Traditional life insurance vs VUL

[m_lim]

^6,800 monthly for 4M coverage plus another 4M pa for Critical Illness?

parang ok yan ha. kasi yung akin lumalabas 5thou monthly for 2M coverage lang sa Sunlife.

anong tawag sa plan mo?

[catherinecaparino]

anong plan to sis? parang ganyan din yung sa office mate ko.

[ayi21]

Wow ang laki. For our prulife naman 5M pero doble ang monthly. Can u give us the details of ur plan sa manulife?

[D4thAngel]

Premiums depend on age, gender, and if smoker/non-smoker. Please share with us the details of the plan. thank you.

[fionaapple]

^gusto ko rin malaman...baka term life insurance ito kaya mas mura?

[drowningpanda]

Ano pinagkaiba ng coverage ng early stage critical illness sa critical illness lang? Pano kung nadiagnose bigla ng critical illness pero nasa stage 4 na? Hindi na mac-claim yung insurance?

[m_lim]

sa mga pro term, invest the difference, ano gamit niyo for critical illness?

kasi ang term, mapapakinabangan lang kapag dead ka na. paano kapag nagkasakit ka eh hindi pa lumalaki yung investment mo?

health card naman usually nasa 200t lang maximum coverage. kulang yan kapag critical illness. so anong pwede bukos sa critical illness rider ng Vuls?

[london]

Am I making the right decision?

I have several aunts and uncles na walang asawa and anak, senior levels na (65+s, 70s) and I am planning to put most of their money in several VULs para naka allocate na din kung kanino mapupunta. May insurance din na 25% so if something happens, ang makukuha mo is the face amount + 25% insuarance.

They have zero to minimum insurance so not enough to cover their estate taxes. Most of their money is sa money market lang kasi nga senior levels na and di na kaya ng puso ang fluctuations sa high risk investments. If sa equities kasi ilagay ngayon, e with the coming recession, what if something happens sa kanila then nataon na super baba ng market, e di lugi  (but actually, di no naman talaga alam ang buhay. kahit bata, pag time mo na e yun na).

Ang purpose na lang talaga is to leave a legacy and para di na mag away away mga heirs.

[ikaela]

^Mayayaman na aunts and uncles who were able to create wealth on their own? Who are they going to leave a legacy to kung walang mga asawa at anak? Is that money you want invest really their extra money, i.e. do they have other stable sources of retirement income?

Kung wala, I'd rather that you find investments where they can live on interest. Sa ganyan na age (65 and up), you have to let them enjoy their money na. Let them taste the sweet fruits of their labor kaysa naman isipin pa ang taxes. Kung may maiiwan sila sa mundo, hayaan na sila to live their own lives -- I'm sure matatanda na rin sila.

This is what I would do:

(1) Find income-generating/interest-bearing investments. Place them in the names of younger family relatives and/or whoever is most trusted.

Now, financial advisors like to say that the person loses control over his assets if he does this. I like to rebut that by saying that if you can't trust your very own family, then you have invested in the wrong things in your life.

(2) When the person dies, the entrusted person can withdraw from the investment himself to pay off the deceased estate taxes. No need for insurance companies to meddle as long as there is TRUST among the people involved.

(3) If you really don't have anyone trustworthy, compute the person's net estate NOW. See what you can donate, place under a different name, give away, or sell -- LEGALLY decrease the size of the estate as much as possible.

If your lawyer is good and things go according to plan, you can end up with a less than 1M tax payable on a 20-50M estate.

(4) From here, you can make a better decision about which life insurance product to get for their needs. In the example I gave in #3, something that gives 1M-5M should be enough. No need to put "most of their money" in life insurance. A single-pay VUL (kahit pa invested in equities) is best for estate planning purposes.

[onlytechgirl]

Ano pinagkaiba ng coverage ng early stage critical illness sa critical illness lang? Pano kung nadiagnose bigla ng critical illness pero nasa stage 4 na? Hindi na mac-claim yung insurance?

^hi sis, yun early stage ng critical illness like stage 1 cancer, sa 36 critical illness, hindi cover yun kasi hindi pa naman critical yun.. pero meron kasi sa insurance na pwede cover kahit early stage. kung stage 4 na yun, critical na yun so pwede na yun i-claim

[london]

thanks sis ikaela for your insights =)

yes, mayayaman who were able to create wealth on their own. some are still in business na ayaw pang tumigil, the others are retired and not really maluho. 

actually, naka OR kasi ako sa lahat and medyo worried din ako so as much as possible, I want to unload some of their money. i always tell them na gamastos gastos na bat wala pa rin. maybe it's their nature na talaga and dahil na-experience nila yung hardship way way back. i'm an only child, single, my dad died a few years ago so it's just me and my mom na senior levels na rin. between us, we also have a sizeable amount, tapos yun nga na ka OR pa ko sa mga aunts/uncles.

gusto ko sana e i distribute na nila sa cousins ko na iba yung ibang money ngayon. but ayaw naman. takot na mawala lang. i've been convincing them to do this pero after several years, wala pa rin nangyayari. so the only thing i can think of is get VULs na yung cousins or anak na ng cousins ang benificiaries. or get VULs for the cousins  but the owner of the policy is yung aunts/uncles. dito medyo agreeable sila.

[j.adore]

It's hard to convince oldies with that kind of mindset. Get a professional to help out on estate planning instead baka mas maging open minded sila. Ok naman yung VUL idea pero baka lang may mas tailor-fit options for your relatives.

[london]

^ thanks sis j adore. sana i can convince them soon...

[m_lim]

check this out mga sis:

http://www.moneyandopportunity.net/2014/12/insurance-vul-or-buy-term-invest.html?m=1


so pag kailangan mo maging insured ng more than 20 years, mas ok ang VUL kahit na mas malaki babayaran mo sa umpisa compared sa term.

kasi nga naman ang term insurance, nagmamahal habang tumatanda ka so kung matagal ka mag tterm, edi mahal rin aabutin mo.

[mxherr5]

Was this something you wrote sis?

It appears there's something wrong with the calculation on the VUL
side. When you look at the end of the 10th year.

247,872 after a 10% return became 272,659. That's an EXACT 10%
return. Shouldn't it be less? Just because a VUL has a paying period
of x years doesn't mean the charges stop after the 10th year. There
should be a cost of insurance charge for the 1M death benefit THROUGHOUT
the life of the policy.

Unless this VUL is special and the insurance is free? I'd like to know
which VUL this is if that's the case

[m_lim]

^nope, nabasa ko lang rin online...

saan nakalagay na no insurance cost na after 10years?

eto lang kasi nakita ko:

The total premiums of the VUL may look higher compared with BTID for the first 10 years, but upon close examination, the premiums for the VUL includes the investment portion of the product. Once you deduct the cost of the investment portion of the VUL from the total premiums, the difference of insurance cost for the VUL and Term Insurance is not that significant. After the the 10 year mark the cost of term insurance surpasses the total insurance cost of VUL.

[mxherr5]

It's in the computation the author posted:
http://2.bp.blogspot.com/-mlPJfzmcqYE/VH1MpeMb3VI/AAAAAAAADd4/RlYtZCGzc2E/s1600/BTID%2BVS%2B%2BVUL%2BCHART.png

Look at age 39 to 40.
From 247,872 at age 39 and with no more premiums being paid
at age 40 it became 272,659 which is exactly a 10% return. It should
be less to account for the monthly insurance charges and if this was a VUL
from certain companies there would be a monthly policy charge too(such as
AXA, Manulife and Prulife)

I guess the author wasn't aiming for 100% accuracy and simply made do with
a simplistic computation.

When I last did a comparison, I found that with the exception of Sunlife's VUL
BTID came out ahead if you just look at the total fund value at age 65 compared
to VULs but the difference wasn't that big( several hundred thousand pesos and
mind you the fund values I'm looking at were in the 12M and above range so
100-500k wasn't that big in my eyes lol).

I had Sunlife's table of COI so I was able to really do a proper computation.
(And Insular's as well)
The other VUL providers only disclose the 1st year insurance charge or not at all
so I had to rely on their illustrations.

[m_lim]

Well you can't compare returns of mutual funds/stocks vs. returns of VUL as comparing this two is like comparing an apple to banana.

Scenario 1:

Invested 100,000 sa mutual fund, after a year it gained 30%. Your mutual fund is now 130K. At the end of 2nd year namatay ang investor. Beneficiary will receive all the proceeds  after 1 or 2 years less pa sa mga tax na babayaran.

Scenario 2:

Policy holder bought a plan with 1M coverage paid only 25K for the whole year. Fund balance at the end of the year is only 9K. Paid another 6250 for the first quarter of the second year, namatay ang insured. After 7 banking days, ang 1M + Fund Value nareceive agad ng beneficiary.

kung ganito ang mangyari, bakit di nalang kumuha ng Term insurance sa Scenario1?

100thou invested sa mutual fund, after 1 year kumita ng 30%. namatay after 1year. edi makakakuha 130thou less tax.

tapos...

kumuha ng term insurance kunyari 25t per year. after 1 year namatay nga so instant 1M.

edi meron siyang 130thou less tax PLUS 1million.

[PetiksPinayInvestor]

Due to what is happening in our PH market, I just thought to inform GT especially those na may VUL policies since sila po ang affected nito

Matapang ka ba?

Ang all-time high unit price ng Index Fund ng Sun Life Prosperity Fund ay 1.0109 noong May 5 2015 pa

Kahapon ang unit price niya ay 0.7862

That is a 2,247-pt drop

Kunyari you bought units at 0.7862 per unit

Kung mag reverse ang market at bumalik sa presyong 1.0109, kumita ka ng 28.58% kung ibebenta mo yung binili mo

So, may opportunity ba sa down (or bear) market?

Kung long-term ka kamo, tingin mo may impact ito sa future target money goal mo?

Now, if you have VULs exposed to equities (Balanced Fund, Equity Fund, Growth Plus Fund, My Future Fund),

your best strategy is PESO COST AVERAGING method

where you deposit the equivalent monthly premium of your policy and you place your deposit monthly

This monthly deposits can be done purely online via online banking bills payment facility of your favorite bank -- walang pila, almost petiks

[perasense]

Both have their advantages and disadvantages, and for me, they fit different types of investors.

If you're the type that is very disciplined when it comes to saving and investing, and you have the time to study what investment options will give you the best returns, then monitor the market to make sure that you're buying units of MF/UITF or stocks at the right time and take advantage of any market opportunities, then term is the best type of insurance for you.

VUL on the other hand, I would recommend for 4 types of people. First, those who are new to investing, and are not used to setting aside money for the purpose of investment, so they can get used to the habit. Since mas mahal ang VUL sa term usually, it lets people get used to committing themselves to setting aside a bigger portion of their money.

Second, if you are the type who wants riders or have a family history of critical illness (like cancer) because ang term usually accidental death lang rider ang pwede i-attach na rider, ang VUL maraming possible riders kang pwede i-attach sa policy.

Let's be honest, kapag nagkasakit ka ng critical sa first few years ng term insurance, ubos yung investment mo kahit mas malaki pa ang kinita nya kesa sa VUL, dahil ang term, makukuha lang ng family mo ang benefit pag-dead ka. Eh paano kung kailangan magpa-chemo or magpa-heart bypass? Syempre dun sa investment ka kukuha, eh di parang nawala lang sya.

Third, if you just want to have insurance and invest but are too lazy to learn about what your other options are, or are just plain not interested in the time and effort to find out about other investment vehicles (and yes aminin natim, may mga ganitong tao).

And lastly, for older people who are already in the stage of estate/inheritance planning. Una dahil mas mahal na ang premium ng term kapag older ka, so wala na syang difference sa term premium-wise, plus usually may medical requirement. And second, it's easier to get a single-pay VUL for each person na pamamanahan mo kesa mag-divide ka ng pera, stocks at properties, at magbayad ng transfer taxes para sa bawat isa sa kanila.

Mathematically-speaking naman, all projections will tell you that BTID performs better. Assuming of course, alam mo yung ginagawa mo sa pagi-invest. If not, pwedeng isang taon pa lang ang pera na ininvest mo, ubos na due to losses.