13/03/2021
WHERE SHOULD YOUR MONEY GO? 🤔
Juan and Pedro are both single, 25-year old individuals when they started saving.
Pedro puts his savings toward life insurance that also protects him against critical illness, while Juan opts to put his savings in a bank.
Now let’s say after a year, both Pedro and Juan get diagnosed with cancer and need regular chemotherapy sessions to survive.
Pedro can file for a claim for P1M to help him pay for his medical expenses while leaving his VUL intact and untouched. This means he can withdraw the investment income it has generated without touching the capital.
Juan, on the other hand, wipes his savings clean in order to pay for his medical bills.
WHAT IF NOTHING HAPPENS TO THEM?
At 45 years old, their savings have both reached P720,000. (Assuming they save P3,000 a month for 20 years).
Juan's total savings amount to P729,839.008 because of 0.125% interest per year, but he has to pay also 20% withholding tax on the interest he earned.
Pedro, on the other hand, is a multi-millionaire!
This is because the insurance he has chosen to invest in is a VUL (Variable Unit Link), whose primary feature is investing in Equity (stock market). Pedro was fortunate to experience an upward growth during the time he had money in his VUL, positively impacting the compounding earnings he received. Although the money he invested wasn’t easily accessible to him whenever he needed it while it was invested in his VUL, it has grown substantially in the 20 years since he put it in.
Which one is better, saving in a bank or saving in VUL? Make the right decision today and start saving through insurance! Talk to your most trusted financial advisor for the perfect plans for your needs.
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