When people hear the word life insurance, they actually start to cringe and turn their head in the other way to avoid hearing about it. Filipinos still think that when you avail a life insurance, you will have to keep on paying until you die. Filipinos would rather invest their money in the stock market or in the banks for assurance rather than life insurance. That was also my belief back then. But this time, not anymore. Insurance companies started to make products known as Variable Unit Linked.
So what is a Variable Unit Linked? A Variable Unit Linked is a type of product where it binds both investment and life protection and you get to save for a certain number of years. In the event if anything ever happens to you, you are assured that your loved ones will get to receive something from the money you saved. Let’s say nothing bad happened to you, you still have the ability to use the money you invested in. You may use this for travel, for the education of your child, for retirement, etc. You have the option to invest one-time or do it staggard. Usually if clients choose staggard mode of payment, they usually decide if they want to save for 5 years, 7 years or 10 years. They also have the option to do it monthly, quarterly, semi-annual or annually.
So how does the Investment portion get to work in VUL products? The money that you invest is being managed by “fund managers”. They are the ones who usually do the nitty gritty work and they make sure that your money is safe. In order for fund managers to grow your money, you have the option to put it in the conservative fund, moderate fund, aggressive fund or the index fund. If you are the type of person who is willing to take risks and you are actually really thinking of doing this investment for long term, I would usually recommend to put it in the aggressive fund or the index fund.
Also, if you have noticed, banks are actually selling this kind of products as well. In order for the banks to sell variable unit linked products, they had to partner up with insurance companies. The banks only get to earn because whatever percentage of interest they promise to a client, the rest actually goes to them.
If you have any questions regarding Variable Unit Linked products, please don’t hesitate to leave a message. I will surely answer your questions. 🙂