5 things people often miss about VUL – and why you should know them

A VUL policy is a powerful tool that combines life insurance protection with an investment component, offering the potential for fund value growth. However, like any investment, it requires research to dispel misconceptions and reduce risks.

Variable Unit-Linked (VUL) insurance gained popularity in the mid-2000s, surprising many with its dual benefits: life insurance coverage combined with an investment component.

What made it even more appealing was the promise of paying premiums for just around 10 years. Financial advisors widely promoted VUL as a smart, flexible solution for those seeking both protection and wealth growth in a single product.

When the pandemic hit, VUL earned a mixed reputation from Filipinos, with many policyholders expressing sentiments like, “Nalugi lang ako,” “Hindi nag-grow ang investment”, or “Mas mabuti pa ang traditional or term insurance.”

The truth is, VUL is primarily a life insurance product with the added flexibility to potentially grow your money. It’s not a quick fix, nor is it a scam. Misunderstandings often arise when expectations are not clearly aligned, so thorough communication is key.

Here are five common concerns raised about VUL, and the things you should really know before deciding if it’s right for you.

1. “Nalugi lang ako sa VUL. Sabi nila investment ito, pero hindi nag-grow.” (I lost money in my VUL. They said it was an investment, but it hasn’t grown.)

It’s understandable to feel frustrated. One major reason is that people may not be aware that VUL is designed as an insurance solution first, with an investment component built in. Knowing this can help set clearer expectations and guide better decisions.

The investment component of VUL is market-linked, which means your fund value can go up or down, depending on market conditions. It’s important to understand that the reason many VUL clients have seen a decline in their fund value is because these are typically invested in the local stock market, which has experienced minimal growth over the past decade.

If your VUL fund value didn’t grow during a market downturn, that doesn’t necessarily mean that it failed—the life insurance protection benefit remains intact, and that’s what matters more. The investment side can still recover and grow over the long term.

You can also ask your advisor to switch the investment funds, depending on your goals, risk tolerance and time horizon.

2. “Ang sabi, 10 years to pay lang, pero pinagbayad pa rin ako nung pandemic kahit fully paid na.” (I was told it’s 10 years to pay, but I still had to pay during the pandemic even after completing my payments.)

What people sometimes overlook—or perhaps are not informed about—is that VUL has flexible premium payments. You can design it for a limited pay period, but if the fund value drops (like during the pandemic), the policy may require additional payments to keep the insurance coverage active.

Technically, the investment component of the VUL continues to fund your insurance premiums even after the payment period ends, for as long as you live.

The advantage here is that you may pay for a limited time only, but your coverage continues for life. Compare this to term insurance, where you’ll need to keep paying premiums every year for as long as you want coverage, and at a higher premium as you get older.

With a well-funded VUL, you can enjoy lifetime protection without the worry of annual payments dragging on indefinitely.

3. “Mas okay sana kung traditional insurance na lang ang kinuha ko para mas maganda ang health benefits.” (I should’ve just chosen traditional insurance instead, since the health benefits are better.)

Traditional life insurance and VUL serve different purposes. Traditional plans focus on fixed coverage, guaranteed endowment or health protection, while VULs give you flexibility—you can add riders for health, accident and critical illness benefit, while also having an investment component.

One isn’t better than the other; it always depends on your goals. If flexibility and long-term wealth, or legacy-building is more important to you, a VUL may be the right fit.

4. “Hindi naman pala guaranteed.” (So it’s not guaranteed after all.)

Exactly—and that’s actually a good thing. If someone promises guaranteed high returns, that could be a red flag for a potential scam.

With a VUL, your investment portion is tied to market performance, which means it can grow over time, but it also comes with ups and downs. That’s the trade-off.

To make the most out of your VUL, it’s important to align your policy with your risk tolerance and long-term financial goals. One practical tip: consider allocating a manageable portion of your monthly income towards premiums. This helps ensure that your policy is well-funded, which can support the insurance charges even during market downturns.

5. “Ang dami palang dapat intindihin. Nakaka-overwhelm.” (There’s so much to understand. It feels overwhelming.)

It is true that VULs can feel complex, but you don’t have to figure it out alone. A Sun Life advisor can help you understand your options, manage your expectations and build a plan that fits your unique life goals.

With the right partner, a VUL becomes less intimidating and more empowering. It’s a long-term financial tool designed to protect first and grow second. By understanding how it really works, you can make a confident choice for yourself and your family.

Sun Life offers a wide range of financial solutions designed to meet different needs and life goals. Whether you are securing your family’s future, planning for retirement or growing your wealth, there is a Sun Life plan that is right for you.

Learn more about how a VUL can help you secure a brighter future.