Life Insurance products, especially VUL (variable universal life) insurance products have become so popular now in the Philippines. VUL insurance is basically life insurance with an investment fund. That means that a
portion of your premium payments will be for life insurance, and a portion will go to the fund value of the investment. Not only are your loved ones protected if something happens to you, you also have a cash fund account that can grow in the long run.
I availed of the Sun Maxilink Prime back in 2014, which is a VUL insurance product. At first I was hesitant to get life insurance, due to the following 3 reasons:
- My company already provided life insurance, which in my opinion was sufficient. And most importantly, free. 🙂
- I was married with no kids at that time, and my wife was working. So technically, my wife wasn’t really dependent on my income.
- I had learned about the buy term and invest the difference concept in several blogs. This entails purchasing term life insurance, which is supposedly cheaper, and investing directly in stocks yourself. You get insurance at the cheapest cost, while maximizing your potential returns in equities.
After a long 2 hour discussion with the sales agent, I was convinced that it was indeed an affordable product (literally 73 pesos a day) for something that could be beneficial when I’m old. Below is a sample table illustrating the projected benefits of a Sun Maxilink Prime product:
As you can see, your total premiums of P265,200 after ten years would have potentially resulted in a fund value of P331,418 + P1,000,000 death benefit (10% expected growth yearly if invested in equity fund) The fund value is withdraw-able once you start paying, but with a maximum amount per year. You also have the option to top-up or add to your fund value by paying more than the premium fees.
There are, however, 2 things that I wish I had done differently:
The first is I would have gotten a VUL product sooner. It is not only much cheaper, your fund value growth potential is much bigger due to compounded interest. It is also easy to enroll dependents anytime (in the event your spouse stops working, or you have kids), by just submitting a form.
The second thing I would have done differently is get an insurance plan with health coverage. I wasn’t thinking about health coverage then, because I had a health card from my company. Once I retire, I will not be covered with the same benefits, which is a scary thought. You cannot add health coverage to an existing plan. The only option was to avail of a separate plan, but I did not want 2 insurance plans. Sun Life offers health protection plans with life insurance just like other investment companies.
At the end of the day, personal finance is still personal. Different strokes for different folks. Don’t just buy insurance because everyone is doing it. Identify your personal needs and goals. Think long term and prepare ahead. As for me, I plan to stick with my VUL life insurance plan, and just use the investment fund as a medical emergency fund for when I retire.