

      If you have further questions or need any other help, don;t hesitate to contact me.


  26. Hello Carlos,
    Good morning ..thank you very much for your quick response..a great help for me.
    I already download all the application form and now I already started to reading how to start in stocks thru COL.

    Again thank you and have a wonderful day ahead.


  27. Hello Carlos,
    I'm a seaman and i have a VUL called BUILD PLUS PESO from BPI PHILAM LIFE. Without any knowledge for the sake of "makaipon" i enrolled myself serves as my retirement money. Now i'm investing an annual premium of 101k php. I'm covered with 500k php =annual premium x 500% and if i died through accident it will be 1M because of the so called riders the 1k php. They have a projectile amount for 15 years i'll be accumulating 2.7m. Is that value good enough? I'm planning to extend it up to 25 years or should i withdraw it after 10 years of maturity and invest in mutual fund or at COL financial peso cost averaging method? Please help I'm confused i want to have a high return and less risk. thou i have no time for trading in stocks.

    1. Hi Anonymous,

      There's a lot to tackle in your questions, so let's take them one at a time:

      1. You're a seaman, so you definitely don't have a lot of time or access to things. What you need is a pooled fund - something you can invest in and be assured that a professional is handling it for you. That includes uitfs, mutual funds, and VULs.

      2. Your goal was to save. Congrats, you are saving!

      3. You want high returns. Everyone does. Unfortunately very few know what those large future returns are for. Some assume large amounts of money are all they need. But that is mostly wrong.

      What you need to do is find a quite spot, where you won’t be disturbed for at least a little time. Sit down, (maybe even close your eyes, if there's no threat of falling asleep), and just envision the future you want. You'll probably think: big house, cars, TVs, etc. Just keep imagining your future. What are you going to do in that house? What does it look like? What's the car for, where are you going in that? Keep imagining and questioning every detail until you figure out what you really want for your future, until it practically looks like the real thing.

      Then list them down. There might be a million things, that's ok. You can prioritize them according to importance or urgency later.

      4. Invest for your goals. Browse the investments you've been offered, look for info on other things you've heard about; keep your eyes & ears open for new investments you can make. Keep learning and evaluating. Invest in something that you know, have deemed to be safe, and has the potential returns that could meet your goals.

      5.You want less risk. There are two sides to this.

      One; high returns usually necessitates taking high risks. But you can negate that. In your case, investing in a pooled fund (VUL) should be enough - it's diversified, and (I'm assuming) you are investing long-term.

      Two; you can take steps to pro-actively protect yourself. The biggest risk to your dreams is if something happens to your ability to earn. Part of the answer is life insurance (if you're leaving people behind).

      But the other answers are taking care of your health and having an emergency fund. That way you can keep earning and not have to withdraw your investment prematurely (a big risk in investing).

    2. 6. Is 2.7M enough? Only you can really answer that. Do step#3 above. If you have 2.7M, will it bring you the future you want? If not, how close is it? Will you be happy in that future?

      No one gets everything that they want. So it's ok to leave some of those for later, or even drop the more frivolous ones. Just be sure the really important ones are considered.

      7. Should you invest in COL (or something else) or keep your VUL?

      Obviously I'm biased against VULs. And obviously insurance salesmen are biased in favor of VULs. But fortunately you can decide this one for yourself.

      Will the returns in your VUL be sufficient to achieve your goals? If yes, then stay. If not, start looking for something else.

      8. Some unsolicited, but hopefully helpful thoughts to consider: The investments that give the highest returns are: your own business, stocks, forex, and real estate.

      You have no time for a business (and your away at sea, so you can really manage it either).

      Trading forex and stocks will take experience (built over time). As well as require that you at least focus on them for a bit (while trading).

      You can buy real estate and re-sell it or have it rented out. However, there's considerable cost (taxes, upkeep, keeping squatters out, etc.). If you have a large capital, you can take this on. You'll need patience though as it can sometimes take a while before you can sell. You may also need help if you are going to rent out a property.

      In your case the best option for high returns really is a pooled fund invested in stocks. You already have one (You're VUL is invested in equities, right?). So the toughest part is over.

      Just keep earning and investing; maybe even get a sideline if there's a good opportunity. And every once in a while (every 6 months or one year) evaluate your goals and your investments.

  28. Thank you very much Carlos for your very fast, informative and detailed answer to my queries. Your a big help for OFW (seaman) like me who wants to earn but lacks knowledge. Fyi, my VUL is invested in 3 funds (3 max as per VUL) namely BPI PHILAMLIFE peso bund fund, peso equity fund and peso balanced fund thou im not the one who chose it,the bancassurance agent done it for me for I dn't know what it is at that moment. I will re-evaluate my goals as you said but im pretty much interested in MF That invest in equity. Which bank do you prefer for me opening MF investment? BDO, BPI or PNB? I want to add a vehicle for the last time hehehe! When I retire I will collect all my investments and construct an apartment? Any insights... More knowledge and wisdom God Bless!

    1. Hi Anonymous,

      I agree you should examine if your portfolio (i.e. your different investments) really does suit your needs. Typically you want different funds for different goals, but usually just one fund for one goal.

      What you have (those 3 VUL funds) is not a bad mix. But your investments should really be "goal-driven".

      If you're interested in Mutual Funds, the ones that I often hear perform well are PhilEquity (their "main" fund) and FAMI Save and Learn Equity Fund.

      They do have rather big sales loads and fees. But earn well over the long run.

      I'm also assuming you are interested in Equity Funds in general. UITFs also have equity funds, and BDO's is usually tagged a good performer. BPI is usually described as mediocre (disclosure: I invest in BPI; it's ok but not tell-your-friends-great). PNB I have no experience with but I heard is not that great (but to be fair, I'm not sure if my "source" is reliable).

      UITFs tend to have lower fees (but you should ask and compare to make sure).

      Wether UITFs or MFs are better is mostly a toss up. I did a quick, "spot-check" study the performance of those three were close enough.

      So I would really recommend choosing the one that:
      1 you trust and are comfortable with and
      2 is very accessible to you (check online, can easily get to when you are home,etc.)

      Lastly, an apartment business sounds nice. Location and target market are the primary concerns. For example, it could be near a "rich" school. In that case a nice-looking, safe apartment with a price point suitable for students would be ideal. But most likely the "if you build it, they will come" strategy won't work.

      If that is truly your goal, good luck and start researching. There's lots to learn when it comes to real estate and being a landlord. But it can also be very profitable.

      Good luck and happy investing!

  29. I've learned a lot from you Carlos and thanks a lot! Lastly, I thought my VUL after 10 years of maturity I can stop paying the premium and just let it grow I was wrong. In order to be covered by my insurance I have to continue paying annually so my option are 1.To withdraw all my money and close my VUL after maturity 2. Continue paying my premium annually and be covered by insurance. If you were in my shoes what would be your best choice? Yet, I have learned that I can profit more investing in uitf or mf via equity fund... If I continue paying my premiums does my bancassurance agent profit annually to? One thing is clear for me and that is to invest for long term. Thanks in advance..

    1. Hi Anonymous,

      Thanks for the kind words.

      As to your question, it really depends. The "easy" thing to do is ask your financial adviser, if the VUL proceeds can pay for the insurance, since that's their usual sales pitch.

      Tackling it in more detail though:

      1. Let it mature and move to a MF/UITF + Term insurance combo. It would be hard to evaluate this now, since we don't know how much that future term insurance would cost. Also, I'm not sure if your VUL will have the same cost of insurance as now or rise in cost proportionately with term insurance

      2. Keep the VUL. You've already got it anyway. You could ask for the projected costs you'd have to pay.

      Approach#1 has the advantage of probably earning more. Assuming both investments are in equity funds, with #1 you aren't selling off shares to pay off your insurance. That's good because keeping "old" shares and their relatively low price helps maximize your profit.

      Approach#2 has the advantage of cash flow. You're not paying out of pocket for insurance, so you have more to spend/invest on other things.

      Each approach has it's advantage and could be good for you, depending on your goals.

      So in 10 years, where do you see yourself? If you're still working, and life is relatively the same, or still have good cashflow regardless of the changes in your life, then approach #1 might be the better deal.

      If you've got more dependents, or started your own business (which might need your money more urgently), or maybe retired early, or switching career/jobs, etc. then approach #2 might be the better approach.

      So again, it really depends on you and your goals.

      For your other question: Everyone profits from you. That's the sad/nice thing about capitalism. Your MF/UITF charges you fees annually. And aside from the cost of insurance, you'd be paying - even if indirectly - the fund manager handling your VUL's fund. There's always someone in charge of the fund, and they're always paid a fee.

  30. Wow. Good read! I am a 25 y/o call center agent and a 4th year law student with no dependents however, I consider my two under brothers, one 23 y/o who is now gainfully employed and 18 y/o who is still in college as my prospective 'beneficiaries.' (Our parents passed away while we were all minors)

    I invested 10k in BDO UITF money market peso savings equity fund at the beginning of the year thinking I should start investing for my future. Hence, after making some research I decided to transfer my savings and place it in UITF and I top it up every month.

    Recently, one of my colleagues who is also a new financial advisor of Manulife offered me a VUL.

    I got interested b/c I was really looking for a long term investment since I turned 25 and considering my circumstances, being insured is a plus. I understand that I am still currently covered by my employer however, since I am nearly graduating I am planning to resign so I can focus on my studies and especially for the bar examination review. I thought it would be great to be insured for the first 5 yrs of my law career where I might or might not have an employer and at the same time, be able to get an 'additional fund' after such period for a trip to Paris. Hihi

    I am not sure if I am making the right decisions but I am fully aware that there are risks. Anyway, since I made the decision to invest in UITF, I already have this mindset that there are risks in everything that we do and that nothing in life is really certain (except death perhaps). :)

    But if you have better suggestion for me and my silly plans I'd really appreciate it. Hehe. I'm so glad to have found this thread. I was just Googling about VULs again b/c my financial advisor texted me earlier that she already got my proposal. Thank you and God bless!

    1. Hi Anonymous,

      You're young, but you also have dependents. So you do need insurance. Especially if you are going to stop working to focus on your studies; you won't be covered by your employer then.

      The only part I'm not sure about is you're just getting a VUL, and yet you're "nearly" graduating (and hence resigning).

      VULs typically have a large premium, which can be hard to pay if you are not employed. A cheaper term would be easier to pay off, however you may still need to set aside a large amount to cover payments fora 5-year period.

      Insurance is a good step though, and if you've already figured out how to pay it while not employed then both options are good.

  31. Hi Carlos,

    Can you help me decide because I open a VUL balanced fund with sunlife last feb 2014. My premium annually is 316,720 payable for 5years. Right now, I ask my financial advisor to change from balance to equity. Assuming na makaka earn ako na mas malaki, nag top up ako nang 800k yesterday. When I checked my policy online, di ko alam na may 5% charge pala. Hindi na explain nang advisor to sakin and my mistake is hindi ko binasa ung policy ko dahil Im working abroad. Btw Im 27 years old non smoker. Worth it ba na nag top up ako? Or pwede ko pa siya I pull out then invest ko sa dynamic fund nila. Hope na maka reply ka asap because I deposited the fund yesterday and na stress talaga ako sa charge na 40k. Thank you.

    1. Hi Anonymous,

      First off, congrats! Not only are you investing, but you're investing a large amount. So don't stress too much, the hardest part is pretty much done.

      Regarding your worries:

      1. Your financial should be responsible for explaining everything and making sure you understand. That's why they are termed as "advisers" instead of simply being called agents or salesmen. Unfortunately some do act like mere salesmen. AS long as they get you to sign and get their commissions, it's ok in their books. Assess careful if you really have an adviser or an agent.

      2. Is the top up done and irreversible? 5% seems steep. If you can "undo" it and not get penalized or have to pay the 5% charge, then it's better. After all, a balanced fund also contains stocks, and nowadays contain mostly stocks and only a little bonds.

      2.1 As far as I know most funds allow one fund switch per year. Maybe you can wait until you're eligible for that?

      3. However, if it's done and irreversible, don't fret too much. 5% is huge now, but over the long term, that sum (40k) won;t matter that much when you see how much your fund has grown.

      4. Was your top up worth it? I think in the end, it will be worth it. Or at the very worst, it won't really matter that much. Personally speaking, I would have advised against investing in a VUL, as I think it's not the optimum solution. But in practice, as long as you're investing, the hardest part is over. You can monitor and switch to a different investment as you see fit, but you're basically juts fine-tuning. So just keep investing, know your policy, avoid future penalties/charges and then switch if you see a without-doubt better investment.

      5. I'm not sure you can pull out without incurring more penalties/charges. Also I think if you pullout of the VUL entirely, you lose at least part of what you've already paid. In these cases, where you've already gotten the policy, it's usually best to just continue.

      Let me know if you still have questions.

  32. Hi Carlos,

    I talked to my advisor just yesterday and she said its not possible to reverse the transaction because they already bought the units. I also switched my VUL balanced fund to VUL equity fund. Sunlife allows you to switched 4x a year if I'm not mistaken, I am not sure. She was very sorry that she didn't realize as it was her first time to receive a top up with that amount. But anyway I will just think of the bright side. Thank you also for the response at nabawasan nang madami yung stress ko about sa 5% charge. Sabi ko na lang sa advisor na if ever bumaba per unit eh I email nya ako para makapag invest ako sa MF nila. Thank you so much Carlo.

    1. Hi Anonymous,

      Glad to hear na nabawasan ang stress mo. Congrats again and thanks for dropping by to let us know what happoened! :)

  33. Hello Carlos,
    I want to invest in uitf and term insurance my financial adviser in Manulife sent a message by email regarding investing in VUL and it sounds good in the end :) . I'm not a biased person and i want to hear your insights regarding this matter before my final pick of investment. Below is the email message of my financial adviser.... Thanks in advance Carlos.

    A huge chunk of your money isn’t actually going to insurance costs in a VUL. I’m a financial adviser for Manulife so I’ll tell you how it all works. I’m actually having a problem with this since VUL is my core product but a lot of agents are misrepresenting it so I have to keep explaining it to my clients again and again. Most, if not all, VUL products have what we call a “premium load” for the first 4-5 years, which for our company is set at 60%, 40%, 20%, 20% for a 10 year investment plan. That premium load is not going to the insurance. The premium load covers your agent’s “service fee”/commission plus other admin fees. The COI of a VUL is pretty much just the same cost as term insurance (Php 2,000/year at 30 years old for 1M coverage) which increases as time goes by. I have investments in UITFs, MFs, and in VULs now by comparison MFs are by far the least risky among the investment but it also gains the least overall. UITFs and VULs have similar ROIs. Now it all depends on your time horizon of investment. For short-mid term investments (less than 15 years) UITFs and MFs are better options since they don’t have the premium load at the start. Now for long terms investments VUL are better than the other 2 simply because it is tax deferred. Imagine when your investment reaches around 5M at 10% ROI. The VUL will earn Php 500,000 while a UITF or MF will generate Php 400,000 due to taxes. Which means as time goes on UITFs and MFs actually slow down because of how big the taxes become while VULs aren’t hampered by that. It’s best to use different investment vehicles for different goals. There are VULs that don’t have premium loads though, mostly the single pay ones but they do require a high capital (500k minimum) Single pay VULs have very low insurance coverage (125% of premium). These products when regularly topped up leaves every other common investments in the dust.

    1. Hi Anonymous,

      Well, I've actually heard nice things about Manulife's VUL, though I'm not sure if it's this exact one. Anyway, here are my thoughts:

      1. It's really funny how your email message is word-for-word a copy of a comment from another site: http://philpad.com/vul-insurance-vs-mutual-fund-vs-uitf-investment

      2. VUL, UITF and MF should pretty much have the same risk - assuming they're all invested in equities. I'm not sure why MFs were singled out as less risky and gains least.

      3. Tax defered. Well, that sounds like an advantage. But are they making good on that advantage? They say it can let the fund grow more over time, so let's just compare the returns over time.

      UITFs and MFs already subtract the taxes, so whatever you see in the NAV is the final, tax-free amount. So you can just compare the (real-world) gains straight up; or maybe deduct 10% from the VUL first if they say that's not really tax-free yet.

      4. I've always heard agents say the VUL is a great long-term investment. Usually they site the insurance, but this is the first time I read it's because of tax deferment and better gains.

      It should be relatively easy to check on your part. Ask for the historical returns of their VUL (last 10 years or more if possible; the last 5 are big "boom" years for stocks, so everyone will have fantastic data), then just go to http://www.pifa.com.ph/factsfignavps.asp and compare against the other MFs. You can also compare against UITFs by going to their bank's website and looking up the historical returns.

      5. I've heard Single-pay VULs really are better than the usual "installment-pay" VUL. However, since equities typically rely on price appreciation, the strategy of buying in bulk at the start usually fares best when investing in any equity fund.

      Again, it's very easy to compare against MFs and UITFs. Simply look up the sites I mentioned above and compare with the single-pay VUL. Those returns are always assuming a lump-sum payment at the start.

      According to Manulife's data (http://www.manulife.com.ph/PS/Documents/Variable%20Fund%20Performance%20Charts%20Since%20Inception.pdf) their Equity fund's return is 12.97% per year since sept '07 (7 years)

      PhilEquity (http://www.philequity.net/pefi.php?mode=Snapshot) returned 19.74% the last 10 years, and around 24% the last 5 years.

      Assuming the agent's ideal scenario of going long-term, I'm not sure their single-pay VUL will leave this "least-gaining" MF in the dust.

      (BDO is harder to compare, but the data is here: https://www.bdo.com.ph/personal/trust-and-investments/unit-investment-trust-funds/bdo-equity-fund)

      5. Knowing which is the "better" investment is up to you. You should pause and consider carefully your goals and think of the best way to achieve them.

      I'm not out to discourage everyone from VULs, it' just that agents keep holding it up as the "best" and preying on people's emotions to make sales and get commissions without really educating the public. Your agent may be different, but I wouldn't know.

      So just carefully consider all factors and decide for yourself.

  34. Hello Carlos,
    I was surprise when i checked the link above no.1 that was really a copy paste email message to me. And about your reply, very well said Carlos. Now i've done my home works and came to final decision, I will invest in UITF and get insurance from maxi care and philamlife. Lastly, NAVPU of BDO is higher than BPI in terms of equity funds. Correct me if i'm wrong, does it mean i will gain more in BPI because i can buy more units in equity due to its cheaper value? How about the estate tax? Does it only apply in my capital gains in UITF? How does estate tax affect my investment in uitf? A lots of question from newbie like me :)

    1. Hi anonymous,

      Yeah, that copy paste was weird. Maybe your financial adviser was the one who left the comment about a year ago?

      Anyways, for your other questions:

      1. NAVPU of BPI is lower than BDO

      This means you'll be able to buy more units. In general though, what you really want is better returns, regardless of how affordable the current NAVPU is.

      But strategically, it's advantageous that the units are low so you can buy more. Because eventually, when the price appreciates you have a bigger "base" to build on.

      In practice though, when it comes to pooled funds (uitf, mf, vul) what you really should look out for a re historical returns. After that, maybe "beta" or "volatility" (how wild the swings are). Ideally a great fund should give high historical returns (10+%) and the beta is low, meaning each year the returns are always near that high amount.

      2. Will you gain more because the NAVPU is cheap?

      Gaining more is more correlated with the funds historical returns than the NAVPU price.

      3. Estate Tax

      Here's the BIR page for estate taxes: http://www.bir.gov.ph/index.php/tax-information/estate-tax.html

      It will apply to your entire UITF/MF fund. However, that's after the various exemptions (read my post on estate taxes here: http://www.personalfinanceapprentice.com/2013/10/estate-planning-for-newbies-part1-what.html

      4. A VUL is more tax efficient if you die without redeeming the fund. The entire amount (insurance face amount + investment) is tax free in that situation. If you plan on using the investment while alive, there's no efficiency advantage.

      If you have more questions, feel free to ask anytime.

  35. Hello Carlos,
    Now I have learned with your blog that it is the best to get a term insurance and invest the difference. Can you please advise me which can give more ROI? Will i join the Bo Sanchez truly rich club and follow his advises on where to buy and sell stock market share or invest monthly in UITF in big banks equity fund? Which is easier and more profitable... And thanks a lot now i know VUL is not the best option to invest..

    1. Hi Anonymous,

      My personal choice, especially if you don't have a lot of knowledge yet or don't have a lot of spare time is to invest in a Mutual Fund of UITF.

      If you are not yet familiar with UITF and MF, Read my post here: http://www.personalfinanceapprentice.com/2012/11/investing-in-mutual-funds-and-uitfs.html

      If you want to know which MF or UITF will be good for you, read my other post: http://www.personalfinanceapprentice.com/2012/11/investing-in-mutual-funds-and-uitfs.html

      If you are thinking of joining TRC, here's what you should know: Their stock recommendations are a subset of COL's stock picks. Basically, they look at COL's list and then chooses which ones their members invest in. And for that service (plus the god whispers email Bro. Bo sends you) you pay around 600 per month.

      (COL's picks are free if you are a COL client; and their recommendations are alos usually freely available elsewhere - like my blog: http://www.personalfinanceapprentice.com/p/blog-page_16.html)

      It's very profitable for you, and there someone that will hold your hand as you learn the ropes. So the ~Php7,200 you pay per year isn't a waste. Whether or not the profit you get is worth the 7,200 expense is totally up to you. Bu it's not an unfair price if you are new to stock investing and need help.

  36. Hi Carlos,

    Its me again the guy who was charged with 5% dahil sa top up ko. Carlos, ask ko lang if pwede ko ba sila I question about my concern. Kasi pag ka check ko if how much nila binile yung per share nang equity fund ko sa policy ko through their website is 4.2726. Pero pag chineck mo ung daily unit price nang equity nila sep. 29,14 - 4.0979 , sep.30,14 - 4.1083 , oct 1,2014 - 4.0984, oct.2, 2014 - 4.0542. Take note, my transfer date is sep 29, 2014. Hindi ko alam kung san nila nakuha yung figure na 4.2726 which amount na binile ko per share.

    Thank you Carlos,

    1. Hi Anonymous,

      Definitely you should ask them.

      Pero may possible explanations din:
      1. Baka magka-ibang fund yung tinitignan mo at iniivestan ng policy mo?

      2. Baka naman yung nakita mong 4.2726 is average price na ng lahat ng units mo? (meaning nakabili ka talaga at 4.0979, pero pag sinama yung iba mo pang nabili, 4.2726 na yung average nilang lahat)

      3. Baka naman sept 29 yung order mo, pero ibang date (much later) nila na process and complete?

      4. Posibleng "system error" lang yan, and nabili mo talaga ng 4.0979, pero may mali lang sa pag display nila.

      5. Baka naman naka "price in" na yung charge sayo? (i.e. 4.0979 per share, pero yung total invested amount plus yung charge, divided by units bought, eh "naging" 4.2726 na yung price per share mo.

      Anyway, better ask them, it's best to know for sure what is happening.

  37. Hello Carlos,
    Very informative blog and indeed a good read for newbie investor like me.. And now after doing my research I prefer to invest in uitf equity funds from a big bank like bdo and bpi. In opening an account for uitf do I need a TIN number? I'm an ofw (seaman) and I don't a have a tin number because ofw is tax exempted due to our monthly remittance. And as I read other blogs I noticed that the only way to invest by uitf is by lumpsome and monthly terms.. Correct me if im wrong, if I have an existing uitf investment and option to invest in my own way for example when NAVPU's are low or I have extra money to invest anytime is it possible? And what will happen to my uitf account with automatic debit arrangement if I don't have a fund in my account if short comings scenario will arrive? Does my uitf investment will be for close? Patulong naman sir ☺ same lang ba ang bpi and bdo in terms of funding the uitf? Sa March 2015 pa kasi vacation ko sir...

    1. Hi Anonymous,

      You can invest in UITFs via: 1) lumpsum - one-time-big-time and then sit and wait, 2) monthly cost averaging - place the 10k or 5k initial and then invest 1k (or more) monthly, and 3) you could also be opportunistic and invest top up your investment whenever the NAVPU (and the stock market) is bearish/low. Or you could come up with your own hybrid strategy of any or all of those three.

      You can invest more anytime you want - even after office hours or holidays, though it will be processed the next banking day.

      You can subscribe to the Regular investment plan or easy investment plan, where an amount you specify is deducted from your savings account and invested in your chosen fund. If your savings account does not have enough money, the amount will not be deducted form you and your investment just proceeds as normal.

      However, if you close your savings account, I'm not sure what happens to your investment. Most likely it will just keep going, since that is a trust product, not a deposit product. Though there may be some hassle in starting another account from which to fund your account. I suggest maintain the minimum, to keep things very convenient.

      BPI and BDO are roughly the same. You can both setup the account and make transactions online (great for OFWs). The difference is that with BDO, each top-up is a "chunk" and you can redeem only in "chunks". I.e. if you invest 10k then 5k then wish to redeem some money. you can redeem 5k or 10k, but not in any other portions.

      With BPI, you can invest 10k, then 5k. And then redeem any portion (assuming you redeem after the holding period; and if I'm correct - as long as it is over 1k). But then BDO usually performs better than BPI.

      If you have other questions, let me know.

  38. BTID and VULs have different purpose. If you want short term protection, go for BTID. If you want long term protection, go for VUL. When we say long term, we mean over 20 years protection. Term insurance premiums increase as we age. For example, premiums for a 15-year renewable term you get at age 21 will change when you turn 36. By then it will be based on 36 y.o. After another 15 years, price will be based on 51y.o. Depending on the insurance company, life insurance coverage for term ends at 60 to 65 so you're on your own after then. VUL life insurance covers up to age 100. If you live to 100, you get paid the sum assured + the fund value.

    1. That's yet another example of a sales pitch that preys on people's fears and hardly does anything to educate them. For one, Term Insurance does increase yearly. But VUL is already much, much more expensive than Term. You could pay double, triple, maybe even quadruple of what you would otherwise need to pay. And everyone pushes the need for lifetime coverage as if it was a no-brainer. If by 65, you have no more children to send to school and your house is paid for, there's very little need for protection. You'd like to pay for your own funeral expenses. But those are stuff your investment can pay for, no need to die just to get money. And you'd also want to provide for your daily needs. Again, that's something you want from your investment. At that age, what you need is your own business or a large passive-income investment. Insurance doesn't resolve that.

    2. Hi Sir Carlos,

      Your blog is very informative specially to those person like who want's to put some investment. I am OFW and I need your some tips and advice what is best investment for me I am 40 years old already.

      Some of my friend say that get VUL (one time payment or regular) MF and UITF. My plan is long term,hope you give me some advice and tips.more power thank you...

    3. Hi Anonymous,

      Thanks for the kind words!

      I agree with your friends that you should get one of the three. To know which one is the right one, you need to set your goals first.

      You probably want to get life insurance, if you have dependents. At the same time, build up your emergency fund.

      And then you can choose from VUL, MF or UITF depending on your goals: retirement money, house, etc.

      I'm not sure how long your overseas contract is, or how much longer you want to work abroad. But being able to come home eventually is also a long-term goal. You'll need to either setup income streams here, or build up your savings (or both).

      Anyway, even at 40, you've still got a lot of time left; 20 or more years before you retire. Any of those three can work for you, just take into account the "price" of your goal, and check which investment returns enough for you to meet that price.

  39. Thank you very much for your tips and advice ...

  40. Hi kakakuha ko lang ng policy sa PRu LIFE UK last June 2014, what happen if I choose to terminate my policy cannot afford na since umalis ako ng work. :(

    1. Hi Anonymous,

      Unfortunately, the policy most likely be void in this case. I'm not sure what the correct term is, but coverage will probbaly stop and I'm not sure how much if any of your money will be refunded.

      It's best to ask your agent. Or even find another pru life agent and ask this as a "hypothetical".

  41. Good pm sir. Spent my whole day back reading and looking up the terms i encounter. Im a newbie and would like to seek tour guidance as to the current status of my portfolio and plans to invest.

    im 25 yrs old,no dependent and has a higher earning capacity,i believe,conpared to my contemporaries. I have a laundry business and im already on my 4th policy year of philamlife abundance plus. Its 50k annual,45 goes to equity and 5k to life insurance. Charges from fund mangement are until the 3rd yr only. Is this as bad as the vuls mentioned above? from what i understand in thr policy,i will continue to have the insurance until 65 yrs old as long as i complete the 10 years. Im planning to add mf and utif to my portfolio. Will be working abroad in a years time so i am looking options where to put my money. Hoping you can help me.

    1. Hi Anonymous,

      My advice, simply stated: Keep up the good work.

      You've got a rags-to-slightly-comfortable life story, and you have your own laundry business. And you've got insurance; and since you have one already it doesn't matter much if it's VUL or not.

      For one: "Getting out" from a VUL seems to entail cost, and it's usually better to just continue (unless you can;t make payments anymore or need that money for something else). Second: it seems our priority should be growing/expanding your business or adding a new one in case of "down" years.

      Thanks for back reading, I appreciate the time you spent here.

  42. Good day sir. Spent my whole day backreading and looking up terms i encounter. I am a complete newbie so im begging for a little patience. Hoping you can enlighted me more about my current portfolio,as u did with the others.

    Here is my profile: 25 years old,single and no dependent and has rags-to-slightly comfortble life story. I already have a laundry business and already in the 4th policy years of philamlife abundance plus. I pay 50 k annual,45 k goes to investment and 5k goes to life insurance. Management charges are only up to the 3rd year (already past it so im expecting funds to start growing by then). From what i also understand from the policy,will get the life insurance benefit until 65 years old as long as i complete the 10th policy year. Is this is bad as the other vuls from above?really worried but i cannot do more than to wait and pay for 6 more years.

    Im planning to add mf and utif in my portfolio at the start of the year. Noted down your recommendations. Will be working abroad in a few months time so im in a hurry to find productive measures to protect and make money grow. If you can recommend classes to attend regsrding mf and utif,please let me know. Thanks and more power. Will refer my friends to this blog!

    1. Hi Anonymous,

      You look like you're in good shape. Unless your cash flow is tightening up, I wouldn't be worried if I were in your shoes.

      You can add MF and UITF as long as you have spare funds to do so.

      You can try seminars from OFW Usapang Piso or Fitz Villafuerte. You can try IMG if you want, as the first two classes are free (I'm not a member btw, but I've heard there good info there)

      Thanks for dropping by - and referring friends!=D

  43. Hi, Carlo!

    Thanks for your very informative post!

    I'm in my late 20's, single, no dependents, no plan to have a family of my own (but also open to having one). I have already been investing into stocks (for retirement) and UITF (for a house) since Feb. 2014. I already have set up my emergency fund and been religiously setting aside money for savings.

    My goal now is to have at least 2M for my future medical needs which can cover expenses for critical illness as well as hospitalization when HMOs will not cover for this anymore.

    What strategy would you recommend? I initially thought of getting a Sunlife Flexilink VUL. But now, I'm considering to get a Sunlife LifeAssure policy instead, while putting up a medical fund via UITF. Does this sound like the best plan?

    Thanks and more power!

    1. Hi Anonymous,

      If I were in your shoes I would probably do that too (LifeAssurance + UITF). So yes, I think that's a good strategy.

      But whether it's the "best" is something only you can decide.

      But You look like you're in good financial shape, so I wouldn't be worried.

  44. Sunlife flexilink vul is okay if it is for medical and life. Just dont be lured on the bpi-philam vul products. Im saying this base on experience. I really regreted very much and really dont what decision to do. I already have sunlife flexilink. But still I have some money aside from my emergency which I planned to put it to uitf at bpi. However when I asked the customer service staff he advice me about the bpi-philam which is a little of an insurance but more of an investment. However, I had reviewed the policy after a month because of the holiday. And boom, my invest account only contains 40% of the amount that I have deposited. 60% is premium charge. I planned to surrender the policy but there is a 75% surrender charge from the 40%. To summarize, I will only have 10k recovered amount from my 100k if i will surrender the policy. What will I do, will I push it thru of will I surrender the polycy and just forget the 90K loss? I also reviewed the projected account value and even on the 10th year of the policy i'm still at loss of 2.5% of the total premium? Please help me decide.... huhuhuhuh

    1. Hi Anonymous,

      I'm really sorry to hear that. But my advice, when it comes to VUL, is to choose something else if you don't have one, and stick with it if you have one already.

      As you see, the price tag of getting out is very steep. Objectively speaking, you can move to a better investment, but that would mean an investment where your 10k can grow to more than 100k in a relatively short time. (And those types of gains can't be found even in direct stock investments - at least not usually and not without some "help"),

      Better to just stick with your investment, as the investment can still grow, and the premium charges are at least for insurance (right?).

      And thanks for sharing your experience. It's always good to talk about investments in "real" terms rather than in the "hypothetical" most sales agents use.

    2. Hi sir, no sir the premium charge is mostly for the agents commission, admin fee. I as stated on the policy if ever I die, my beneficiary will get the higher of the face amount or invesment acount value. And that is really weird. Di ba dapat the benificiary will get the face amount plus the investment value? But what is stated in the policy is different. Whichever is higher lang ung makukuha. It is really better to get a term and invedt the difference. Since your beneficiary will get both account when you die.

    3. Definitely, that's very weird!

      I've always read and heard (the sales pitches anyway) that you get both. Or at least that's always the impression they get.

      If that's what is in your policy, that's a very bad VUL,

      However, the option of forgoing that 90k is equally onerous.

      That's just a bad set of choices.

      I suggest really clarifying this with your agent. Maybe that only happens in certain situations? Also clarify how much of the premium (it is paid yearly?) will go to the insurance, investment, and other fees. That way you know if pushing through with it is really practical.

      For me, even just thinking of letting that 90k go is painful. So if the face amount alone is enough for your beneficiaries in case something unfortunate happens, it's not so bad to stick with the policy. Eventually the investment will grow.

      But yeah, in this case, Buy Term and Invest the Difference is the clear best option. But it's largely up to you if you can let that 90k go, or how you can deal with it (emotionally anyway).

    4. Yah. Im also having a nightmare thinking that my 90k would just go. That is a 5month salary net. Gush!! Thank you very much. I have come to a decision to stick with it and charge it to experience as you have said. Thanks

  45. Hello! I am currently reading the article and the comments of you sir Carlo and the others. I'm starting to learn about VULs in a policy holder's perspective :)

  46. Hi, thanks for the advice. I blamed myself for being lured in this however it was not my original plan to have a bpi-philam but bpi uitf since i already have yhe sunlife. I just dont understand why some agents only thinks of their commissions and not on both client and customers perspective......

    1. Well, in this case let's just be gracious and think that maybe they have families in great need.

      We can always make more money and learn from our actions (or sometimes, inaction).

  47. I'm reading this and i get really worried. In vuls if you die,you dont get the face amount and the invesment account, only the higher amount of both account. please beware of vuls. I know agents are saying differently on what is written on the policy.

  48. Sir carlo questin ko lng which is better to get VUL or Traditional Insurance with endowment? thank you

    1. Hi! If you are a risk taker go for VUL.. sa endowment kasi protection and savings.. sa VUL protection and investments. :)

    2. So basically the choice is whole life or VUL?

      Depends on you. The other Anonymous provided some good points.

      Although, in a VUL, you can choose a "risk-free" (money market) or "low-risk" (bonds) investment as well as high-risk ones (equity fund, balanced fund). So you could be risk-averse and still get a VUL.

      Whole life could be much cheaper though, if all you want is lifetime insurance.

      So decide what the real goal is, because both have strong selling points. It's easy to make a sub-optimal choice if you aren't clear in your objective.

  49. Thank you for this! My head is swimming with information and I still haven't decided whether to go for VUL or BTID.

    My main goal as of now is to get insurance that will last until maybe 80 y.o at the lowest possible cost.
    In the near future, I will be investing in MF for retirement funds. Thinking of stocks for short term investment (after I study everything).

    I read that although term insurance is affordable now, it could go up as I age so in the end, VUL still has more value for money in the long run?

    1. Well, you're doing research and that's the most important step.

      Whichever is best for you isn't for me (or pretty much anyone else) to say.

      I would like to caution you against using stocks as a short term investment. Do it only if you have time to monitor your stocks. Or if by short term you mean shorter than your retirement investment but still around 5 years or so.

      Definitely Term insurance will go up. You're paying just the life insurance, so you see it clearly. For VUL and whole life, it's best to watch the breakdown of the fee you are paying. You'll notice that the large, "flat" fee has a lot of components, only one of which is the cost of insurance (essentially what you are paying for term; which also goes up in other forms of life insurance).

  50. We have that Pyramid thing for us to have financial freedom..
    Lowest part is protection, Savings and nasa top is investment.
    So if you want to start that financial freedom, have a solid foundation first which is Protection. :)

    1. That's true. Good thing there's term insurance to provide a cost-efficient way of providing that foundation (in addition to employer-provided life insurance, if there's any).

  51. Good day!

    I am a private school teacher, 21 years old. kakukuha ko palang ng VUL product last January 2015. Nakapagbayad na ako ng 3k for 500k insurace. Ititigil ko po ba at mag BTID nalang?
    Salamt po.

  52. Hi E-jay,

    Tignan mo muna yung fees at penalties. Madalas kasi may malaking babayaran pag nag terminate ka ng policy.

    Sa ganyang case kung kaya mong ituloy, ituloy mo na lang.

  53. Hi Carlos,

    Thanks for this great post!

    I need your advice, about a year ago, i opened an equity mutual fund with sunlife that will be my investment for future use of my family. This year, since i dont have life insurance, i opened a BPI GET STARTED savings account which is basically a savings account but has free insurance of 5 times your actual savings. This is upto 400k equal to 2 million which my beneficiaries will receive ONLY if i pass away. Also, insurance expires at 70yrs old. Good about is that its a savings account meaning i can withdraw all my cash anytime i want forfeiting my insurance. This is with no charge as well.

    Now, i have these, 1. Life insurance until 70 (only if i dont withdraw my BPI GET STARTED savings) 2. Equity fund as my investment and 3. Emergency fund (from my BPI savings which i can withdraw in need as its still mine and its not locked)

    i read about VUL and its insurance is guaranteed if i dont die and reach 65 plus it includes equity which will earn in time.

    I want to invest more, my question is..should i get VUL or should i just keep my existing money on BPI making it my life insurance and invest more money on my existing equity fund making it my main investment instead of starting another in a VUL?


    1. I think the biggest question here is: What's your goal? Why do you want to invest more? What's the money for? And how much money will that something cost?

      Once you answer that, you'll find out for yourself where you should be placing your money. The problem is sometimes, those questions aren't answered, or are answered vaguely.

      If your goal is long-term, and involves other people, consider getting term. I have that BPI account too, and I store my emergency fund there. The "catch" there is that if it's a medical emergency, the person willl need the money, and then will have no more life insurance. And - not to be morbid, but for practicality's sake - if things didn't go too well at the hospital, then you lose the insurance right before you would have needed it.

      If you're single, something like a St. Peter's plan would be all that's needed, unless you had millions of assets.

      But if you have dependents, a decent term would do the trick.

      However, right now you have an emergency fund and a form of life insurance, so you're definitely ready to invest. And you already have an equity fund, so you are investing.

      There are lots of goals: house, car, wedding - heck even just having a child is a huge financial undertaking (aside from being a great responsibility), travel, additional education, your own business... there's plenty of goals out there. You just need to find the one you really want or very passionate about. Once you do, it'll be easy to figure out which investment is right for you.

  54. Hello Carlos!

    I am just curious, what life insurance plan do you have?

    Also, what's your take on health insurance plans like what Kaiser is offering?

  55. Hi Carlos,

    Thanks for your reply.

    Right now my goal for investing is just to let my money work for me. I mean instead of letting them just sit in the bank for practically nothing, why not let them earn that they can be probably used for college funds of my daughters. I actually dont plan to touch them as long as possible and instead of paying yearly premiums in a VUL, ill just put em there.Thank God that I have a decent job that will let me save and invest at the same time.

    As for my BPI insurance, yes you are very much right that i can use it as an emergency fund but i have to make sure i return what ive spent to keep the insurance. So i cant really consider it 100% for medical emergencies. Meaning if i want to be surely insured, i better not touch the money there as much as possible.

    Again, i am thankful and fortunate that i can afford to save and invest and also keep my BPI Insurance untouched.

    Thank you again for your advice, I will review term insurance as well and keep my option open, and right now i decided to put more money in my equity making it my primary investment.

    God Bless!

  56. I am 25 years old and I got a VUL policy regular pay. A face amount of 500k. I guess depende parin sa need ng tao nakabase bago masabi na isang product Hindi maganda. In my case I already have a child at kaya ako kumuha ng vul para sa education niya pero na realized KO di pala soya practical if for educational. But then na appreciate KO na in way I have an annual premium of 12335..including two riders..accidental death benefit which is equivalent to another 500k and total disability benefit. In the projection stated in my policy..di ako halos mag gagain kung titingnan yung investment part niya sa first 10 years..naisip ko di talaga siya practical sa educational purposes..pero going back sa face amount na 500k if in case mamatay ako the death benefit is face amount+the fund value .pero kung maiisipan ko na kunin ang pera ko I will get my fund value+dividends.and meron din premium holiday after 10 years I can stop paying pero tuloy parin ang policy ko until the age 65 and use the money for my retirement and based sa assumption 10% interest my money at the age of 65 will be 2.2m This is a regular pay VUL dahil ang purpose KO ay more on sa protection than the investment. Meron din kasi na vul na single pay..kung ang purpose ko naman daw more on investment dahil ang coverage protection 125% lang ng amount na ininvest..

    1. Hi, anong company yan? Thanks

    2. I think Pioneer Life Insurance.

  57. Hi Carlos,

    Thanks for this great post. It's very informative.

    I'm already investing in stocks via COL for almost a year now and it makes me a newbie when it comes to investing..I'm interested in buying MF or UITF but I want to clear some doubts in having two investment. My question is, why is there a need to buy two types of investment (stocks in COL and investing at MF at the same time). Like me, I'm already investing in stocks thru COL while following the SAM table of TRC, then why invest in MF or UITF if I can invest all of my extra money in COL?

    Your thoughts will be much appreciated.

    Thank you again

    -Alexandria Jin

    1. Hi Alexandria,

      Well, the simplest answer to your question is: diversification and portfolio management.

      But to expound more on that:

      You're right, there isn't much point. Whether through COL or MF/UITF, you are investing in the Philippine stock market.

      Though by buying into a UITF or MF, you own probably dozens of stocks (depending on the holdings of the MF/UITF you subscribed to). You are more diversified than buying 5 or so stocks recommended by COL/TRC.

      Of course, when it comes to stocks, it's more profitable to hold fewer companies. That way you maximize your profit instead of "diluting" it with stocks that aren't performing well.

      On the flip side, it's also more risky. If you didn't pick the right stock, you could possibly be "maximizing" your losses.

      But in the end, it really depends on your goal as well as your risk appetite. You can have both (COL + MF/UITF), all three, or just one. As long as you know and manage your risks and ensure your investment is suitable for your goal.

  58. What I like to read are actual comparisons of a VUL with a term insurance, fund investments by mutual funds and/or uitf's, or direct trading in stocks, etc., to show to readers what are the possible advantages and disadvantages of each kind compared to the rest.

    Everytime I go to my banks to ask advice about investing my money with them, they always introduce me to a VUL sales person; and I never really get to understand what she (it's almost always a female) is talking about, except that she is full of obviously promotion zeal, and I am turned off. In many instances she does not really know either what it is all about, except that when I die my beneficiaries will get my money plus the earnings from the VUL whatever; but my concern is not with my beneficiaries when I die, but with my own needs while I still live and don't want to end up living beyond my money hoard.

    Anyway, perhaps the author of this write-up and readers who are really knowledgeable and experienced and successful in their management of their own money as to earn more money, please just give comparative illustrations of the advantages and disadvantages of VUL vis-a-vis the other kinds of finance products.

    1. I'm hoping more people give actual examples too...

  59. Hi sir carlos, just want to have your advise on my situation. Im currently 23 and still no mouth to feed and I want to invest as early as now so i can maximize my hard earned money. But there was a time that someone persuaded me to buy this VUL, i did my homework and thought that this was a sound investment so i bought it. However, im beginning to be anxious about my decision because im finding it now expensive and I believe that I could have better returns with cheaper ones. All of a sudden, i realized that i still have no one to protect so i should invest my money in MF or UITF. Now, would it be a smart move if I stop or postpone my subscription and continue it later knowing that i already paid about 17000? Or should i continue paying then as my income appraises thru years ill invest the remaining of my savings to MF/UITF?

    1. Hi Anonymous,

      A lot will depend on the terms of your VUL.

      For example, what fees/charges would you have to pay if you stopped? If you stop will you still be insured? If the answer is none and yes, then sure you can pursue other investments.

      Otherwise, you may just have to continue. Try not to worry too much about how much more the other investments are making right now. After all, funds have highs and lows. Who know maybe after a few more years the returns would be similar enough.

      By default though, most VULs I know will charge exit fees if you have not been paying for more than 5 years. And even after that, if you stop paying the premium, you are not insured. So it's usually best to pay whatever the "minimum" and just invest later or just put in as much as you can now so you'll sooner get to the point where the VUL "pays for itself".

  60. Hi Carlos. I actually have the same situation as the one above, Im paying for almost 2 yrs now, and I dont have a frequent communication with my Financial adv. so some details are not clear to me. Im with Prulife UK, my premium is 3k monthly and I believe their VUL is good accdg to some reviews and feedbacks. However my main purpose was to get more than what I have invested, in terms of monetary. Im just after the returns or the fund value that I can withdraw and use after my term. It's a type of equity fund, but when I checked the fund illustration, after Year 5 it's only around Php150,000 when the payable premium is 180K total. I understand tho that I also have to pay for the other fees/charges and for other benefits included on the policy, but the thing is what if I dont need to claim any of the hospital benefits and Im pretty sure Im not gonna die in 5 yrs either. Insurance is a risk anyhow, what could you advise me though? I need ur help sir. Thank you!

    1. Hi Angelica,

      That's a tough decision. But it seems to me that the only two options are to cut your losses or stick with it.

      You could stop the policy after year 5, and accept the difference (~30k?) as a loss and move on to other investments. The pro is you get to move on to more efficient investments. The con is you're out ~30k.

      You could also just keep going. You can treat it as a "lagging" investment that will eventually earn over time. The pro is you still have insurance and you don't give up the ~30k. The con is you're stuck with a "slow earning" investment.

      It would really come down to what you wanted the money for. If it's for retirement, either way should be fine. If it's for something else, you'll have to compute which approach will get you to your goal either faster or more likely.

  61. Hi Carlos, I read through your site and it made a lot of sense as i noticed plenty of aggressive life insurance salesmen clawing up my back. However, I also read this site and the local writer seems very professional, knowledgeable, legitimate, and unbiased. However, she seems to support the benefit of VUL over Term.


    My real alarm signal is the estate planning thing. If I were to aim for example, a value of 400-500Mn, is there even a term insurance that covers the estate tax of that? (max 100Mn)?

    What are your thoughts on this?

    1. Hi Anonymous,

      No offense meant, but if you have 400-500 million, you better stop reading blogs and hire a lawyer for your estate planning. There are efficient options for estates that big and insurance is just one of them. What you save on not hiring the lawyer might not be as much as what the lawyer can save for you in estate taxes if you have that much money.

      The site you mentioned is from an RFP - and a doctor to boot. So yeah, it is professional. However, reading just the one article you linked to doesn't make me think she favors whole/VUL over term. She very well could be though; the only RFP I've ever read supporting term is Fitz.

      Back to your question on estate taxes... Good point, which is why I recommended the lawyer at the start. I've not heard of a 100Mn VUL payout yet, but it probably exists. I'm thinking they'd be willing to also sell term if someone with that much money specified that's what they wanted. But again, no need to lock yourself into just insurance if estate planing (especially for such huge amounts) is really your biggest concern.

  62. Hi Carlos,

    Great post btw...

    I actually have VUL with Sunlife and paying for about 2.5 years now @ quarterly premiums.I can check my premiums and charges via online thru their website and the thing that bothers me most is the big deductions aka admin and transfer charges.

    I computed and summarize it below:
    Total premiums paid 188,425.00
    Additional amount paid above of premium 20,575.00
    Administration charge 57,143.61
    Transfer charges 54,453.91

    Net premiums 97,402.48

    With this I think that only 97K was invested and the remaining goes to my insurance and charges.

    I'm planning to terminate the policy but the cash surrender value is only 99K.

    Can you give some helpful advise?

    Best regards....

  63. Hi Anonymous,

    I'm afraid my advice won't be that helpful. There's a few approaches you can think about: http://www.personalfinanceapprentice.com/2015/02/so-ive-got-vul-what-now.html

    But it all comes down to how willing you are to take a ~89k loss. (188k paid, but only 99k "redeemed" if you exit).

    You could try to Buy Term and Invest the Difference. But unfortunately there really isn't an equity fund out there that could turn 99k into more than 188k in a couple of years. So it isn't really plausible to make up the loos with gains in a better performing fund.

    You could instead stick with your VUL and focus your remaining time, money and effort on achieving your other goals.

  64. Hi carlos great post btw

    Id like to ask for your advice about something
    I invested last year in manulife a vul fund with a premium of 100k for 5 yrs. the thing is right now i found a really good mf equity fund that i wanted to invest instead, i wanted to stop and get my remaining fund value but was told by the advisor that exiting early has additional chargers can u believe that on the 1st yr is 90percent of the remaining fund value, 2nd is 80 and 3rd is 75 percent, 4th n 5th minimal chargers 2 and 1%.. it wasnt explain to be beforehand :c and the mf equity fund is lot better than with manulife projected return because of charges.. I wanted to know if u were in my position what would u do? Do you still invest with manulife and finish the five years or just forget about it and move on with equity?
    I earn around 120k a month but may liabilities is around 80k. I just have 40k savings. 400k a year, hope my info can help u analyze it and better advice me about my querry

  65. Replies
    1. Hi Ryan,

      Sorry for the late response. And thanks for sharing such details.

      In most cases, it really boils down to how willing you are to accept the loss. For most people, losing ~90k i just too hard to swallow. So the common advice is to continue with the VUL.

      For your case though, you seem much better equipped to handle such a loss. In this case, it boils down to which decision is more financially sound.

      If you continue with VUL, you get your insurance and your investment gains a little (let's say 10%). If you turn to BTID, you get new insurance (let's say a very affordable term) and your investment gains more (let's say 20%, though the gap probably isn't that large).

      It's tempting to switch to the "faster horse" specially since in relative terms the "hit" you take fro the VUL is 1 month's salary. Still a big amount, but somehow not life-shattering.

      But if you do so, will you really earn more over the long run? In 5 years definitely it's still a loss. 10% a year for 5 years won't make up the 90k loss, and won't surpass what the total money would've been by sticking with the fund.

      You could say that maybe in 10 years of outperformance, the fund would make it up as compared to the VUL, Maybe. But by then the math is different. You've probably finished paying the VUL and could invest fully in an MF without having to accept a loss.

      You know the specific costs and potential gains, so you can work out the math better than me. But in my experience, the VUL-imposed losses pretty much guarantees that sticking with it is the most fiscally-sound move if you're already in it.

      Thankfully for you, you still have sizeable savings. You can divert some of your funds into your chosen mf; it doesn't necessarily have to be an either-or dilemma.

  66. I have learned a lot from your article, Carlos. I can't believe I read every single comment you have here but truly are good insights. I am new at investing and currently I'm on my mid 30's - only now did i get interest after 9 years since when a friend of mine approached me to buy an insurance for my son and I just realized i need an investment rather than have a savings account alone. For now my priority is how to fund my son's college tuition fee which is 5 years from now. I am about to acquire a VUL with Sunlife for the purpose of saving for the tuition fee and of course for my retirement. But I learned that they [Sunlife] do not encourage withdrawing until it reached it's 10th year so to maximize what i supposedly gain in returns. I need an investment that I can withdraw after 5 years - tho I have no life insurance yet aside from the health card that my company provides. Do you think it is best to go for MF + term insurance to be able to get what I need when the time comes? I am thinking twice to buy the VUL as the returns are pretty attractive. What are your thoughts? Thank you in advance.

    1. Hi Anonymous,

      Agents are always going to say I'm biased or know nothing. But yes, I advice you to go with term and invest the difference.

      However, it's not that easy.

      5 years is just enough time for you to earn from an equity fund (which is usually what people mean when they say investment in MF). But the timing might be awkward. We're coming from a strong, several-year bull run. And since the market moves in cycles, there should be a bear-run coming.

      But then, investment is always risky. No one really knows when the highs and lows are coming.

      So my advice is this:

      Get term. It's the cheapest and most affordable. That's good because you'd want to divert as much cash as possible to the college fund. And in case something happens, you can get a lumpsum that can tide you and/or your family over.

      A VUL in contrast will eat up so much more of your money for similar coverage. And if you read the comments here, most of that will go to agent commissions and admin fees.

      For the investment: practice cost averaging. If for example you have 100k now, don't invest it all at once. In fact keep a good portion in reserve while adding small amounts to the MF or UITF (perhaps monthly or whatever frequency you think is best).

      Cost averaging is ideal for new investors since it lets them "ride" the market's ups and downs without taking too much "damage" even if they aren't very experienced yet.

      While investing, it's a good idea to learn more about how stock investing works. Nothing fancy; just familiarize yourself with terms first, then possible strategies. You just need to know how it works so you are better prepared for ups and downs.

      That reserve fund is ideal when the market enters a downtrend. By that time you would know more and can see an opportunity. The reserve fund will allow you to buy more after the market "bottoms" and starts to recover. That's usually the most profitable period. (just don't buy in the way down).

      That last part might sound complicated or hard to do. It is; try it only when you know more.

      Also, the reserve fund is also great for your peace of mind. Which is needed all the time, but especially for the last part of my advice. But even if you decide not to heed that last part, the reserve fund really can help with your peace of mind.

      Lastly, remember to have an emergency fund. The reserve fund can be added to the emergency fund, but you should still have a separate emergency fund that really just for emergencies.

    2. Thank you so much for your help. I will invest anytime soon and your advise will help a lot. I'll try each suggestion you have for me :)

  67. Thanks carlos, i did do decided to pursue the manulife vul, and id still go for the mf fund but a little smaller than what i wanted originally, thanks for the advice it was helful, ive learn a lot

  68. I am seaman and a proud Sunlifer.
    I have a Maxilink Prime VUL at 2M face amount and 2M ADB meaning if I die by accident my beneficiary will receive 6M, but if I live long enough I can have the living benefit/cash value of 10M at projected growth of 10%. My annual premium will be 170k for 10 years and I will be insured until age 88.

    I tried to get term insurance with same coverage and surprisingly it is much more expensive. It will cost me 3.6M total and I will only be covered till age 70. Opting for the VUL seems a better choice. Term Insurance is cheaper when you are young but as you grow older it is way too expensive.

    Been thinking also about mutual funds but I opted for VUL single pay instead. It works like a mutual fund but the good thing is I will be insured with 25% of my investment so if I invested 1M the minimum death benefit will be 1.250M. And it is estate tax free.

    Hopefully, I made the right choice ☺

    1. Hi Anonymous,

      I also have a Sun Maxilink Prime but I would like to share my experience about VUL. All advantages were discussed to me except for the admin and transfer charges which ate up almost 60% of my premiums. To give some reference to the charges from 1st to tenth year just refer below:

      1st year -- 55% of the regular premium
      2nd year -- 40% of the regular premium
      3rd year -- 20% of the regular premium
      4th-5th year -- 5% of the regular premium
      6th-10 year -- 0%

      But if you have agents/advisor etc, be prepared to pay 15% more on commissions on top of your yearly regular premiums above and you should clarify it with them. Please think again because 15% is a lot of money which in the first place should have been invested instead.

      I'm very disappointed to what happened to me that's why I terminated my policy even-though I lost a great deal of money. It's a very hard decision but continuing it will cause further loses since much of your hard-earned money goes to charges and not to your investments. I'm sure majority of people who chose VUL thought that big share of your premiums will go to investment and not the other way around.

      I hope this helps in making your right chose.


    2. Hi. I bought a VuL and for me it is OK for charges until I saw your comment, is it additional 15% every year? So that means, 55%+15%= 70% total charges for first year? Tnx for reply

  69. Hi Carlo!
    Thanks for having this website or page kasi this made me need to know more about insiurance. Nagkaroon ako ng idea kung ano pa ang mga dapat kong, malaman/mabasa/i-research about insurance. You wrote your opinion about VUL and its a good to know for me.

    Recently, I had a talk with 2 Financial advisers from two different Insurance companies. So, nagpa quote ako. They both advised me to get an insurance na may savings & investment at the same time since I want a growth on what I'm paying for. As written on the quotes, both are Variable Life Insurance. Is this the same with VUL o magkaiba? Thanks

    1. Hi Anonymous,

      Thanks for dropping by. Yes, it's the same.

  70. Hi question lang po where did you get na mas mahal ang charges ng VUL sa term. Just curious lang po

  71. Hello. I hope you can help me decide what to do next. I am a 36 yr old single employee and I have a 2yr old Pru Life VUL, worth 1M, 35k annual premium . I have read Fitz blog similar to this post and got interested on BTID and since then, I wanted to let go of pru and get a term but i wanted the Critical illness benefit. I dont know other products that offer a term for Critical illlness, I thought that is what i need because we dont have enough coverage in the office. (we have a measly Php40k php a year per case, how cheap). NOw recently, I heard of Sunlife offering critical illness for only 8K/year and of course, I was caught by the huge discrepancy. I am doing a bit of math and i thought it would be better if i get the sunlife product, pay 10k/year and invest 20k/year (not much but still). What do you recommend me to do? and have you any insight on sunlife vs pru? thank you in advance.

    1. Hi Osang.

      I think you can go BTID if your Pru Life VUL won't be charging you a huge "exit fee". Most likely it will though, so I advise staying with it at least until the exit fees are gone.

      As far as I know, both those insurers have good quality products and good service. And yes, I would have preferred the 10k insurance 20k investment option myself.

      But if you really scrutinize your options, and ask your agent, most likely you will find it very costly to ext from your VUL right now. maybe in a few years you can leave it or at lest pay a much smaller annual fee.

  72. Hi Carlos, I admire you for finding time to answer each and every post here in your website.

    I am 31, ofw and I am coming back to Philippines for a vacation in December and I hope by that time, I am able to find the best investment plan that suits my needs. My goals are:
    1. I have dependents and I want to secure family's financial future if something happened to me
    2. Withdrawable insurance for educational plan (my daughter goes to college in 7 years and I will be using this for her college studies)
    3. Critical Insurance / Death / Disability / Hospital riders

    Some agents offer me i.e. acemount of 1M, annual fee of 50K, 10 years to pay

    Let's say for 7th year, I withdraw some of my money to pay my daughter's tuition for college, how will it affect my investment/insurance? If I will use this for educational funds, in my 7th, 8th, 9th and 10th year - how much money will be left in my account? How does it affect the riders?

    I hope you could give me some advise on this.


    1. Hi Jo,

      Your questions are best suited for the VUL salesperson. Each plan can behave differently, it's best to discuss those thoroughly with the person selling the plan.

      My advice is to get quotes as early as know. I'm not sure if you can do it via email, or maybe some agents are willing to call you there.

      If you can't, then at least browse the insurance providers' sites and list down the products that you find interesting. Then, ask the agents when you get here. Don't rush and evaluate everything against your goals.

  73. Hi Sir Carlos! Salamat sa very informative na article, pati na rin sa mga comments na ibinunga nito. Napakarami ko talagang nalaman. Katatapos ko lang na i-build ang aking emergency fund at mag-uumpisa na ko sa insurance-investment part (BTID ☺)

  74. Hi Carlo

    This is a very very informative article about insurance.

    I'm a seaman 35 y/o with 2 dependents 1 month old and 3 yrs old

    My goal is to have an insurance that can be use enough for their college after 15 or 18 yrs and an insurance / investment plan that I can use for my self when I retire. normally we seaman retire at 55. please help me about this I really need an advice because I'm not very familiar with any type of any insurances.
    And best Bank / insurance company you can recommend.

    Thank u very much and more power to you.

    Best Regards,

    1. Hi Rodolfo,

      Let's tackle the basic first: The best insurance company is the one that will give you the largest coverage (ex 10M) for the lowest price (ex 5k per year) with the most convenience (ex text them and they'll hand deliver the cash to you in an hour).

      Those are obviously exaggerations, but they're meant just to provide some targets.

      Also, there's a lot of moving parts to any insurance policy, so it's best to get a wide variety of quotes to be sure to get the best deal. Even if I recommend a company I know to be great, there's a decent chance a different company is actually better for you.

      M best advice is to start an equity fund for their college education. IT could be from a reputable mutual fund (ex PhilEquity) or a trusted bank's UITF (BDO or BPI or some other bank you prefer/trust).

      What you have written are three separate goals:
      1. Education Fund
      2. Retirement Fund (or staying home in RP for good fund)
      3. Protection for your family in case of something unfortunate.

      Some insurance salesmen will salestalk you into thinking these are all just one goal OR you can address one goal with just one action (VUL).

      Whether the latter is true is up to you, but personally I prefer to tackle each goal separately. That way you can adjust as needed for each, giving you flexibility in your finances.

      My best advice is:

      Step1: get a 20-year term (the kind that usually auto-renews as long as you pay yearly). Shop around and ask all the insurance companies you know. This approach ensures you get good protection at minimum cost. Add critical illness rider if you like.

      Step2: Start an equity fund; place a big lump sum and add monthly to it. As 4-5 years before your eldest enters college, switch to a bond fund. 1-2 yeas before college, be in a time-deposit or savings account.

      step3: aside from those, set aside money each month and "forget" about it. This can be your emergency fund. If you already have an adequate emergency fund, this "forgotten" money can now be your retirement fund (but open a different account for the retirement fund).

  75. Hi Carlo,

    just like other did, i have been reading all the comments and your answer for the whole day (while working in the office) and i really admire your generosity in sharing your knowledge and just like other, i want to know your kind opinion on my financial situation.

    I'm 32 y/o and OFW and living with my family here in abroad with the company providing family medical insurance (worth 20M pesos each) and a life insurance (worth 20M) for myself. Im currently investing in the stock market in the Philippines and able to set up a small business as well. i am also currently paying down payment for a condo investment and will turnover by 2019. in addition to that, i am also investing on small business here where i lend my money and will gain 8%monthly compounded. this business anyway is owned by a friend.

    With all the current financial activities mentioned above, i dont have emergency fund yet and planning to start by Jan 2016 thru savings deposit and will convert this to BPI emergency fund accounts and if im not mistaken will give better return than savings account. i am also planning to start investing in mutual funds and UITF after reaching my goal for the emergency fund.

    My first question is, is it wise to get life insurance with critical illness covered now for me and for my wife even we have insurance covered by the company? or shall i get it when im going for good?

    Second question is, what is the best strategy for the condo when it will be turnover, shall i withdraw my investment in my business partner and get some amount in my stock market or mutual fund in the future to fully pay the condo (1.6M remaining) or i will just get a loan from a bank then pay it monthly until they are paid?

    Last question is, what would be the best plan to prepare for my children education (8y/o and 2 y/o)

    By the way, i was about to go home to sign an agreement on the VUL with prulife UK and luckily i was able to read this thread and i really took the opportunity to know your thoughts if im having the right direction,

    Thank you again and i look forward for your kind advise.

    More Power and God Bless!

    1. Hi Anonymous,

      my answer is actually too long for the comments section (literally, google won't allow me). So meail me and I'll email my answer to you.

      (use the contact form; Contact Me link at the top right)

  76. Hi Sir Carlo,

    I took time back reading all the comments above and same here with others I am really concern in where to put up my money for investment. I am self employed and no life insurance at all. I have 2 kids and breadwinner of the family so I am the one sustaining my family needs. With regards to my income, i know I can afford to finance them. I am just worried for my kids future so I am planning to invest in Sunlife. I met with my financial advisor and she offer me this Life Insurance + Growth Plus Fund (new service I think). In her proposal, I am legible to pay of 120k annually and will get insured of 2million for 10years payment, considering of my age (24).and will get another 2million if death by accident. What I am after only is to have an educational investment for my 2kids later on. Do you think this is a good choice? I didnt even know if its VUL??? as i really dont have an idea.

    1. Hi Che Tatz,

      Well, let's start with what I guess is probably the selling speech to you: for 120k a year, you get 2M insurance in case something happens (so your children will still be able to go to school) and you will also have an investment, which you can use for their education later.

      Well, that sounds great right? And it is; depending on how affordable the 120k a year is for you.

      You can get term insurance with a higher payout for a fraction of the cost. And if you invest yourself, you can get the same returns by picking a good fund and just cost averaging.

      Of course, if you search around the internet or even just ask people who have VUL and those who invested themselves, this is an on-going debate: VUL vs BTID.

      But the real kicker here is your situation. Like I said, if 120k a year is really easy for you to make and spend, then go ahead. It offers convenience in the sense that you have an advisor, and there's just 1 contract/prospectuc to look at.

      But as a self-employed individual, you may also be concerned about income fluctuations. Because you don't have a fixed salary every month, you probably want to keep your fixed expenses down.

      And you probably want to save up a lot for your emergency fund. Because while employees typically need it when losing work or sudden emergencies, you may need it to cover normal/regular living expenses in case of a dry spell.

      In my opinion, getting term and then having a lot of flexibility in your investment is more suited for your situation.

      If you get a VUL, for the next 10 years you need to come up with 120k a year. Sure you get wiggle room since you can pay monthly, quarterly, or annually. And like I said, if 120k is easy to attain go for it.

      But if it's significant enough, and a dry spell in your income happens, what if you can only pay 100k or less this year or next? What if by the time you come up with the rest of the money the due date or even the grace period has lapsed? Your income isn't a fixed salary after all.

      Of course, investing it yourself has it's own pitfalls: your discipline to invest regularly and willingness to get more knowledge. There are free and easy way to address both, but you'd have to be willing to spend some time building or reinforcing those two habits.

  77. Sir Carlo,

    Hi! It took me a bunch of time reading the above comments.Anyway, I am a bit worried about my investment in Sunlife. I am 21 years old now and I have a VUL investment (Sun Flexilink Policy). Honestly, i was lured to have a VUL investment because of my boyfriend's mom (she is a financial adviser). That time, I felt like i was hypnotized because I have said "yes" without even understanding the terms and all the fast talking she did to me, well, obviously, on that time she was in need of more clients for her promotion and to make a little "pabango" in my supposed to be future mother-in-law, I had said "yes". I was completely unaware of what I lured into. All I know now is that I'm paying 1 thousand pesos monthly for my premiums which is 10, 485 a year with a face amount of 300k only and my fund is in what she called Growth Plus Fund (She's the one who chose for me) and right now I am on my 7 months of paying. I felt like I was cheated because I invested without understanding every single thing in this matter even now, though it's my fault. Right I am doing my researches but is still overwhelmed of the terms. Please help me what to do. Should I terminate my policy na? and after I terminate it, what's the next step you can advice? By the way, I am currently a regular employee in a multi-national company, we have a group insurance but i am not sure how much they would give just in case something happens to me. I only earn small and I cannot afford large investments. Thank you. Hope to hear from you soon!

    1. Hi anonymous,

      Well, you've certainly got a tough decision to make.

      In general, once you get a VUL, my best advice is to stick it out. The "exit fees" just don't make it worth it to switch.

      In your case I'd advise asking yourself some questions:

      1) Can you afford to continue? If you can, just stick with it. It's primarily forced savings and forced investing. I prefer a different approach, but it's still better than not saving an not investing.

      If you can't afford it, it's easy to know: you have to choose paying the VUL or not eating, maybe not paying rent, or walking to work since you have no more money for pamasahe. Or you could have money for those things but can't really pay the electricity bill. Or maybe you have to eat the same instant noodles everyday for a year (or until you get a raise). In which case, bite the bullet and just walk away from the VUL.

      2) Can you make more money elsewhere? Or, to be more accurate, earn more from another investment by a great degree that you can also replace what you already put into the VUL?

      the usual answer is no. But in your 7th month, you've "only" "lost" 7000. Since the market is down right now, it's also probably not earning much either.

      If you can somehow save 1000 for the next 7 months, is there way you can eventually recoup what you lost? If yes, go for it; if not, think about staying with the fund

      3) Are you alarmed because of what I wrote/said here rather than what is actually happening to you?

      If yes, then please accept my apology I did not really mean to cause you mental or emotional distress. My article is meant for people to think deeply before getting a VUL. It's not meant to panic people who already bought VULs (though those readers end up here too).

      If however you were alarmed even before reading my article, then try to be objective and pragmatic. See where your alarm is coming from. As you yourself mentioned, it could be due to a good chunk of your money to something you don't fully understand. In which case the answer is probably to keep reading and studying before making a decision.

      If the panic is because the VUL is "losing money" (growth plus sounds like it's invested in the stock market, which has been going down), then you may have to come to terms with the fact that stock market investments are generally "losing" right now.

      Again, just keep reading and studying. it wont make the VUL earn more, but understanding your situation will lessen the panic and give you more confidence in future decisions.

      I'd love to give you concrete steps, but unlike insurance salesmen I do no claim to know what's best for your future better than you. The best I can do is that in my observation, most people I've come across generally choose to stick with the VUL rather than accept ~90% loss on what they've paid so far and just walk away from it.

      The real kicker is if 7,000 you've paid so far is still somehow small enough that it's easy to walk away from. Or, if the ~1k a month you are paying is something your really can't afford.

    2. Just want to share my story, 3 years ago kumuha ako ng Sunlife Flexilink (VUL), same as yours 300k ang FA amount, less than 1k monthly then with investment scheme. Masasabi ko isa iyon sa best decision na naisip ko at nagawa ko while bata pa. Fresh graduate ako that time at interesado talaga ako to learn investments thru stocks or mutual funds but since I am not knowledgeable enough at nagpapakabusy pa sa work nagstart ako to have personal insurance, good thing may VUL :)
      My point is, hindi mo kelangan mafeel na you're cheated kase its an insurance, anything happens to you tapos o hindi tapos ang premium mo may makukuha ang beneficiaries mo. You feel secured pa nga. 300k FA oo medyo maliit sya pero good start naman habang bata ka pa. Tama yan, learn from insights ng ibang may experience and maging curious. :)
      Sa ngayon nagtry na ako ng other financial firm.. like COL Financial :)

  78. Hi, Any advice on the best companies to get Term Insurance from? Thank you

    1. Hi thefreelancemomma,

      Sorry, but no I don't. I have ideas, but it's really in your best interest to canvass it yourself since there are variables at play.

      I do recommend asking Manulife, Sunlife, Insular, Philam, maybe even Axa. If you know other insurers I didn't mention, it's not that I thinke "my list" is better than them, I'm probably just not familiar with them.

  79. OMG you guys are getting so screwed by investing in VULs. It is literally the worst investment possible. Please read up on several articles like Bogleheads etc.

  80. Hi thanks for the great post! More than the VUL vs the BTID debate. I think it still boils down to what is suitable for the consumer. In BTID you have liquidity advantages over your investments while in VUL, you don't. Personal finance is a behavioral thing, for a person that is always tempted to liquidate his investments and spend it on something, VUL might be suitable for him because it forces him to stick on his investment plan. I hope that made a point. Not pro BTID and not pro VUL just saying that both suits different people. At the end of the day we wanted our investments grow and provide for our financial goals.

  81. Hello sir carlos,

    i think i have made a mistake too after narealize kong parang may mali nga, dahil i have invested without understanding it first. i invested sun maxilink prime. im 23 yrs old,single, seaman and breadwinner. napakaeager ko kasi maginvest kahit hndi ko pa naintindihan. then last year,just 4 months ago, i was offered this VUL ng sunlife. i have invested 125,000 pesos. argh. parang may mali nga dahil hndi ko naintindhan eh. nasilaw ako dun sa sinabi nyang may death benefit daw akong 5 million. then after reading this article of yours i realized na tama ka nga.and i learned sa mga comments. ang tanong ko po is, if i tell na from 125k na ininvest ko sabhn ko saknilang 30k na lang monthly, and the reamining 95k ay maggng cash advance payment ko for years? will they accpet it? im so confused :( kung itterminate ko naman, 40 k lang makukuha ko. :( parang napakataas nga masyado ng ininvest kong pera para lang sa vul.

    1. Hi Anonymous,

      Well, that seems tough. You could ask your agent; honestly I'm not sure what the details of your policy say, so I'm not sure how probable those options are.

      In general though, it's usually best to stick with your VUL if you already have it. Unless you can't afford to pay it anymore, though that doesn't seem to be the case.

  82. hi sir carlos need you advice.

    I am looking for a term insurance for my father he is 57 yrs old. they dont have enough saving and lately napapansin ko lagi nalang siyang nagkakasakit. is it a god idea to get a term insurance for my father so that my mom will be taken cared of when he dies? i dont like VUls coz i dont want to pay high premiums for the same coverage.

    also do you recommend that i renew the term insurance every year? or every 5 or 10 years? thanks in advance.

    1. Hi Stephanie Z.

      If you can get approved for a term insurance, I would probably go for the longest coverage possible (approximately around 8 years i think in your case.).

      From experience, the premiums would probably be paid every year. Not sure if it can be installment; it's best to ask.

      Would I recommend term? While it's still available, yes. Though you could also get a comparatively more expensive VUL, for the peace of mind that it won't end when your father becomes a senior citizen.

  83. hello sir carlos..

    gusto ko lng po mag ask. magbabayad po kasi ako ng kukunin kung insurance ngayon June yung Health invest plus ng Philam Life. Anuual premium niya ay 63886.99PHP for 5yrs po. tapos ung death benifit nya eh 600k. premium allocation nya po ay PAMI Philam Bond Fund 20%, PAMI Philam Strategic Growth Fund 80%.ok po ba sya? first time ko po kukuha ng investment insurance. sana mabigyan ninyo po ako ng idea. THank you sir.

  84. Hello i am John 22 years old, i grabbed a plan in Pru Life UK, ill be paying around 10k per month for 7 years. Covered 1M but about the investment, did i do the right move investing in growth fund?

  85. Hello Carlos I know that this is quite off topic but in someway related with investments. What will you do if you were in my shoes I have a 500k php a hard earned money and I want it for a long term investment like for 15 years no touch... I already have a VUL which I accidentally purchase and I want it to stay at is cause I don't want to loose my money. What is your recommendation to me that will make me financially stable? And lastly, is it good to use as a vehicle the citiseconline and buy one stock only like jollibee for long term? Thank you very much in advance...

  86. Hello Carlos I know that this is quite off topic but in someway related with investments. What will you do if you were in my shoes I have a 500k php a hard earned money and I want it for a long term investment like for 15 years no touch... I already have a VUL which I accidentally purchase and I want it to stay at is cause I don't want to loose my money. What is your recommendation to me that will make me financially stable? And lastly, is it good to use as a vehicle the citiseconline and buy one stock only like jollibee for long term? Thank you very much in advance...

  87. Hi. I'm 24 and got a VUL proposal. 350k ang guaranteed, 22k annually for 10years ang premium. With hospital income benefit and critical illness. I'm really considering this kasi level ung premium. Ung family namin medyo high risk for illnesses. 40s may sakit na. meron din below 40. so worry ko baka hindi na ko insurable by then. Not that inaanticipate ko magkasakit nang maaga but just in case. Good choice na po ba VUL or what other options do I have? Aside from lifestyle check

    1. Hi Anonymous,

      My best - but unsolicited and potentially unwelcome - advice is a lifestyle shift. Exercise, eat healthy, get regular checkups, maybe even take vitamins if needed. Insurance doesn't take care of health problems, it just pays the bills. Better to not be sick in the first place.

      second - what's the 350k for? I'm guessing it's just if you pass away. It has critical illness, good. But what's the coverage amount? what illnesses are covered?

      If you're worried about health, get an HMO card or health insurance. Life insurance, even with health-related riders, is still primarily for when you die. The riders just make it more lucrative.

      You can get a VUL or whole life (still way cheaper than VUL) if you're worried about being uninsurable.

      If I were you I'd just take whole life and invest the difference. But that's a personal choice. You really have to decide for yourself.

  88. Great post.. I'm a newbie here.. just wanted to ask some advise or best options rather.. I'm a mother of 2 ages 3 and 5.. any recommendation on wc investment? My priority is their future.. I have heard about money 8 from bdo.. 2nd option is Sunlife VUL.. Thanks!

    1. I'd start a college fund for them. And whoever is the breadwinner (you, your husband, or both) should get life insurance. And you should establish who takes care of the kids if you both pass away. There should be a will also, and plan how the investment or savings left behind will be disbursed to your kids (by 18? a portion every year? lumpsum to whoever will take care of them?).

      TMI? slightly morbid? Maybe, but you did say their future was your priority. And there's more to their future than just choosing an investment vehicle.

      Also, those seem to be both VULs. I'd recommend you just crunch numbers since both products are similar anyway. Lower fees? higher payout?

  89. Hi!

    I just got Invest Peso Max from BPI-Philam. I asked the "financial advisor" if this was a VUL product since I am not that versed in it he said twice NO. He wanted to even push for the one with the monthly premiums which I declined since I wanted to get the 1 time pay only It was worth 125k. I've read that VUL can be a decent investment but now as I read financial blogs & after reading the policy which was just sent this week I am having second doubts. The person who handled my inquiries is not that well versed nor knowledgable... so in hindsight that should have been a warning signal... should I still continue with this? I am still on the cooling off period so I assume I can still cancel.

    I also got a ALFM Peso Bond Fund, BPI Short Term Fund, BPI Maxi Saver (SDA) currently have a BPI Trade, Regular savings & BPI Save Up

    Need your advise quick!


    1. Hi Anonymous,

      A good rule to follow: Don't commit large sums of money to something you are not sure of.

      This may be a good product. I recommend studying it very well. If it good for you, buy it. If not, don't hesitate to cancel. If you're unsure, learn more but don't buy yet.

  90. Good daY!

    Nice article and it enlightened me in so many ways.

    I'm a newbie sales agent of VUL. Yes we do received commission sa VUL na nabebenta namin but Im not the one who sells a product for only commissions. It is my personal advocady also to spread the benefits of financial planning in securing their future lives. I always make sure kung ano talaga need ng client ko if they need pure insurance ill give them term insurance but kung purely investment I introduced them in various investment instruments like stocks, MF's, UITF's and others at sinasabi ko rin it is ok to invest kahit hindi sa company namin basta follow and invest what they think is best for them. I always inform them that VUL is not not an investment but Life insurance yung nga lang kahit papaano ito ang insurance na may makukuha ka (kung ok ang takbo ng market) kahit pa paano. In terms kung mahal, I dont think so na mahal ang VUL compare sa Term insurance. For those na may VUL na you may lessen or remove your worries by contacting your sales agent kung diskumpiyado kayo try to reach other sales agent na mapagkakatiwalaan niyo. It is a matter of educating ourselves kung ano ang pinapasukan natin, I respect those na ayaw sa VUL because at least may idea at discipline na sila sa investing but VUL is not bad at all, why do you think big financial institutions like BPI-Philam, manulife, sun life to name a few if this VUL product is bad for the public. But in the end we have to educate ourselves and help one another in reaching for our financial goals. God bless!

    1. I do agree with a lot of your points but...

      Companies sell because it makes them money, not necessarily because it's a public service. That said, insurance is generally good. But companies do put other costs on it like their admin fees and commissions. It's best for consumers to also weigh which is giving them the best bang for the buck and not just trust a brand name.

  91. Hi Carlos,

    Great article! :D

    I hope you can help me,

    Currently, I have Php 200,000 in my bank and planning to invest it. However, I'm confused of which first step should I take. Because half of my friends are urging me to apply for an insurance first, while the other half are advising me to skip insurance and start with Stocks. Then a week ago, my uncle told me to have at least a life insurance and emergency fund before venturing into stocks market, and I was like, wtf?

    Do I really need an emergency fund before investing into stocks? If, Yes, How much?

    Life Insurance: I want to avail a life-time insurance, is there such thing? If, Yes, How much? How long will I be paying?

    Stock Market: I'm all ears. :D

    PS: I'm a nurse, with very little salary.

    Cheers! :D

    1. Hi Anonymous,

      Thanks for mentioning you're a nurse with very little salary. Now I'm convinced you're uncle is right and you need that emergency fund first.

      Insurance requires a regular payment, and stocks take time to make money. Emergency funds however can bail you out anytime you have an emergency.

      Insurance is good. It helps you when you pass away. You can get riders that help out with hospitalization. But it doesn't usually help when your doctor prescribes an expensive med (with no generic equivalent), or someone in your family gets in a accident and needs your help (unless they themselves are insures). It doesn't pay utility bills or tuition either, or most other "money-mergencies".

      Don't get me wrong, insurance is good, but it's payout is focused. So gt one you can afford and is useful to you, but don't be too reliant on it or expect much from it.

      VUL and whole-life insurance are "life-time" insurance. Paying for them usually takes a long time too. That's not a diss on them, just a reminder to do your math diligently before getting one.

      I do like investing in the stock market, but unless you know what you're doing, try an equity fund first (either mutual fund or UITF).

      And yes, establish you emergency fund (even if partial) first before investing in stocks/equities. Emergencies can happen at any time - including when your stock investment just lost 20% or more.

    2. Hi Carlos!

      I appreciate your quick response! :D

      After reading your reply, I guess I will open another bank account for my emergency fund, is Php 50,000 enough?

      What life-insurance company do you recommend?


    3. Hi Anonymous,

      Typically, your emergency fund should be 3-6 months of your monthly expenses. And so you would know better than me if 50k is enough.

      I don't really recommend specific life-insurance companies. My best advice is to compare the different ones available to you. Specifically, weigh the following factors: how much is the annual premium (or monthly, quarterly; just compare with same mode of payment), how much the benefit/face amount is, are there other "riders" available, how much those cost, what specifically they cover and do not cover. And then select the one with the lowest premium, highest face amount, and with riders that you may be likely to use.

  92. Carlo patulong nmn ho.
    1. Me nag offer saaken ng vul kya aq nag research about dun anyway I agree s post nio so ung kukunin q is health insurance ung me critical illness, disability and accidental death. Pero need q ng life insurance pra s estate tax meron b ng combo eh ung dalawang un?
    2. 500k q nsa banko lng dko p alam gagawin q.
    -meron aq 6mos emergency fund
    -300k stocks
    - 60k mf
    -me pera pra s kukunin insurance
    -house pero not generating income kc nktira mother and 1nephew.

    Planning to resign aftr 1 and half yr fr now (ofw). Save money,Benta house, reside in the province. Buy new small property n pede mg tanim and small business.
    500k end of service pay pra s college ng nephew.
    I'm 34 not going to get married. If I'll hav a kid ok if not ok lng din.
    Ung 500k long term pra s pg tanda q and ung health insurance din. Life insurance pra s maiiwan n mg aayus ng lahat ibayad s estate tax. Lahat ng siblings me mga work.
    What do u think po s plan? Medyo messy?