INSURANCE + INVESTMENT

The Greatest Combination?

Since the money is deeply invested, the insurance component is low. It is normally 125 percent of the Single Premium paid, or the current Fund Value.

To illustrate, a Single Premium of P250,000 covers the insured for P312,500. If the insured dies, the beneficiary will receive at least P312,500. Riders, or extra advantages, are not available in Single Pay VUL. The insured can only collect the death benefit and investment returns.

This policy also has Guaranteed Insurability, which means you don’t need to be in good health to apply. The other is regular pay VUL. This insurance coverage demands a longer time of premium payment. Payment terms range from 5 to 20 years of life. Premiums can be as little as P1,000 paid either on a monthly, quarterly, semi-annual, or annual basis. The insurance coverage is notably high for Regular Pay VUL due to the upfront expenses. Typically, the insurance is at least 500 percent of the total premiums paid. For illustrate, the annual premium is P24,000, and the payment term is 10 years. Your insurance coverage will be P24,000 x 10 years x 500 percent = P1,200,000 Because of the upfront payments, the investment development is delayed mainly on the 1st to 4th year of the policy. Insurance companies have varying product designs and pricing on their VULs. Some VUL plans have fund values even on the 1st and 2nd year of the policy where charges are at greatest, whereas some VULs have zero fund values upon its beginning. It is very important to question your Financial Advisor about the costs to limit expectations about the growth of the investment.

Single Pay VUL is a good option if you have a good sum (normally starts at P200,000) to invest and your goal is to have it fully invested because you already have enough insurance coverage.

Regular Pay VUL is more appropriate if you need to get high insurance protection for your family and you are comfortable with your money invested long-term. The Financial Pyramid has three levels – the foundation is protection, the next is wealth accumulation, and the last is wealth transfer.

Following this pyramid, it is recommended to start with Regular Pay VUL because it gives enough insurance protection for your family. If the budget permits, combine it with a Single Pay VUL to give you better investment returns.

Whatever insurance or investment product you choose, should support your financial goals. Study your options well and compare VUL quotes. Don’t just rely on what an insurance agent tells you. Buying a VUL policy is a major decision that you just don’t do in a snap.

How do you know which VUL is appropriate for you? The right VUL product for you will depend on your financial needs and capacity to pay.

 

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