Life Insurance

**hinlog** · June 6th, 2021 05:32 PM

Originally Posted by jut703

For a 10 year VUL of say 50k per year (500k total premiums paid), the commission of the agent is typically as follows:

Year 1 - 25k (50%)
Year 2 - 15k (30%)
Year 3 - 15k (30%)
Year 4 - 10k (20%)
Year 5 - 10k (20%)

Total commission from a 500k payout = 15%
These are recent, actual figures shared by my friend who’s a licensed insurance agent.

So with the 500k that you paid, only 425k can get invested. You have to subtract 2% per year on management fees, plus the annual premium (around 300 pesos/yr only).

That 500k gets you roughly 1M coverage value. Plus whatever that total fund grows in say 30 years.

Term will auto-renew itself if you pay. If you don’t have the operational discipline to pay your term insurance year on year then go for a VUL and just pay for 10 years and be dome with it.

But I’ve done the math and for my case, BTID will net me 2 million pesos higher wealth by the time I’m 60 vs VUL.

BTID is like driving a manual/DSG transmission car while VUL is like driving a CVT. Obviously VUL is smoother and far more convenient but you’ll have slower laptimes than a manual/DSG.

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Excellent illustration as usual coming from you, although I am surprised those comm rates shared with you are applicable to VUL policies. Parang pang traditional products e.

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**tarzegetakizerd** · June 7th, 2021 10:16 AM

Originally Posted by jut703

Term will auto-renew itself if you pay. If you don’t have the operational discipline to pay your term insurance year on year then go for a VUL and just pay for 10 years and be dome with it.

But I’ve done the math and for my case, BTID will net me 2 million pesos higher wealth by the time I’m 60 vs VUL.

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If I may add, in strategies I researched on, you will only buy term until the period you are self-insured. That's when you have accumulated enough net worth to be comfortable without the need for insurance. That's helpful especially when term becomes too expensive for a small coverage amount.

In VUL, AFAIR part of the fund will be used to pay for the insurance part of it. Kaya 10 years lang ang bayad kahit whole life ang coverage. Kaya sa sample calculations, binabawas din usually sa net earnings ng VUL yung corresponding cost ng insurance (which also increases anually).

**jut703** · June 7th, 2021 11:31 AM

Originally Posted by tarzegetakizerd

If I may add, in strategies I researched on, you will only buy term until the period you are self-insured. That's when you have accumulated enough net worth to be comfortable without the need for insurance. That's helpful especially when term becomes too expensive for a small coverage amount.

In VUL, AFAIR part of the fund will be used to pay for the insurance part of it. Kaya 10 years lang ang bayad kahit whole life ang coverage. Kaya sa sample calculations, binabawas din usually sa net earnings ng VUL yung corresponding cost ng insurance (which also increases anually).

Yup. Term gets exponentially more expensive after 65 since that’s when you’re likely to die. You can cut the term insurance by then, since if you followed BTID your investments will be much much bigger already. At that stage you also likely will be done paying for your big ticket items - house, children’s education, etc. So you only really need money for medical coverage and funeral expenses.

On your second paragraph, yes, the annual premium of the insurance is taken from the total fund value. It’s not much (a few hundreds per year) but it does reduce from your total investment pot.

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**boybi** · June 7th, 2021 12:44 PM

So the term insurance being referred to here is really like car insurance, where you don't get anything from the premiums paid if you stay alive?

Also, what exactly is BTID? Buy Term Invest the Difference? The Term here is the Term Insurance? And the Invest the Difference is you invest your extra money on whatever investment you seem fit?

**tarzegetakizerd** · June 7th, 2021 01:01 PM

Originally Posted by boybi

So the term insurance being referred to here is really like car insurance, where you don't get anything from the premiums paid if you stay alive?

Also, what exactly is BTID? Buy Term Invest the Difference? The Term here is the Term Insurance? And the Invest the Difference is you invest your extra money on whatever investment you seem fit?

Yes for both.

**misseksaherada** · June 7th, 2021 01:02 PM

buti na lang VUL yung kinuha ko for life insurance.. nagkaroon din kasi ako financial adjustment.. hindi ko na anticipate.. so hindi ko full nababayaran yung VUL ko, and from quarterly binayaran ko siya ng monthly..
natapos na yung 10yrs ko, kakareview lang namin ng Financial Advisor.. Wala pala problem yung ganun.. Same coverage ng life insurance pa din and rider.. Ang pinagkaiba lang, wala masyado nadagdag sa investment part..
Ang good thing dun, optional ang pag-tuloy ng top up if interested pa din lumaki yung sa investment part..
Based sa observation ko, wag aasa sa VUL for investment kuno.. wala masyado movement, pero pwede na para added value sa life insurance, sabay sa inflation.. (para naman yun sa beneficiary, hindi naman sa policy owner).. Ang 1-2M ngayon ay maliit na value pagdating ng panahon, kaya yung investment part ng VUL ang mag-cover sa inflation..

**papi smith** · June 7th, 2021 02:13 PM

Originally Posted by misseksaherada

buti na lang VUL yung kinuha ko for life insurance.. nagkaroon din kasi ako financial adjustment.. hindi ko na anticipate.. so hindi ko full nababayaran yung VUL ko, and from quarterly binayaran ko siya ng monthly..
natapos na yung 10yrs ko, kakareview lang namin ng Financial Advisor.. Wala pala problem yung ganun.. Same coverage ng life insurance pa din and rider.. Ang pinagkaiba lang, wala masyado nadagdag sa investment part..
Ang good thing dun, optional ang pag-tuloy ng top up if interested pa din lumaki yung sa investment part..
Based sa observation ko, wag aasa sa VUL for investment kuno.. wala masyado movement, pero pwede na para added value sa life insurance, sabay sa inflation.. (para naman yun sa beneficiary, hindi naman sa policy owner).. Ang 1-2M ngayon ay maliit na value pagdating ng panahon, kaya yung investment part ng VUL ang mag-cover sa inflation..

Just don't die when on a bear market [emoji16][emoji3577]

Edit: kahit nga pala bagsak ang fund value, you still get the face amount plus 25%

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**jut703** · June 7th, 2021 03:52 PM

Originally Posted by boybi

So the term insurance being referred to here is really like car insurance, where you don't get anything from the premiums paid if you stay alive?

Also, what exactly is BTID? Buy Term Invest the Difference? The Term here is the Term Insurance? And the Invest the Difference is you invest your extra money on whatever investment you seem fit?

Yup. So typically for 1M coverage, pag term insurance, it’s 5k per year with escalation of about 2-3% per year. Pag VUL naman, 50k/year for 10 years.

So for 10 yrs, 5k per year on insurance then 45k you invest by yourself on stocks/uitf/business/real estate.

Pag naka-VUL ka, you pay the entire 50k per year to the insurance company, they will take out their fees and commissions, and the balance amount is what gets investment.

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