21/07/2020
Best time to buy life insurance is when you do not need it.
1. When you are young.
2. When you are healthy.
3. When you are productive. (When you have money to pay the premiums).
You cannot buy life insurance when you need it.
1. When you are old.
2. When you have poor health.
3. When you are not productive. (When you have no more money to pay the premiums).
One of the reasons why I highly recommend VUL -vs- Get Term Invest the Difference is this:
When you get term and fail to pay on time, it will lapse immediately.
Reasons for lapsation:
1. Forgot to pay.
2. No more means of paying.
3. Don't like to pay anymore.
With VUL, there is fund value that is accumulated over time. When one forgets to pay or has no means of paying for the plan, the fund value will be the one to pay for the charges, thus causing a delay in the lapsation of the plan. You will still be insured even if you do not have means to pay anymore as long as there are enough funds to pay for the charges. The fund that was accumulated over time may even be big enough to make sure that you are still insured for many years even if you have stopped paying for the plan.
When an insurance plan lapses, reinstatement is not easy. It will only be easy if you are still young, healthy and have the means to pay.
If there is already an existing illness, the reinstatement has the possibility of not being approved or you would have to be rated. (You would have to pay higher than originally quoted).
VUL was not invented to compete with other investments. Its top priority is protection.
1.The insurance component of VUL protects the investment linked to it. Upon death, there is ease of transfer of the life insurance plus all the funds to your loved ones.
With other investments where insurance is not involved, the family members will still have to file all the necessary requirements of the BIR based on your total assets before they can claim the money in the bank, btid, mutual funds and other investments. (That is a tedious process). I still push for diversification. VUL is needed in your portfolio. The life insurance can easily be claimed by loved ones to be used to pay for estate taxes so that loved ones can claim the other investments, immediate need of the family, burial, pay loans from hospital bills and money for adjustment period to name a few.
VUL offers ease of transfer of the life insurance and the investments linked to it. Other investments do not have this.
2. The fund value that has been accumulated over time can protect the life insurance for it not to lapse immediately.
Remember, you get life insurance when you do not need it. You cannot apply for one when you need it.
Scenario: there was a time in your life na gipit lang, you failed to pay for your term... Naglapse... You have money to pay but you already have poor health... Declined ang reinstatement... Hindi ka na insured.
Scenario: you got VUL... Na gipit or nakalimutan lang magbayad... Kung may funds na siya, VUL will not easily lapse. The funds will help you buy time until you remember to pay or have the capacity to pay.
We are not talking about which is better. As what I heard from a wise speaker, there is no one best investment. It is best to get hold of as many good investments as you can.
To take it further, there is no one best solution. Take hold of as many good solutions that you can get your hands into.
Tip ni Tati
