AskMy friend, introduce to me the Variable life insurance (VL) which he said is a combination of Insurance and mutual fund, that means insurance and investment in one. Can you give some points or advantages/ disadvantages of one from the other. Should I get them individually (meaning I seperate my insurance from my investment) or should I get a VL?
Thank you!
Tags: fund, insurance, life, mutual, Variable
9 Responses to “Variable Life Insurance (VL) or Traditional Insurance? VL or Mutual Fund (MF)?”
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If you have the budget, better to have separate insurance and mutual funds. This will give you more flexibility.
You may visit http://mutualfundphilippines.com for a list of the best mutual fund companies in the Philippines today.
I recommend having a separate life insurance,and a separate investments such as mutual funds or stocks.
Advantage: Having a separate MF or stocks will usually results to higher returns compared to combined life insurance and investments..
Of course we all want higher returns if we invest with our hard earned money.
Best to learn Mutual Funds first.. then if want to be more aggressive learn stock investing.
Cheers!
Hi PJ,
I also recommend a separate variable life plan and traditional life plan.
But if you’re planning to invest in mutual funds, better go with the variable life plan instead why because the yield is almost the same plus the variable life gives you more like life insurance, accident coverage, disability benefits, health coverage for critical illnesses and others benefits. Plus your earnings are tax free.
You just have to study variable life plans more to appreciate its benefits because there are several types of variable life plans and several types of riders too. (Riders are optional additional benefit/s such as personal accident, hospital income, etc.).
For me, the best company that offers VL is Prulife UK. Prulife pioneered VL in the Philippines as in they are the first to introduced this type of investment product in the country in 2002.
Bottomline, you must first find a knowledgeable and honest agent that will explain this carefully to you, the kind that really cares, not the one that recommends just to get a commission.
God Bless!
I would suggest getting a Variable Life Plan with Pru Life UK
better get a single pay plan ( Pru Life Investor Account- PIA ) as the Premium Charge is only 6 per cent ( to cover for your life / health protection ) and the remaining 94 per cent of your single payment goes smack to your chosen investment fund. to be invested
you can do top-ups or you may not. These top ups are voluntary additional deposits on your part if you want to increase your portfolio of investments.
and here’s more…..putting money in Variable Life like in PRU LIFE lets you select 2 or more investment funds from your single account ( e. g. Equity Fund —> stock market blue chip companies or Bond funds—> high grade corporate or government debt securities). A very good way of diversification following the principle of putting your assets in several baskets.
in summary a single variable life plan of Pru Life UK can offer you the following :
1. Investments for your money
2. protection and health benefits should you need in times of sickness or death
3. diversification of portfolio
4. can increase the amount of your portfolio anytime from voluntary top ups. / additional deposits.
does any mutual funds offer all of those listed above?
I suggest you get a traditional (term) insurance and tandem it with a mutual fund. these are basically the two components of a Variable insurance. As for the health coverage, you can get that separately and still get higher return.
@Francisco de Vera: A Variable Life insurance is totally different from a Mutual Fund. You cannot compare apples from bananas. So to set the comparison straight, compare VLs with other VLs and Mutual FUnds with other Mutual Funds.
Mutual Funds are investment facilities so yes it invests your money.
Mutual Funds are “diversified” investment facilities.
And you can add anytime in your Mutual Funds.
Protection and health benefits are offered by life insurance/health insurance companies. ^_^
In VLs you don’t need to worry much on the performance of the market since a dedicated team is handling your money. (So long as you choose the right company.)
But you can also sleep soundly with Mutual Funds despite the volatility of the market IF and only IF you are knowledgeable and well informed. Plus the bonus of higher return. As the saying goes, “No risk. No reward.”
It depends upon what you can handle. Speak to people who are experienced enough.
Good luck and God Bless.. ^_^
I suggest that you get a VL plan (insurance with investment).
Why? Because this plan gives a solution to our uncertainties in life, dying to soon or living too long. If we die to soon, we will not be a burden to loved ones because the insurance will take care of it. If we live too long, the investment in the plan can serve as your retirement fund.
Investing in MF is also good, as long as you already have an insurance coverage that can answer the needs of the people you are going to leave behind.
I don’t suggest that you get a separate term insurance and a MF investment.
Why? Because term insurance usually recomputes every five years (you need to re apply and when you reach a certain age/coverage, you will undergo a medical exam) as time goes by and when we get older, our health also decreases and we might encounter some health problems like high blood pressures, diabetes and etc. These health problems are sometimes or often times declined by insurance companies because of the risk. And when we’re on that stage already, that is where we need the life insurance so that again… We will not be a burden to our loved ones. The VL plan will give you an insurance coverage from the
start. And even if you encounter any health problems in the future, you will not undergo any medical exam anymore because your VL plan was approved when you were younger and healthier(btw, are you healthy?;)).
Lastly, I’ve seen all the different VL plans from the different insurance companies. The best for me is the VL plan of Sunlife Financial. Very straightforward, easy to understand and has great features.
Hope that this would help you. God bless!
Get a VL plan first and if still you have excess money on hand, put it in MF. You only need at least P5k for the initial investment and at least P1k for the additional investment.
Why, that was a very good question pj!
Now, i would not recommend anything because i believe you are smart enough to make a wise decision. If I would have to recommend i will most certainly say go for VUL because i’m tied up with a Life Insurance company which offers just that. But that wouldn’t be fair to you i guess unless i have given you first both perspectives enough for you to make Informed Decision.
>Should you get them individually?–well, let’s say you really need both a toothbrush and a toothpaste. You saw a toothbrush that costs 100 pesos and then a toothpaste that costs 50 pesos. You put them on your grocery cart then headed to the cashier. But as you’re passing by the shelves, you saw a package of both the toothbrush and the toothpaste that only costs 100 (you get to see a lot of these promo items nowadays). So, will you take the 150 or the 100? Either way, you get what you need–the toothbrush and the toothpaste. So, consider the cost you would incur if you get it separate rather than the packaged one.
>VUL or Mutual?–As the previous answers posted here, VUL is a package of both protection and investment. Mutual fund is purely investment. Financial guru Mr. Colayco states that we should first protect then invest. Because if you invest without protection, then your investment can be wiped out when the uncertain happens. So, what’s it gonna be for you?
Advantage of MF over VUL?
>That you will tend to gain higher because there will be no insurance cost.
>There will be no lapsation to care about.
>You can fully withdraw the fund when you want to. (in VUL, you can only partially withdraw because if you fully withdraw, it’s as good as surrendering your policy in exchange for the fund value)
Advantage of VUL over MF?
-Your investment (capital gain and interest) will be safe and secure from being wiped out in case you get critically ill (VUL will give you a cash lump sum for your medication and all), accident or disability, hospitalized (VUL can give you a hospital income ranging from 1K-5K per illness, per day that you’re confined, oh yes even that is just a simple amoebiasis or UTI).
-You get to eliminate the additional cost of getting a separate Life Insurance pol and setting up an investment account.
-You are sure to invest regularly because if not, your policy will lapse and eventually your account will be closed. In MF can you guarantee that you’ll invest (top-up) regularly? What if you saw that cool gadget or don’t want to pass up that great get-away vacation? Wouldn’t you tend to spend rather than invest it to your MF account? After all, there’s no lapsation to worry about, right?
Now, you decide.
-Wealth and Wisdom to us all-
thank u maria Linda can i share your answer to my facebook account?