What is VUL? VUL stands for Variable Universal Life. In short definition, VUL is life insurance plus investment. It’s targeting two goals with one action- to secure income and to grow money.
- Variable because client can choose or vary which instrument he or she can place his money in.
- Universal because a period of payments can cover the entire or the universal span of the life of insured.
- Life Insurance because its basic or primary service is to take the risk whenever something happens to the life of the insured. If the insured is taken out of the picture, VUL will carry-out the agreed responsibility to the beneficiaries of the insured.
“What is a VUL” using a Pot of Gold Illustration
When is VUL a Good Option ?
Is VUL for you?
There are many “gurus” out there who always say that you should “get a term insurance and invest the rest.” Yes that could be true if you have all the time, energy and knowledge to do the investment venture or stock market chart analysis.
The best thing with VUL is that your funds can cover the the regular charges later on and you won’t have to even mind it because it is auto-paying. Unlike with getting a term or traditional insurance, you pay more as you get older and you may be tempted to stop. If you miss paying, you will need to reinstate or reapply and will be under several limitations again just like as a new applicant.
But VUL is good for you if you are always busy and need to be constantly reminded to set aside and invest money. If you have no desire or time to learn the deep technicalities of stock markets, bonds and other investments.
A VUL comes with a Financial Advisor whose job is to remind you of your regular contribution. It’s like hiring a financial consultant who specializes on setting aside money to help you secure income and reach your financial goals.
Risk Profile Questionnaire
Number of years you plan to put the money to investment instrument
|POINTS||RISK & RETURN|
Your attitude towards investing, and the level of risk or volatility (the ups and downs of investment instruments) you can take
Consider your regular expenses, your ability to pay your loans and emergency funds
|More than 15 years||4||Seeks growth of money. Fully accepts volatility and is very okay with ups and downs just to ensure higher returns over the long term||4||Can meet emergency expenses without withdrawing these funds||4|
|Between 11-15 years||3||Comfortable with up and down fluctuations of the market and prepared to do so even it goes down more than 50%||3||If an emergency situation will arise, I may withdraw these funds||3|
|Between 5-10 years||2||Comfortable with volatile happenings but prepared for my money even it goes down not more than 50%||2||I won’t need this money for now. I’ll put it in an investment but this may change||2|
|5 years and below*||1||Just want to preserve the money and prefer to gain stable returns rather than seeing fluctuations*||1||Need to supplement my income with this investment*||1|
|*may not be suitable for VUL|
Select one per column and add your TOTAL SCORE:
- Column A: Score ___
- Column B: Score ___
- Column C: Score ___
- Total Score: ____
How Long Should I Contribute to a VUL?
What’s the duration of VUL terms? It depends on the product that you choose and the financial targets you want to achieve.
You choose to pay regularly like annually, semi-annual, quarterly or monthly.
The Life Insurance company will then charge with service charges and administration charges monthly which go to operations such as salary of fund managers and other expenses.
Below are top recommended VUL policies.
- Sun MaxiLink Prime – Minimum of 10 years
- Sun MaxiLink Bright – Minimum of 5 years
- Sun FlexiLink – No required time period, as long as funds can cover the insurance charges.
What are the Types of VUL?
|VUL Name||Minimum Contribution Duration||Features|
|Sun Life MaxiLink Prime||10 years||Medium Range Premiums / Payments|
|Sun Life MaxiLink Bright||5 years||High Premium Amounts but Shorter Terms|
|Sun Life FlexiLink||Flexible (as long as your fund value can pay your monthly charges)||Lower Premiums but Ideal for Longer Terms|
Top Recommended VUL Combination
Top 1 Recommended: For me, the best insurance any one should have is a combination of VUL and Sun Fit and Well Advantage. For me this is the best set of life insurance, health insurance and investment program any Filipino should have because it protects you comprehensively.
- VUL should have add-ons or riders namely TDB (Total Disability Benefit), ADDD (Accidental Death, Dismemberment and Disability), Daily Hospital Income Benefit. The investment component also aims to grow your money through time.
- Sun Fit and Well then covers 114 critical illnesses. The Sun Fit Advantage includes other benefits as well.
“What is a VUL” using a Sample Proposal
Where are Investments Placed?
Where will I invest? In VUL, you have a choice where to put your money. It depends on the following factors:
- Your target year for the money to use (also called Investment Horizon)
- Purpose: Retirement? Downpayment for a Car / House? Dream Vacation? Child’s Education?
- Your investment risk profile or appetite
|Fund Name |
|Ave. Growth Rate||Returns|
(Growth-oriented or Aggressive)
Jan 25, 2016
|23.64%||∙ 3-year return (2017 vs 2014): N/A
∙ 5-year return (2017 vs 2012): N/A
∙10-year return (2017 vs 2012): N/A
(Growth-oriented or Aggressive)
Sept 13, 2004
|12.60%||∙ 3-year return (2017 vs 2014): 12.82%
∙ 5-year return (2017 vs 2012): 36.86%
∙10-year return (2017 vs 2012): 131.69%
Dec 6, 2004
|9.76%||∙ 3-year return (2017 vs 2014): 5.51%
∙ 5-year return (2017 vs 2012): 19.32%
∙10-year return (2017 vs 2012): 77.05%
Sept 13, 2004
|5.25%||∙ 3-year return (2017 vs 2014): -1.16%
∙ 5-year return (2017 vs 2012): 7.16%
∙10-year return (2017 vs 2012): 43.40%
|My Future 2020|
My Future 2025
My Future 2030
My Future 2035
My Future 2040
(Begins Aggressive and turns to Conservative as the Target Year Approaches)
Jun 7, 2008