Why I chose VUL over BTID

After successfully starting to build up an emergency fund and get a free insurance by opening a BPI Save Up Account, I have decided to avail a more extensive life insurance and to look for ways to let my very small savings grow and not just sleep in the bank. The free insurance coverage that comes with BPI Save Up will terminate as soon as I reach my 61^st birthday. I figured I needed a longer coverage because I think my lifestyle is not that unhealthy and I will do my very best to stay alive beyond 60 years old or even 80. Wow! Another thing is that I really want to commit to using only my BPI Save Up savings in case of real emergency, not emergency leisure travel or whatever. That’s what it is for anyway. I should then have other funds for my personal goals involving #aroundthecountry and #aroundtheworld, charity works, advocacies, leisure, and setting up my own business, and another to fulfill the requests of my loved ones (aside from our needs where a huge portion of my salary goes into). I realized that I should accumulate more than enough money as soon as I can to achieve these things.

It has become my habit for quite some time to read about blogs which can increase my financial literacy. Now, I’m sure I want to have an initial investment and a better life insurance policy. As I read articles on the web, I came across VUL and BTID.


What’s the difference between VUL and BTID?

VUL is Variable Universal Life insurance. It is a type of insurance with an investment feature usually called Mutual Funds (MF). On the other hand, BTID stands for “Buy Term, Invest the Difference.” It is a strategy that others believe to create larger returns. It means buying a term insurance and investing the savings you may have acquired by not getting a relatively more expensive VUL. For easy comparison, you might find blogs computing returns from VUL and BTID with investment in the form of MF.

Both seem to be rewarding and it would be hard to generally conclude which is superior. I believe it depends on the person’s current financial situation, lifestyle, goals and preference. Prevailing market conditions, fund performance and selection of fund manager would dictate the difference in returns for VUL and BTID approach. Below are the reasons why I prefer VUL over BTID.

1.) Easy monitoring.

With VUL, I get a 2-in-1 online account where I can easily monitor my insurance policy/ies and fund value. I’m planning to buy additional policies in the future. Currently, I’m thinking of my uncles who live in the province and the main beneficiaries would be my cousins.

2.)  Budget-friendly.

I don’t think modern VULs are still that expensive as compared to term insurances. I can tolerate the difference anyway. The price difference is justified by the other reasons listed on this blog. Besides, some VULs are designed for the policy owner to pay only for 5 or 10 years and let the investment gains pay the premiums thereafter.

3.)  Saves and buys time.

There’s no need to do separate applications and payments because VUL already comes with investment. Certain percentage of the premiums I pay will automatically be part of pooled funds, funds which I can choose myself. Since I do not have the luxury of time and resources (we do not have WIFI or LAN connection at home as of this writing) to study stocks and monitor market performance frequently, MF component of VUL is perfect when it comes to initially growing my money. Also, while I’m still taking my time in understanding how stocks investments work so I can trade on my own, I’m already allowing my money move and my fund manager work for me thru MF. Thus, I’m practicing the saying, “Start now, earn more in the future.”

4.)  Automates investment.

Personally, I can’t say that I’m disciplined enough to do regular investing without external pressure. I might be swayed by promotional offers everywhere or by my friend’s sudden invites. I wouldn’t want my policy to lapse so I would pay as scheduled making my investment regular as well.

5.)  Lessens worries.

VUL obviously entails longer coverage than term so I don’t need to renew from time to time. Assuming my fund value is enough to continue the policy, the premiums I should have paid after the maturity period would become my savings on hand which I can use wherever I want. When I go to heaven (Yes!), my beneficiaries would automatically receive not just the basic face amount but also the investment gains.

Considering my overall situation, I’m personally biased with VUL. Should you go for VUL or BTID (or both haha)? It’s up to you. If you don’t see the need to invest now (I suggest you consider though) but afraid to leave your family behind with nothing when you bid adieu, you may opt to get a traditional whole life insurance. The bottomline is you should know yourself and your priorities. Good luck! 😸