[bauer]

hayaan mo na siguro allanmm13, baka insurance agent yang gumawa ng computation.  i dont agree also on MOST of the explanation.  simple lang naman paliwanag

MF and UITF walang insurance na kasali, lahat savings and earnings.
VUL puro insurance konting savings and earnings.

kung pipili ka between MF and UITF naman,
MF ay hindi bangko ang nagmanage ng savings and earnings mo
UITF ay puro bangko ang nagmanage ng savings and earnings mo

sino mas matibay? malamang bangko
sino ang mas malaki kita? depende sa UITF or MF pero hindi naman nagkakalayo ang mga kita nila

[kagebomb]

http://bucks.blogs.nytimes.com/2010/04/12/why-life-insurance-is-not-an-investment/



So is term insurance better than VUL? I'm already planning to open up a VUL but after reading this, I'm thinking twice..

[freefront]

What to choose?

Tradional life with forced savings and a low interest rate?

X with 300 guaranteed face amount, at a premium of 24,000/annum at 6 % annual return on your cash value. This will take you about 14-22 years to pay before the policy can pay for itself.

Term insurance with no equity at all but very cheap coverage.

X with a guaranteed face amount of 1,000,000.00 at around 5,200 per annum premium. You place your "bet" every year, year in- year out. Think car insurance.

VUL w/c is based on term insurance but made hybrid by investing a part of your premium into its own MF.

X with 1 million guaranteed face amount, premium of about 26K annually  with a projected 2.2 M if you died at 65 years of age. Supposedly, at 8% projected income, your total premiums at the 10th year paying period is surpassed by your fund value.

And then, you have to consider for how long do you need the insurance?

I have all 3 of them only because I was in a panic mode when my father had to pay for my huge hospital bill. Pano pag namatay ako? Sila pa rin ang taya? Hence the term insurance.

The second is the trad. life. I was attracted to the fact that I can withdraw my dividends, or take out a loan for emergency use na hindi na kailangan ng supporting documents, etc. Back then, the dividend rate was 11% per annum. Now, it is 6%. Kaya matatagalan pa ako makatapos dyan. 18 years pa daw.

Vul is the biggest and latest buy only because this animal did not exist in the Phils. when I bought the first 2 policies. If I manage the investment part like I watch my MF, I should go on a pay holiday at year 8. I don't mind the premiums and whatever it is that needs to be paid because I need the insurance, and I wanted something cheap. Throwing away money on term insurance is not cheap. It is a waste. I think I took the mantra of diversification too far.

 

[gigabytes]

If you got some time to monitor, I'd suggest getting a term insurance and invest in Mutual Funds. That way, you got protection (in case of death), and investment (for retirement).

VUL is actually the same thing. It's an insurance product linked to variable investments. It's a combo kung baga. Some may say that most of the premiums you pay goes to insurance part? Here's what you can do. Just get a basic protection - for example for a P500,000 insurance, a 30 year old male - non smoker would only need to pay 11k a year. So if you can like save 20k a year, you can put the 9k as 'top up' or would directly go to the investment part. The 11k premium already has investment part aside from the 9k you mark as 'top up'.

Same thing as term insurance and MF, only made easier.

[mxherr5]

Hi sir, no offense but did you actually try to do that on a spreadsheet
to see which is better?

I did and return wise when it comes to Sunlife and Pioneer VUL,
it makes sense to get the VUL rather than get it separately.

The cheapest level term insurance for an age 24 I found was from Philam
with an annual premium of 6k. Face amount of 1M..

There's a difference of almost 1million sa fund value at age 65 assuming a return
of 10%

But I guess 1million is not that big of deal when the 24 yr old turns 65 hehe.
Plus you'll have more flexibility in choosing the funds you want.
You can put it in a UITF, Long Term TD, MF, etc

Cheers  

[freefront]

^ My point exactly, giga. Sigurado ka ba na tuwing babayad ka ng premium mo sa term life insurance, sabay invest ka rin ng matching money for your MF? I think not. Unless you work with a financial institution na may automatic monthly deduction para sa MF account mo.

[gigabytes]

Sorry for the confusion. I didn't mean Term insurance as in the traditional one. I was actually referring to VUL. In essence kasi, VUL is term insurance linked to MF (altho not exactly MF).

@mxherr5 - The illustration I made was actually VUL. So my recommendation is to get VUL because it's cheap, then open an MF account instead of putting top ups to your VUL policy. Why? because you'll end up paying more for the 'top ups' charges.

@freefront - you can actually do this. How? You get a VUL and MF from a single agent.  Altho I must agree that it needs a lot of self discipline since psychologically, you know that you're not oblige to pay regularly for MF unlike VUL that you're actually forced to pay.

Kaya most refer to Insurance and the like as 'Forced Savings'. But it's doable as I've been doing this. You can make this as a habit.

[mxherr5]

Ahh ok, I misunderstood you then..
Yep, I agree with you 100%.
The smallest top up charge I saw
for a VUL was 2%(Axa) but with
a mutual fund it goes lower than 2%
as your fund grows.

0% even with Sunlife back-end

Grrr, why can't Philam and Philequity
implement a back-end type of load hehehe
just ranting

[bauer]

VUL is a promised rate of return with a COMMITTED INSURED AMOUNT

TERM INSURANCE is a promise to pay the COMMITTED INSURED AMOUNT

Traditional Life is a promise rate of return with a COMMITTED INSURED AMOUNT

INSURANCE is a promise, whichever you choose, just select the BEST ONE WHO KEEPS THEIR PROMISE.

MF and UITF do not make a promise Fixed amount nor fixed rate of return BUT its PERFORMANCE were based on HISTORICAL RECORDS.

[happyknappy]

nice topic VUL vs Mutual fund... nagtaka din ako kung pareho sila dahil pareho silang may equity, balanced and money market.. Pero talaga palang magkaiba...

Got 2 VUL - one for me and one for my daughter (in preparation sa magiging tuition fees nya + sum assured of 300,000)
& got 1 MF.

tama ganun nga lang differences nila... yung isa insured ka up to 100 years, payable premium for 10 years only...

depende sa product ng VUL... may product mas malaki ang iniinvest sa equity or bonds... sa prulife sabi nung insurance agent ko

investment account.... insured ka pa rin pero maliit na amount lang..

pero ang normal na product like for Prulife, proactive, prulink exact 5 - 15.... maliit na percentage lang ang napupunta sa investment..

[happyknappy]

pag additional investment ba sa mutual fund may sales fee parin?

[gigabytes]

@happyknappy, depends on the mutual fund company. In sunlife, you can get away with sales fee / charge if you chose Back end and you withdraw funds 5 years and up.

[suzaku]

Yes. Ang pinagkaiba lang ata ng initial and subsequent yung minimum investment amount.

Unless of course like gigabytes said, back-end load ang pinili mo.

[mxherr5]

^

Yes pero may parang levels.
i.e. 10k-100k 3%
101k-500k 2%

parang ganun.

Sunlife has a backend option so if you hold
on to your investment for 5 years, wala nang sales load.

UITF also has no sales load pero prohibitive sa cost averaging
ang minimum nila mostly (Or maybe I just earn too little hehehe)

[happyknappy]

ang alam ko sa holding period is redemption fee or exit fee will be waived...

Anyway, nag additional investment kasi ako sa FAMI.... nag dagdag na lang ako ng exit fee just to make sure...