Life Insurance Investments

Life insurance investment plans are not standard to all kinds of life insurance policies. There are specific investment type life insurances. If you are interested in life insurance investments, it’s best to discuss it with your insurance broker or provider so they can provide you with options. Be advised though that the amount paid out under these policies depend on the performance of investments in the insurance fund over time. This makes life insurance investments riskier than plain life insurance policies. This along with the complicated selection of life insurance investment plans means that it is best to seek expert financial before you sign up for a life insurance investment policy.

Variable Life Insurance  

One of the most popular financial products today is what we call a variable universal life (VUL) insurance, which is basically an insurance policy with an investment link. This combination of insurance coverage with savings and investments has been a key to the product’s growing popularity. Compared to whole life insurance, investment-linked policies provide a better accumulation of funds. This makes it appealing to many Filipinos who are not only looking for financial protection in cases of death, but also focusing on becoming financially stable in the long-term.

Comparisons

Unlike the typical life insurance, an investment-linked policy builds cash value since the premiums you pay are similarly invested in equities and are professionally managed by the company. Returns are better since a VUL is a market-driven instrument. Usually, the account holder can choose which fund he wants his money or premiums invested in. They can be in high-quality equities across diversified sectors, local fixed-income securities, or a mix of debt and equity securities. Since VUL’s operate similar to a mutual fund, your investment portfolios are managed with the advantage of up-to-date financial resources and data courtesy of your fund manager.

Advantages

Investment-linked policies offer variable premium payments. This is good news for young professionals who are still starting a career and looking for affordable means to save, invest, and insure all at the same time. Accumulations, though still long-term, is often faster than traditional life policy which often have returns comparable to a time deposit rate. However, since VUL’s are market-driven instruments, they can also be more volatile. Risks may vary depending on investment choices are. Some investment funds linked to your policy offer higher-returns for the short-term but present equally higher-risks for losses. Below average as well as medium risk investment choices are also available

Disadvantages

Like any good investment plan, growing your money takes time. Even with VUL’s providing returns at a faster rate, long-term investment provide better financial protection and security. Investment-linked policies also do not offer other benefits aside from the death benefit. Only the face amount of the variable contract is guaranteed. Traditional life insurance policies offer both guaranteed cash value (savings) alongside non-guaranteed portions.

Reminders

Asses your financial needs and investment capabilities before choosing the life insurance policy you want. Review proposals from various insurance companies and see what works best for your budget and you need.