I’m a big fan of your website, InvestmentJuan01. You’re website is very informative for newbies like me towards the path of financial freedom (or at least enjoying the fruit of blood-sweat-tear-hard-earned money).
I’m Yuri, an OFW in KSA on a yearly-based contract. Thanks to being an OFW, I managed to clear my debts (bank personal loans and CC) although I still maintain CC for emergency purposes only. Savings-wise, I have managed to establish an account with much needed funds for monthly amortization of my car and a small farm. Then two years ago, I got a St. Peter lifeline and last year I bought a lot for my eternal resting place. At least at that level I can say I’m insured kung magkabiglaan eh handa na, hndi na mahihirapan yung mga maiiwan ko.
Having said that, I want to take step further towards financial freedom. I just entered the 30s age bracket and I felt the need to invest. Kumbaga eh dapat ko nang gawin compared to when I was in my 20s na nagiging option lang. Then I stumbled upon your website and made me think more. Then I got interested more in investing, especially in VUL and mutual funds/UITF.
Reading your post about VUL; mas nasabi kong mas bagay ito sa akin lalo na ngaun. Since I have prior financial obligations like amortization then I prefer VUL kasi medyo magaan ang monthly payments. I want to be more educated about VUL, in and outs, pros/cons, and advantages and disadvantages. I read you’re also a financial consultant and might offering VUL. I hope I get to see your reply.
Yuri Gagarin, via Ask Geri email
Thank you for your email Yuri and apologies for just responding now. Been very busy the past 2 months, it’s Holy Week now in the Philippines and it’s just now I’m finding time to address a number of Ask Geri queries.
I must say you began with the end in mind, having established certain investments to prepare you and relatives for the day itself. As I entitled this entry, it seems you’re prepared for the inevitable death, now your concern is on how to live, live more kumbaga.
You mentioned that you feel insured already, having a availed a life plan with one of Jesus’ closest disciples (again it’s Holy Week). I would say this is a good move, and I’m also open to availing one. The plan you got (plus the lot, oh it rhymes) prepares your relatives for your ON THE DAY departure expenses.
Now VUL should assist your relatives for ON THE DAY expenses and beyond. Sure they won’t have problems with burial expenses, but if your relatives depend on your remittances, then they shall have financial challenges eventually, weeks or months after their main provider passes away, suffers critical illness, etc. One more thing, if they do depend on you, please enjoin them to learn financial literacy as well, just like you. For your and their benefit.
Popular advice says Juan must establish his / her emergency fund first, then insurance, before diving into more risky investments. I’ve written quite a number of posts on VUL, some of the links I posted below so you may back read easily.
Why Should I Get Life Insurance?
VUL Insurance or Mutual Funds
Sample VUL Computations
Goose With Golden Eggs and Money Machine
Better to Start Small and Early Than to Invest Bigger Later On
Thoughts on Death and How To Die A Millionaire, Easily
In a gist, VUL asks you to commit a monthly payment whether it is for the next 5, 7, 10 or 15 years. During this time, a portion goes to protection by guaranteeing an amount in case the owner dies, suffers disability or critical illness. Further a portion is invested in instruments that work like a Mutual Fund / UITF which grows exponentially over time. This fund is withdrawable for any use, such as eventual retirement, tuition fees, home purchase etc.
The advantage is you quickly build up your protection arsenal since you get covered for a guaranteed lumpsum even if you’ve just paid 3 months worth of premium. The slight disadvantage is that your monthly premium does not go 100% to investments, at least until year 3, hence the investment portion does not grow rapidly from day 1. Being on your 30s, the secret really is not how much you invested, but how much time you allowed your investments to grow. So the sooner you start, the better.
It is true that I am also a part-time Financial Consultant for one the country’s biggest insurance providers. I’m actually meeting with a client next week and he’s just 21 years old. I envy him since when I was his age, I did not have the extra money to avail of VUL. Anyway, one key requirement though for you to open a VUL is you have to be physically present here in the country to sign some documents etc.
Do let me know when you’re coming back in the country for vacation and maybe we can meet up to talk about your own VUL plan in more detail.