Filipinos don’t often invest in insurance. That is until they wish they did. Soaring medical bills, sudden loss of the family’s breadwinner, and other similar situations are often the cues that make Filipinos go, “I wish I had an insurance policy.”

On the flip side, Filipinos often tend to jump on simple, easy-to-understand investments that promise at least some gains with little effort apart from putting in money.

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It is therefore unsurprising that Variable Universal Life (VUL) insurance is quickly gaining popularity among Filipinos. Not only does it cater to the Filipino desire toward financial gain, but also doubles as an insurance policy. Naturally, this is also a good thing for financial firms, as it gets them more clients who otherwise wouldn’t bother with insurance.

But what exactly is a VUL?

In the simplest terms: It is a financial plan that acts as both an insurance policy and a financial investment policy, wherein the premium payments are allowed to be flexible.

For those looking into either investing in an insurance policy or a financial plan, especially if you’re not well-versed in the world of finance, a VUL can be a great idea for a number of reasons.

life insurance


1. Best of both worlds

By investing in a VUL, you’re essentially getting yourself covered by an insurance policy, whether it’s life insurance or other coverage, such as accidents, medical, and others were offered. In addition, your premium payments also act as a means of earning, similar to a mutual fund. Because this plan includes the two most common features of the financial world, it is therefore “universal”.

The details of the insurance coverage and financial plan vary between firms offering VUL, but the most common offering comes in the form of life insurance with a mutual-fund-like financial plan. Your money, therefore, doesn’t disappear just to keep your policy active; it’s still there, earning for you like a mutual fund, except while you’re paying your premiums, you’re also fully insured.

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2. Flexible payments

This is where the “variable” in VUL comes in. Having variable premiums mean exactly that: Your monthly investment doesn’t have to be fixed. Naturally, you’ll have a set regular premium every month just to make sure the investment is consistent and the policy active. However, you’re not limited to that amount alone; you can add more at any time, such as when you have extra cash from the sudden windfall, say, from the sale of an old car or other properties.

By adding more to your contributions, the value of your financial investment accumulates faster. Which works for you in case of the opposite circumstance: Should you find yourself in a situation where you lose your income stream and you need breathing room from your payments, the policy can pay for itself for as long as fund value remains.



3. It’s savings

With traditional insurance policies, you pay a premium to make sure you’re covered for a much larger amount if ever the conditions for the policy are met. On the other hand, with a VUL, your contributions are more like deposits to a bank savings account: All your contributions remain yours, and you can take it back whenever you wish (though there might be charges for partial or complete withdrawals).

However, unless you really, really need to, it’s best to keep the fund active and accumulating, so that after a set amount of time specified in the policy (usually 10 years or more), you can get your money back with a large earning on top of it. And all the while, you’re still covered by an insurance policy for as long as you keep the fund active. Naturally, you can reinvest some or all of what you’ve earned to keep your VUL going, which is always a good idea.

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4. High reward

It bears noting that no financial plan is ever zero-risk, and because a VUL entails a financial plan, it is not exempt from this. However, if you invest in a VUL with a reputable financial firm, those risks are minimized. Also, because you have the capability of putting in a larger premium on any given month, you also have the potential for much higher earnings. In addition, if you start a VUL early in life, you get the benefit of potentially greater insurance coverage at potentially lower premiums, while also able to collect the gains on your investment just as early, which you can either reinvest or use to fund your life dreams, such as owning a home or seeing the world.


5. It’s a no-brainer

Perhaps best catering to the everyday Filipino who can’t be bothered with the nitty-gritty of financial movements, a VUL is really very easy to do. Take that invite for coffee from that friend of yours who’s a financial adviser (everybody has at least one) and ask them about their VUL insurance offerings. Then ask another friend from a different financial firm – it’s best to always have more than one option. Work with your financial adviser friend toward a VUL that fits your budget, then start on it. You get the peace of mind from having an insurance policy, and your money works for you toward some great earnings in a few years.

Antonio Francisco R. Java

Antonio Francisco R. Java

Anton is a print media veteran who now co-runs his own social media management and public relations firm. He de-stresses by taking his motorcycle out on weekends, and talks incessantly about riding gear and safety. He also builds custom PCs on his spare cash.