Understanding VUL Insurance First

VUL insurance is a hybrid product. Part of your premium goes toward life insurance coverage, and part goes into investment vehicles like equity funds, bonds, or balanced portfolios. It’s often pitched as a two-in-one solution: secure your future while growing your money.

Sounds perfect in theory, but there’s a catch: it’s not cheap. And that’s what catches many people by surprise.

The Initial Price Tag

When I first got quoted for a VUL policy, I was shocked. “Why is this three to five times more expensive than term insurance?” I asked. The agent explained it this way: you’re not just paying for protection—you’re investing too.

The price of a VUL policy depends on several factors:

• Age and health: The younger and healthier you are, the lower the insurance portion of your premium will be.
• Coverage amount: Higher death benefits mean higher insurance charges.
• Payment terms: Some policies are flexible (you can skip or adjust payments), but those with fixed premium schedules often come with lower investment volatility.
• Investment strategy: Some funds carry higher management fees and risk, which can indirectly affect policy value.

For example, a 30-year-old non-smoker looking at a VUL with a ₱2,000,000 coverage might pay anywhere between ₱3,000 to ₱10,000 monthly, depending on the product and provider.

More Than Just Monthly Premiums

One thing many people don’t realize is that the price of VUL isn’t limited to the premiums you pay. You also need to account for:

• Policy fees: These cover administrative and mortality charges, deducted regularly from your policy fund value.
• Fund management charges: Investment-linked funds charge management fees, which reduce overall returns.
• Withdrawal or surrender fees: If you decide to pull out funds or cancel early, you might lose a portion of your investment to charges.

So while a policy might look affordable on paper, understanding the full pricing structure is crucial to avoid surprises.

When the Price Is Actually Worth It

Let me be honest—there were moments I regretted signing up for VUL. Especially in the first two years when my fund value was lower than my total premiums paid. I questioned everything. Was I tricked? Was I losing money?

But over time, I realized that VUL is a long-term game. After the 5-year mark, my investment started to pick up. The compounded returns kicked in. And I still had life insurance coverage intact. That’s when it hit me: the value of VUL isn’t immediate—it’s cumulative.

Here’s when the price of a VUL is worth it:

• You have long-term financial goals (like education, retirement, or legacy planning).
• You prefer passive investing and want professional fund managers to handle your portfolio.
• You want insurance and investment in one simplified product.

But if your main goal is affordable insurance coverage or aggressive investing, there may be better (and cheaper) standalone options.

How to Evaluate the Price for Yourself

Here are a few steps to figure out if a VUL’s price aligns with your financial capability and goals:

1. Request a policy illustration. This breakdown shows projections of how your fund value could grow over time, under best-case and worst-case scenarios.
2. Compare with alternatives. Look at how much term insurance would cost alone, and what you could earn investing the difference elsewhere.
3. Think long term. If you’re not ready to keep the policy for at least 10 years, a VUL may not be ideal due to the high early fees and slow early growth.
4. Ask about hidden costs. Some charges are buried in fine print—ask your agent for a clear explanation.

And remember, premiums aren’t static. They may need to increase over time, especially if the fund doesn’t perform well or if insurance charges go up with age.

Disclosure

Disclosure: Terms, benefits, fees, and investment options of VUL policies vary from one insurance company to another, from one country to another, and from one product to another. Always consult a licensed financial advisor or insurance professional in your location to get personalized advice and accurate policy comparisons.

Final Thoughts

The price of VUL insurance might seem high at first glance—but it’s not just about what you pay. It’s about what you gain over time. For people with long-term plans who want the discipline of structured investment and the peace of mind of life insurance, VUL can be a smart financial tool.

But it’s not for everyone. If you’re not comfortable with the costs, risks, or commitment, don’t feel pressured. There are many ways to protect your future—and VUL is just one of them.

For me, once I understood how pricing worked and how it fit into my overall financial plan, the decision became less scary and more empowering. The key was asking the right questions and aligning the product with my goals. You can do the same.