Variable Universal Life (VUL) insurance has been aggressively marketed in the Philippines as the perfect two-in-one financial product: life insurance plus investment. On paper, it sounds like a good deal. In reality, many Filipinos end up disappointed once they realize the hidden costs and low returns attached to VUL policies.
This article will break down why VUL is not the best investment option, and why you should think twice before signing up for one.
What is VUL Insurance?
VUL (Variable Universal Life) is a type of life insurance policy where part of your premium goes to insurance coverage, and part goes into investment funds (mutual funds or similar). Insurance agents often market it as “hitting two birds with one stone.”
The catch? The cost of insurance, management fees, and other charges eat up a huge portion of your premiums—especially in the first few years. That’s why many policyholders are shocked when they check their fund value and see that it’s much lower than what they’ve already paid.
The Problems with VUL as an Investment
1. High Fees and Charges
During the first 3 to 5 years, a big chunk of your payment goes to commissions and charges. Some people pay hundreds of thousands in premiums but see little to no growth.
2. Poor Investment Growth
The investment portion is tied to mutual fund–like products, which don’t always perform well. Even if the stock market grows, fees can eat away at your potential returns.
3. Lack of Flexibility
Once you’re locked in, it’s hard to stop. If you cancel early, you may lose a large portion of your money because of surrender charges.
4. Insurance Coverage is Limited
Some Filipinos think they’re “fully protected” with VUL. But in reality, the coverage is often lower compared to getting a stand-alone term life insurance.
The Better Alternative: BTID (Buy Term, Invest the Difference)
Instead of mixing insurance with investment, financial experts recommend Buy Term, Invest the Difference (BTID).
- Buy Term: Get affordable term life insurance for pure protection. It costs much less than VUL, but gives higher coverage.
- Invest the Difference: Put the money you save into mutual funds, UITFs, Pag-IBIG MP2, or even stocks. This way, your investments grow without being eaten up by hidden charges.
By separating insurance from investments, you get flexibility, transparency, and better returns in the long run.
Blogger’s Corner
Honestly, VUL is one of the most misleading financial products na naibenta sa maraming Pinoy. I get it—agents push it hard kasi malaki ang commission. But for the average Filipino na kumakayod just to save a few thousand pesos every month, ang sakit isipin na malaking parte ng pera mo napupunta lang sa fees.
Kung tutuusin, there’s nothing wrong with wanting life insurance and investments. Pero dapat klaro: insurance is for protection, investments are for growth. Huwag natin ihalo, kasi in the end, tayo rin ang dehado.
I’ve met people who regret getting a VUL kasi after paying for 5–10 years, maliit pa rin ang fund value nila. Meanwhile, if they had done BTID, baka mas malaki pa ang ipon at mas mataas ang coverage.
So here’s my take: kung may VUL ka na ngayon, study your options. Kung di ka pa nakakakuha, think twice. Wag tayong paloko sa “investment” label ng VUL. Remember—hindi lahat ng binibenta sa atin ay para sa kapakanan natin.