Variable Unit Linked Insurance (VUL)

A Variable Unit Linked Insurance is a non-traditional life insurance plan with benefits directly linked to the performance of the units of investment fund/s you choose. It is also called variable universal life, unit linked product, equity product or investment linked product.

To give you a better understanding, please watch this video:

What funds to choose from?

There are three investment fund to choose from, the Bond, the Equity and the Balanced Fund.

• BOND Fund - is designed to invest only in high quality fixed income instruments that are classified as below average risk.

• EQUITY Fund - is designed mainly to generate long-term capital appreciation through investment in high quality equities diversified across sectors.

• BALANCED Fund - is designed to provide total returns consisting of current income and capital growth through investment in a diversified portfolio of debts (BONDS) and equity (STOCKS) securities from both domestic and foreign issuers.

What is the best fund for me?

In choosing the best fund for you, first you have to know your investment objectives, length of time you plan to remain invested and your risk tolerance to market volatility.

Is the return on my investments guaranteed?

No. Returns on investment fund/s are not guaranteed since the returns will depend on the performance of the fund. However, researched has confirmed that stocks, equity funds go up in value over time for investors who prepared to buy and hold for a period of time (e.g. 5-10 years)

Does this mean that I will bear the risk associated with the investment fund I choose?

While you will bear the risk associated with your chosen investment fund, it will also provide you with opportunity to take advantage of the growth in the economy.

Can I switch from one fund to another?

Yes, you can switch from one fund to another to take advantage of the growth of a particular fund.

Should you be interested in this kind of product you can consult me anytime.Just leave your comments below or you can email your inquiries to: gotheextramyles@gmail.com or mayleen.q.bautista@sunlife.com.ph

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Types of Life Insurance

You've probably wondering "What's the best Life Insurance for me?  It is important to understand that "life insurance" has various types. Knowing the different types will help you get the right plan. May this article help you find the right one for you. :-)

In the Philippines, we use to have TRADITIONAL LIFE Insurance, but as time goes by, Insurance companies began to evolved and start offering NON-TRADITIONAL Life Insurance.

TRADITIONAL LIFE INSURANCE

• TERM LIFE INSURANCE provides "pure" life insurance coverage for a specific period of time. It is the cheapest form of insurance protection because it has no saving component. There is no cash value or dividend.
• WHOLE LIFE INSURANCE provides coverage for your whole life or until age 100. It also requires you to pay for life. It combines protection and savings. It provides death benefits (face amount) and living benefits (cash values and dividends). Living benefits  can be obtained while you are still living.
• ENDOWING LIFE INSURANCE provides coverage for a specified period. They grow cash values very fast. They can build future funds for a definite purpose. The premium paying period is shorter than the whole life insurance and the insurance amount is paid out within a certain period (5,10, or 20 years) or at a certain age of the insured after which the policy matures.

NON-TRADITIONAL LIFE INSURANCE

• VARIABLE UNIVERSAL LIFE/ VARIABLE LIFE INSURANCE/ VUL is an insurance plan with benefits directly linked to the performance of the unit of investment fund/s you choose (usually equity fund, balanced fund, bond fund, money market funds etc.) It's actually a combination of TERM Life Insurance with Mutual Fund Investment. However, unlike Whole Life Insurance, VUL does not have guaranteed cash value as well as dividends. The face amount and death benefit may vary based on how the investment portion performs. As an investor, you reap all the returns but bear all the risks. But you can minimize these risks through PESO COST AVERAGING. This kind of investment is ideal for long term. 

To give you an overview regarding this product, I will share you the video from Pesos and Sense (Episode 3 on the topic of Insurance). 

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How much insurance do you need?

You and I have similar purpose in this world.


It is your job to provide food, clothing, shelter, schooling, medicine and other things for your loved ones; you do this while I lie in your strong box...

I have faith and trust in you. Out of your earnings will come the cost of my upkeep. At times, I may appear to be worthless to you -- but someday (and God knows when) you and I will changes places.

When you are laid to rest, I will come alive and do your job. I will provide the clothing, shelter, schooling, medicine and other things your family will continue to need --just as you are doing now. When your work and toil are done, mine will begin. Through me, your hands will carry on.

Whenever you feel the price you are paying for my upkeep is burdensome, remember that I will do more for you and your family than you ever can do for me. 

If you do your part, I will do mine...

                             Sincerely Yours,   

                 Your  Policy                                           

                                                                                                                                             
Perhaps you are wondering how much insurance do you need, or if you already have an existing coverage, Would you know if it's enough already?

But we all have different kinds of financial need. We don't have exactly the same goals and personal circumstances (age, marital status, number of dependents, etc.). Let's categorize each need as follows:
ON PROTECTION. The need to secure ourselves "IF" something happens to us.
ON EDUCATION. Kids would not stop growing and as they grow, parents will be meeting a lot of expenses. There is a need for educational funding.
ON RETIREMENT. People will grow old, we all need retirement fund. If you retire at age 65 and live up to age 85, do you have enough funds to sustain your retirement years?
ON CRITICAL ILLNESS. If you are diagnosed with critical illness, your medical bills may be more than the money you have in the bank, your salary stops, but your family must go on living. 

At this stage in your life, how would you prioritize those financial need? 

What's concerns you the most? Let's discuss each need and give an example.

ON PROTECTION

   The example above illustrate a household spending P50k per month. This breadwinner requires P15 Million in protection fund. Why P 15 Million ?  Because if the surviving dependents received the P 15 Million proceeds, and invested it in a 4% bearing instrument, then it will generate P 600,000 in interest income per year – which then “replaces” the annual household expenses of the family.  That’s why we call life insurance as an “income replacement” tool. 

      However, we must deduct any existing liquid assets & insurance of the breadwinner. Since the breadwinner already bought a P4 Million Life Insurance Protection, he is still under insured though. In this example, there is still a shortfall of P 8 Million.   

     This amount is now what we call the “insurance gap”... that is the amount that the breadwinner still need in order to reach his financial goal, for  his family's protection...

On Education

        To ensure our children’s future success, parents aspire for the best education for their children. If the cost of education remains the same, perhaps your current income can support quality education for your children as they grow.

            But the challenge for most parents would be having enough savings to keep up with the rising cost of quality education. Consider the cost of college education by taking a look at some schools in the country today. As per CHED tuition fee alone is increasing at 12.25% every year. Education cost continue to rise. This simply shows that money in the bank (which incurs an interest of about 1-2% annually) is not enough to cover up the expenses for education. 

In the Illustration above, Juan dela Cruz need to start saving P12,500 every month and invest it in an instrument that will give him 8% return per year for 17 years to reach his P5.2 Million goal for his son's College education.  

On Retirement

   There are 3 reasons:

1.) According to National Statistics Office (NSO) 1997-2007 Census. Philippines' average annual inflation rate for the past 10 years is estimated at about 6%. To illustrate further, the purchasing power has gone down from P1,000 in 1996 to P558.12 in 2007. Because of this we must make sure that our  INCOME, SAVINGS AND  INVESTMENTS, grow at least 6% every year. Otherwise, we will be reducing our purchasing power.

2.) Filipinos live on an average up to 70 years old. Some Filipinos start to think about retirement at age 28 but does not have the drive or means to prepare for it.

3.) SSS/GSIS -  is not enough to sustain our retirement needs. We cannot rely on government pension nor employment benefit plans to sustain our lifestyle.

     P1.6Million is for food alone, we are not talking about here other bills like Meralco (electricity) bill, water bill, and possible daily medication.

If you keep on ignoring the truths about retirement, then where would you find yourself later? 

Out of 100 Filipino

2 - are financially independent

45 - depend on their relatives

30 - rely on Charity

22 - continue to work

On Critical Illness

        It will hit us the least we expect it. 

The 3 leading causes of death are due to 

CRITICAL ILLNESS including:

Diseases of the Heart ( Heart Attack)

Cerebrocascular Diseases (Stroke)

Malignant Neoplasms (Cancer)

How much would it cost to pay for medical bills? Professional fees? Medicines? Laboratory, surgery and operation cost?

Rough Estimates:

Heart By-pass  - P 500,000

Chemotherapy - P 400,000

Hospital (R &B) - P 2,000/ day

Professional fees - P 600 (routine check up)

              - P60,000 - P70,000 major operation

*In life we have two major problems when it comes to money. According to Xuan Nguyen, you can either die too young or live too long...

If you die to young, you'll be leaving behind people that are dependent on your income. What will happen to them? You need to provide them even after your death.

If you live too long, and live 30 years after your retirement, you will need to provide for your old age.

Both problems need to be solved, and that can only come in buying a 

Life Insurance

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ARE YOU PROTECTED???

Our loved ones are dependent on us, and our income.If we had all the time in the world, then we could generate the income needed by our loved ones to support all their needs...

"But what if time runs out?"

Imagine yourself gone tomorrow...

WHAT WOULD BE THE IMMEDIATE IMPACT ON YOUR FAMILY?

Sad stories of popular celebrities, top earning executives, great doctors, nurses, politicians, engineers, retired OFWs, who died and left nothing to their families because their personal funds were wiped out by their illnesses and have no life insurance. 

WHY PEOPLE DON'T LIKE TO BUY LIFE INSURANCE?

Some people believe that having a Life insurance is planning for their death. For them, it will bring misfortune to their lives, and would rather not have any at all. Unfortunately, too many people don't realize the importance of life insurance until it's too late. 

WHAT IS LIFE INSURANCE?

Life insurance is a contract between an insurance policy holder and (the insurance company), where the insurer promises to pay a designated beneficiary sum of money (the "benefits") upon the death of the insured person. 

Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policy holder typically pays a premium (payment), either regularly or as a lump sum.

To give you an overview:

In the event of untimely death, your family will merely rely on what you have accumulated to date. When it’s not enough, then your family will have to reduce its cost of living.

Life Insurance is the only wealth accumulation tool that does not need time. It fills the gap between your existing wealth vs. the required funds needed to support your loved ones.

Death is something that we cannot predict nor control. 

Therefore TIME remains the biggest challenge.

GET PROTECTION!

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