What Is VUL?

All investments have their own level of risk. In the Philippines, the most common choices that people who are new to investing consider getting, are Mutual Funds, Unit Investment Trust Fund (UITF), or Variable Unit-linked Life Insurance (VUL). While they all have their risks, VUL is still a common choice even for conservative investors.

VUL, according to Brighter Life is a financial product that can give you the best of both worlds. It is an insurance product that gives you the guaranteed insurance that you pay for, plus fund accumulation option depending on your level of risk tolerance.

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Benefits of VUL

Flexible Premiums. When you avail a VUL product in any insurance company, you will have the option to pay top-up. That means any amount that is in excess of your usual premium will be added to the investment money that will yield returns.

Higher Returns. According to a study by one of the insurance companies here in the Philippines, the average returns for an equity fund are 16.6% and 7.8% for the bond fund. This is a study based on the 10 years since VUL started from 2004-2014.

Liquidity. Unlike other insurance plans and policies, a VUL policyholder can withdraw the funds that are on top of the actual amount of the policy. It is considered as a withdrawal from the policy instead of a loan like in the other policies, that in turn incur interest.

Factors to consider before getting VUL

Dependents. If you already have dependents, this is a good idea. But if your sole purpose is to grow your money, this may not be a good idea.

Premium Payments. For the first few years of your policy, the money that you are putting in is going to go to your insurance, rather the investment.

Returns. The returns are usually higher but the terms of the policy are all long term.

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