Tip # 1: if you want to finish RICH, take charge of your
finances.
Financial life is not all about saving, it’s also about
investing.
I asked her if she has the illustration of benefits and she
showed me the PDF emailed to her by the agent. I studied the file and came up
with my own excel sheet.
Disclaimer: Some
of the details of the given illustration of benefits were hidden for the
protection of the seller. If you find something similar to this, that may have
only been a coincidence.
Assumptions and
Considerations:
- The Proposed Plan Holder is a 34 years old non smoker.
- Policy Premium is P24,000.00
- Although the VUL involved should be paid until age 99, I only considered until age 65.
- Only the Living Benefit was compared.
- Interest rate used for the VUL was that of
illustrated. The interest rate in Term + Mutual Fund is at 10% (same as that of
the illustrated in VUL.) Fact #2: VULs and any other investment
companies DO NOT guarantee returns. This is for illustration purposes ONLY.
VUL
|
Term + Mutual Fund
|
|||||
Age
|
Premium
|
Living Benefit
|
Insurance
|
MF
|
Living Benefit
|
|
35
|
24000
|
35
|
4,813
|
19,187
|
21,106
|
|
36
|
24000
|
74
|
6,651
|
17,349
|
42,300
|
|
37
|
24000
|
11,984
|
6,651
|
17,349
|
65,614
|
|
38
|
24000
|
29,176
|
6,651
|
17,349
|
91,259
|
|
39
|
24000
|
49,938
|
6,651
|
17,349
|
119,469
|
|
40
|
24000
|
74,589
|
6,651
|
17,349
|
150,500
|
|
41
|
24000
|
101,280
|
10,017
|
13,983
|
180,931
|
|
42
|
24000
|
130,116
|
10,017
|
13,983
|
214,406
|
|
43
|
24000
|
161,333
|
10,017
|
13,983
|
251,228
|
|
44
|
24000
|
195,091
|
10,017
|
13,983
|
291,732
|
|
45
|
24000
|
231,625
|
10,017
|
13,983
|
336,286
|
|
46
|
24000
|
271,134
|
14,854
|
9,146
|
379,975
|
|
47
|
24000
|
313,898
|
14,854
|
9,146
|
428,034
|
|
48
|
24000
|
360,182
|
14,854
|
9,146
|
480,898
|
|
49
|
24000
|
410,302
|
14,854
|
9,146
|
539,048
|
|
50
|
24000
|
464,562
|
14,854
|
9,146
|
603,013
|
|
51
|
24000
|
523,299
|
22,971
|
1029
|
664,447
|
|
52
|
24000
|
586,807
|
22,971
|
1029
|
732,023
|
|
53
|
24000
|
655,427
|
22,971
|
1029
|
806,357
|
|
54
|
24000
|
729,495
|
22,971
|
1029
|
888,125
|
|
55
|
24000
|
976,937
|
||||
56
|
24000
|
1,074,631
|
||||
57
|
24000
|
1,182,094
|
||||
58
|
24000
|
1,300,304
|
||||
59
|
24000
|
1,430,334
|
||||
60
|
24000
|
1,313,714
|
1,573,367
|
|||
61
|
24000
|
1,730,704
|
||||
62
|
24000
|
1,903,775
|
||||
63
|
24000
|
2,094,152
|
||||
64
|
24000
|
2,303,567
|
||||
65
|
24000
|
2,048,849
|
2,533,924.03
|
|||
Comparison:
- Comparing the living benefit, it is EVIDENT that all throughout, my officemate will get better returns if she combines the Term Insurance with a Mutual Fund.
- On the VUL, my officemate will still continue to pay even after age 55 but will still get lower return. On the other hand, even if my officemate will stop paying for the insurance [Please NOTE: I don’t believe that a person needs a WHOLE LIFE insurance.] the Mutual Fund will still keep accumulating still beating the return of the VUL. Please refer to the Living Benefit at the age of 65.
- Even if the insurance cost increases for the Term (Age 51-54) please note that the living benefit STILL beats that of the VUL.
My opinion and recommendation to my friend:
- Finance is all about the numbers game. If you are lazy to compute and compare, you might be losing millions in a span of “how-many” years.
- This is just for illustration purposes only. I just presented here the facts that I know. And I don’t believe that a person needs whole life insurance.
- The insurance component is an actual product.
- A 35 year-old should be able to save Php24,000.00 a year provided that he/she is working. That is equivalent to 1 month pay.
- With all the expenses in the family, how can I afford to save P24,000.00 a year? Simple. Your 13th month pay will suffice.
- Hassle on claiming? Hmm. Not for me. J
Disclaimer: This is not rocket science.
Till next time. ^_^
