Hi everyone! Madami ako natutunan dito sa thread. Newbie pa lang ako about insurance and investments.
Ask ko lang po,
1.) What's the difference between face amount and fund value? And how are they computed?
Face Amount is the basis of the insurance coverage. For example, you are insured for 1,000,000 with Face Amount equivalent also to 1M. Meron ding mga produkto na insured for 1,000,000 with Face Amount equivalent to 500,000 naman, because the contract says that you are insured for 200% of the Face Amount
Fund Value on the other hand is the value of your policy at any given date depending on your paid premiums, number of units you bought with your premiums, and the value per unit of the fund.
Sa VULs, Fund Value ang tawag sa value ng investment side ng iyong policy. Sa Traditional products ang counterpart ng Fund Value is Guaranteed Cash Value (for earning policies). Sa mga Traditional term insurance, walang Cash Value kasi term insurance products do not earn.
2.) Paano po kapag tumigil na sa pagbabayad ng premium in less than 5 years? And hindi na talaga balak ituloy. May marerefund po ba?
It depends.
If VUL, as long as non-zero ang Fund Value at kayang bayaran ang future yearly charges, then in-force ang policy
If Traditional, merong tinatawag na non-forfeiture options. Meaning, may mga options para never mag lapse ang isang contract
examples of non-forfeiture options are
a) paid up insurance - ito yung mga policies na may cash value tapos kung ayaw na magbayad ng policy owner/insured then liliit lang ang coverage pero insured na siya for life. So day kung say 1M ang kanyang insurance at 10 yrs to pay at on the 5th yr ayaw na niya mag pay then cocomputin ni Actuary ang paid up insurance coverage niya based on premiums paid. Hindi na 1M ang insurance but paid na siya for life
b) paid up term or paid up extended term - ito yung same coverage pero iikli ang coverage span. so for example instead na insured for 1M until age 100, insured pa rin for 1M pero hindi na until age 100. Subject to computation ng Actuary pa rin
c) Premium Advance (last resort ito) - ito yung maglo loan sa cash value ng policy. Kaya siya last resort kasi malaki ang interes. so far ang rates ay from 8% to 10% annually ang interest. Mabigat.
Sa ganang akin, kung gusto mo na guaranteed ang premiums mo, meaning kapag gusto mo na 5 yrs to pay lang ay exactly 5 yrs to pay lang, then go for traditional participating insurance products. May kamahalan ito since may guarantees.
Pero kung gusto mo naman ng flexibility sa payment ng premiums, at the same time you are invested in bond or equity securities, then go for VULs. Mas affordable ang premiums nito kasi you as the insured are already taking some risks due to exposure of part of your policy to the volatility of the markets.
I hope nakatulong po ito
