Most efficient way to get covered is BTID - Buy Term and Invest the Difference.

I’ve done the math and BTID builds you more wealth in the long run than VULs.

3 key reasons:

1. Fees and commissions - for the first 5 years of your VUL, you’re basically just paying for your agent’s commission (around 50% of your premium on the first year is commission). Then you have management fees and annual premiums. All of that eats into the investment part of your VUL.

Annual premium for 1M coverage with term insurance is just 5k/year for a 30 year old, and increases only a few hundred pesos annually as you get older. Annual premium for 1M coverage (10-yrs to pay) is 50k per year. If you invest the difference, your investments will earn from compound interest much more because you’re avoiding the fees above.

2. Flexibility in investment - your VUL is typically invested only in either money market funds, bonds, or equities. They work like mutual funds. If you invest your money on your own you can put it in many other asset classes - real estate, crypto, business, etc.

3. Overselling by agents - I know so many agents who misinform (sometimes deliberately) their clients by saying VULs are investments and their money will grow significantly and enough for retirement if they get covered. That’s only partially true - only part of your VUL premium is invested, and you’re still really paying for 2 services - term insurance and investment, with fees eating up your premium as well. Many people are shocked to find that after paying 10 yrs worth of premium (say 50k/yr), they’ll find that their total fund value is actually less than the 500k they’ve paid.

For example, I’ve been paying my VUL for 7 years but my fund value today is actually just 70% of the price of the premiums I’ve paid. But that’s fine because a VUL is really intended for very long term benefit (i.e. when you die).

Now while I generally say that VULs are an expensive way to get protected vs BTID, one way to make them be better value for money is through critical health riders - you pay roughly around 10k extra per year but you’ll get coverage for about 500k worth of expenses if you ever get hospitalized or whatnot. There’s also typically a set number of reimbursable hospital days per year (I think 10 per year max).

You have to really read the fine print and run the math yourself because most insurance agents will not do that for you because they prefer that you get a VUL vs term insurance because they earn more that way since it has higher fees/commissions.

It’s a very predatory industry and I pity those who aren’t financially savvy enough and end up getting sales talked by these agents masquerading as “financial advisors” (whose only advice is for you to buy from them).


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