11/11/2025
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WHY I CHOSE TO STICK WITH MY REGULAR PAY V.U.L.
Even before getting my V.U.L. policy, I did a side-by-side comparison between the Admin and Insurance Charges of a V.U.L. and the annual premiums of a Term Insurance.
Take note that I did not use the entire V.U.L. premium to compare with the Term Insurance premium, since the focus here is on the cost alone. Also, the fund value — or the portion of the premium that remains after charges are deducted — is the counterpart of the “invested difference” in a B.T.I.D. strategy.
I wanted to see for myself which one truly costs more over time — not based on opinions, but on actual numbers.
And 10 years later, I still stand by the same conclusion and the same reason I chose a V.U.L. in the first place.
THE NUMBERS
Looking at the first 25 years of paying the total insurance-related charges inside my V.U.L. amount to ₱1,534,617.52, while having the same exact set and amounts of coverages through Term Insurance totals ₱1,631,600.
This comparison only covers the first 25 years (Age 27-52). It doesn’t include the years beyond that, where Term Insurance premiums rise significantly — often costing much more than the insurance charges inside a V.U.L.
What makes the gap even wider is how payment modes work. When you convert a Term Insurance’s annual premium to a monthly mode, it doesn’t simply divide by 12 — instead, the annual premium is multiplied by 0.0975 to get the monthly premium. Multiply that by 12 months, and you’ll find you’re paying more than if you stuck to annual mode.
On the other hand, with a V.U.L., the annual insurance charges are simply divided by 12 to compute the monthly charges — no extra cost added for paying monthly.
HOW I SEE MY V.U.L.
I’ve always viewed my fund value as an insurance fund, not as savings or an investment I plan to withdraw and spend.
It’s the reserve fund that sustains the policy — the source that continuously pays for my insurance charges.
In a way, the fund value acts as an “insurance to the insurance.”
It provides a financial cushion that keeps the policy alive even if I stop paying fresh premiums — something a Term Insurance can never do.
WHAT MOST PEOPLE DON’T KNOW
Many don’t realize that with a V.U.L. policy, the agent’s commission is usually only deducted during the first three years of the plan. After that, 100% of your premiums go directly toward insurance charges and investments.
In contrast, with Term Insurance, the servicing agent continues earning commissions for life — every time the plan is renewed or paid. That ongoing cost structure is one reason why Term Insurance often ends up more expensive over the long run.
THE IMPORTANCE OF SUSTAINABILITY
When it comes to insurance, sustainability matters more than anything else. What’s the point of paying for years, only to lose your coverage later on?
With Term Insurance, a missed payment can easily cause your policy to lapse just a month after non-payment. And reinstating it isn’t always guaranteed — it can require a medical re-evaluation, which becomes harder to pass as you get older.
Imagine losing 20+ years’ worth of payments just because of a single missed due date — that’s a real risk with Term Insurance.
With a V.U.L., your fund value cushions that risk. Even if you stop paying temporarily, or even for a while, your accumulated fund can continue covering the insurance charges, keeping your protection in force.
That built-in sustainability is exactly what makes the V.U.L. structure more resilient and practical for long-term coverage.
THE RIGHT WAY TO COMPARE
Many who criticize V.U.L. policies make unfair comparisons — they look at the fund value vs. total premiums paid, and immediately conclude there’s a loss.
But that misses key facts:
1. Only part of your premium is invested.
2. The rest goes toward insurance protection, just like in Term Insurance.
3. The fair comparison is between insurance charges (V.U.L.) and Term premiums (Term Insurance).
That’s what my numbers show — and on that basis, the V.U.L. holds up well, even from a purely cost perspective.
THE REALITY OF “BUY TERM, INVEST DIFFERENCE”
Doing Buy Term, Invest the Difference doesn’t remove the cost of insurance — you still need to pay for protection every year, from your own pocket.
With a V.U.L., your fund value becomes your insurance fund, automatically paying the insurance charges as long as it’s sufficient.
So when people compare a V.U.L.’s fund value to a pure investment portfolio meant to be withdrawn and enjoyed, it’s not a fair comparison — because the fund serves a different purpose. It’s meant to sustain protection, not replace your investments.
BOTTOM LINE:
I compared the numbers before I even bought my policy — and years later, they still make sense.
When viewed correctly:
• The V.U.L. doesn’t necessarily cost more.
• The fund value acts as an insurance to the insurance, keeping protection sustainable.
• The “loss” people often claim isn’t a real loss once you understand the fund’s purpose.
• Term Insurance often becomes more expensive long-term due to renewals and lifetime commissions.
• Beyond 25 years, the cost gap widens even more in favor of V.U.L.
• And the difference becomes even clearer once you factor in monthly-mode premiums.
• Most importantly, V.U.L. offers sustainability — something a pure Term plan can easily lose after a single missed payment.
As for the fund not performing as well as other investment options — that’s not always the case. I personally have an MP2 account, I trade stocks and crypto, and while they sometimes outperform the chosen fund in my policy, each carries different levels of risk and potential, just like my V.U.L. fund does.
I also don’t think it’s wise to use any of these investments to fund my insurance, since frequent withdrawals aren’t strategic. These are investments meant for capital growth and future use — not for sustaining my insurance.
This is not to discount the Buy Term, Invest the Difference (B.T.I.D.) strategy — it also has its own advantages, and it works well for those disciplined enough to manage both parts effectively and has better investment options they can easily withdraw money from. My goal here is simply to share the pros and cons of both approaches, and why FOR ME, sticking with my Regular Pay V.U.L. has proven to be the more sustainable and practical choice in the long run. Again, that’s FOR ME.
