VULs, or Variable Universal Life insurance plans, are one of the most widely marketed financial products in the Philippines. You’ve probably heard about them through friends, family, or a financial advisor offering life insurance with an investment component.
At first glance, they sound ideal: life insurance and investing in one plan. But if you go through personal finance groups or follow finance forums and read about the topic, you quickly realize how divisive VULs can be. Many people feel stuck with underperforming policies, unclear terms, and slow-growing funds.
This article will help you understand what a VUL is, what to consider before getting one, and why it’s important to make an informed decision.
What Is a VUL?
A Variable Universal Life (VUL) policy is a two-in-one financial product. It combines:
- Life insurance: Provides financial protection for your beneficiaries.
- Investment component: A portion of your premium is invested in mutual fund-like portfolios.
The idea is that while you’re getting insured, your money is also growing through investments.
Why Do People Get VULs?
VULs are often marketed as the ideal solution for those who:
- Want to be “financially responsible”
- Are new to investing and want a structured plan
- Prefer the convenience of having insurance and investments in one product
They may be appealing to people who want a hands-off approach to wealth-building. For those who don’t have the time or interest to manage separate accounts, a VUL can seem like a one-stop solution.
Common Concerns About VULs
1. VULs Market to Emotion, Not Strategy
“VUL marketing takes advantage of two emotional issues: death and family.”
In the Philippines, VULs are often sold to OFWs, first-jobbers, and breadwinners as a “gift to family” or a sign that you’re finally being financially responsible. The emotional appeal is strong, but that’s also what makes it easy to overlook the fine print. These products are often sold through fear and guilt, not strategy or transparency.
Despite their popularity, VULs also come with drawbacks. Here are some common concerns you’ll see raised by policyholders and financial educators:
- High fees: VULs typically charge multiple fees, which reduce your investment growth.
- Lack of transparency: Many policyholders aren’t aware how their premiums are split between insurance and investment.
- Limited control: Unlike direct investments, you often can’t freely switch funds or adjust your allocations without going through an agent.
- NAVPU delays: The Net Asset Value Per Unit (NAVPU) isn’t updated in real-time, making it hard to track your performance accurately.
- Investment returns may disappoint: Many VULs invest in managed portfolios similar to those you can access directly, but at higher costs and with less flexibility.
2. Fees on Top of Fees
As mentioned, beyond just the insurance premium, VULs come with layered fees: administrative charges, mortality fees, fund management costs, and even surrender fees.
Many policyholders don’t even realize these are being charged, until they notice their investment portion barely growing. To make matters worse, some policies include add-on riders you didn’t explicitly ask for, and they’re difficult (or sometimes impossible) to remove.
3. It’s Not an Investment
VULs are often marketed as an all-in-one investment product. But at its core, life insurance is meant for protection, not growth.
If you want insurance, get protection. If you want growth, invest separately. Trying to do both often means paying more for less of each.
Some of the controversy about VULs stems from how they are marketed. In many cases, the emphasis is on the potential returns, with little explanation about the costs, limitations, or long-term commitment.
Unfortunately, some agents focus on emotional selling rather than transparent education. This leads to people signing up without fully understanding what they’re committing to. That said, not all are like this. There are ethical, well-trained agents who explain VULs clearly and help clients choose plans that align with their goals.
Is a VUL Right for You?
A VUL might be a good fit if:
- You want life insurance bundled with a modest investment component
- You prefer a structured, long-term plan
- You don’t want to manage separate accounts or portfolios
A VUL might not be ideal if:
- You’re focused on maximizing long-term investment growth
- You prefer low-cost, passive investments
- You want full control and transparency over where your money goes
What Are the Better Alternatives?
The combo that works, in my opinion: Get a basic term life plan to cover the “what if,” and use the rest of your money to build wealth through low-cost, long-term investments like index funds, Pag-IBIG MP2, or global ETFs.
My Tita Thoughts
VULs aren’t inherently bad, but they’re not always the best option either. Like any financial product, they need to be evaluated based on your goals, values, and risk tolerance.
Before signing up, make sure to:
- Ask for a full breakdown of all fees and charges
- Understand how your premium is split between insurance and investment
- Compare with other options like term life insurance + direct investments (such as mutual funds or index ETFs)
You deserve financial tools that truly support your future, not just products that sound impressive on paper. The more you understand your options, the better equipped you’ll be to build a plan that actually works for you.
Want the real story behind this? I shared exactly what led me to cash mine out.
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Content Disclaimer: Please remember that I’m not a licensed financial advisor. Everything I share is based on personal experience and research. Always do your due diligence before making any financial decisions.