Those were her exact words, except for "company namin" which is the insurance company she is representing. And so I thought of writing this post.
I used to think that once you have a VUL, an investment with insurance policy, YOU ARE OKAY -- regardless of the insurance company and the financial advisor where you got it from.
Why?
Because I used to believe that ALL insurance companies have the same goal of helping its policyholders achieve their financial goals, and ALL financial advisors have the same advocacy of being that hand to hold along the way, until they reach their financial goals (purpose of investment), and most importantly, until the end of the journey (purpose of insurance).
But my personal experience taught me otherwise.
My husband signed his first VUL policy in 2008
Just a brief background of that policy. My husband is the policy owner, our eldest daughter is the insured (based on agent's offer). It is a 10-year multiple pay plan wherein my husband pays around Php2,500 per month auto debit to his savings account. The funds were allocated at Fixed Income Fund -- the low risk, low potential return kind of fund (based on agent's decision).
One night in 2015, over dinner, my husband asks, "Magkano na kaya ung pera natin sa VUL? Pwede mo tanungin si agent?"
In 2008, I had no idea about insurance and investment, and so was my husband. Out of the many things the agent said during the signing of the policy, the "After 10 years of paying, pwede nyo na sya I-withdraw at doble na ung binayad nyo" (sounds familiar?) part was the only thing that made sense to us back then. That was all that my husband and I remembered and understood, and being on our seventh year of paying, we wanted an update.
We Surrendered the Policy With a Php78,000 Loss
The next day, I asked the agent for an update. For me to understand the numbers she gave me, I was told to enroll the policy online for monitoring. And so I did.
Last year, when we received the policy update via mail, and saw that the funds were allocated at Fixed Income, I asked my husband to sign a form requesting for the funds to be switched to Equity. If the switching wasn't made, our loss might have been bigger.
We are close to the "After 10 years of paying," but we are way too far from the "doble na ung binayad nyo." And so with the understanding about VULs that I have now, and after checking our options, the best we could do was just surrender the policy. And that's what we did.
The Policy Had Flaws
Let me share with you the reasons why my husband and I decided to just surrender the policy, even at a loss. Php78,000 is hard-earned money.
1. The insured was our daughter. Back then, my husband and I were not yet insured.
Before insuring kids, the parents should be insured first. Why? Because parents are the income earners, and with insurance, we are protecting their future income. Although you can attach a Payor's Rider with your child's insurance policy, that can only do so much. You can buy a policy for your kids when you already have adequate insurance coverage.
2. The Fund was allocated at Fixed Income for 6 Years
I asked the agent why she placed it in Fixed Income knowing that it is a long-term investment for our daughter. This means that we will not be needing the fund for the next 20 years or so, except if it actually doubles after 10 years of paying.
Her decision was based on her conservative risk appetite. I cannot even remember her asking us of our risk appetite, or educating us about the different funds.
The investment part of your VUL should not be based on your agent's risk appetite, but YOURS. Because you are the one taking the risk, the gains and the losses, and not the agent. If you will look closely into the proposal, this is stated. But more often than not, we skip reading the fine print because we're too busy, or "hindi din naman natin naiintindihan." And so I ask Financial Advisors to please go through the proposal, page by page, during presentation. This will also lessen the incidents of "hindi naman na explain sa amin un" that we read everyday in Facebook insurance and VUL groups.
As Financial Advisors, our job is to provide information and insight to our clients, that will guide them in making that sound decision. It is not our job to decide for them.
But instead, he was already paying Php3,200 per month -- and we had no clue!
I asked the agent about this. Her reply was, "Ay ate, wala ba natatanggap si Kuya na TEXT during anniversary asking if okay lang na magtaas ng premium?"
We are not aware of any text message of that sort. The agent sent me a sample and it contained words that meant "If you do not reply to this message, it means that you agree." I told the agent that my husband's registered number has been deactivated for the past years.
For situations like this wherein it involves changes in the policy, I think a written letter with the policyholder's signature is a MUST.
And this is where the importance of enrolling your policy online and regularly updating your contact details comes in.
I asked the agent what the increase in premium was for, she said it was to enable the fund to beat inflation.
Wait, what?
I thought the role of the fund is to make sure that our original premiums beat inflation, without us needing to add? (At this point of our conversation, my stress level was already gaining momentum. Lol!) Anyways...
Honestly, my husband and I were disappointed with the policy. But we make decisions based on logic, and not on emotions. And so I asked the agent for other details, particularly the charges, and we looked at our options.
Option 1. We can continue paying as planned. If we choose to do that, it means that we are okay with the loss and that the more money we put in, the more money we allow to lose -- and we would need more time (so much more vs. based on the proposal) just to breakeven. Their Equity Fund's performance is neither impressive. It is performing lower than the market.
Option 2. We can stop paying, and just let the money grow over a very loooooong period of time. Because we are already in our 7th year of paying, there may no longer be admin and acquisition charges, only insurance charges. And so I asked how much will we still be charged until Year 10. The agent said, the charges are currently at Php2,000/month. What?!? For every Php3,200 that my husband pays, Php2,000 goes to the company and we are left with only Php1,200?!? This explains that loss. The charges are eating up our fund, and so we had very little money left to grow. For a policy that is already in its seventh year, this admin charges are huge compared to most companies.
Option 3. Just surrender the policy, and accept the Php78,000 loss.
Among the many other flaws, this was mainly the reason that made us decide to go for Option 3. The agent referred us to someone else.
This was maybe because I was becoming a difficult client for her due to my asking questions. When I have difficult clients, I take them as a challenge. I tell myself, "Joan, dito ka natututo." As a common quote says, "A smooth sea never made a skilled sailor."
Before a client signs a policy with me as their Financial Advisor, I tell them that this is a "Till death do us part" kind of commitment between him/her and me. I make it clear to them that they will be hearing from me regularly for updates, for new investment products that they may be interested in, and updates in the local and global market.
The role of a Financial Advisor does not end when the policy is issued, or when the commissions have been received -- but that will only be the beginning of your financial journey together.
I remember a client saying, "Iba ka sa ibang agent kasi kahit issued na ung policy, nag update ka pa din. Nasisingit mo pa ung pagpunta samin." And I told them that I want to be there until they withdraw funds for their kid's college, and until they receive their monthly pension from their retirement fund when they reach 65. And most importantly, I will be there during the worst case scenario, handing the insurance benefit check to their beneficiaries. Clients have entrusted me with their time and money. The least I can do is do my job well until the day I deliver that promise.
Fast forward to 30 years or so later, I imagine myself with my clients, enjoying quality time over coffee. As long as we are disciplined enough to stick with our financial plan, we will retire rich.
The purpose of this post is NOT to discourage you about VULs, or discourage you about a particular insurance company.
This post is written because this has been a common scenario. When I tell my friends about this experience, they can relate.
The purpose of this post is to INSPIRE you to keep learning financially. Your Financial Advisor is there to do the math for you in computing your target amounts and to provide you with options that can help you achieve your financial goals; but everything will still depend on your own decision, your action or inaction.
The purpose of this post is to teach you to CHOOSE WELL. Your Financial Advisor must be someone you trust (I had complete trust with ours, she is my cousin who has been a Financial Advisor for years), but more importantly, he/she must be competent enough not to give up on you when you become a difficult client. For me, being a Financial Advisor is not just a career that puts food on the table, but a calling. It is aligned to my purpose.
When we decided to surrender our policy, this is what I told my husband, "We can earn back the money we loss through other investments, but we cannot take back the 7 years that passed."
Let this experience of ours be a lesson to those who are reading this post.
If you have an existing VUL, its time that you contact your Financial Advisor for an update, and policy review. If you can no longer contact your Financial Advisor, you can book an appointment here and I can do a quick policy review with you online.
If you have plans of getting a VUL, sign one with a Financial Advisor that you personally know and trust, is competent, and with a company who is backed up with business expertise for more than a decade. Manulife Philippines, a subsidiary of Manulife Financial based in Canada, has been in the country for 117 years, and one of the leading insurance providers in the country today.
If you do not have a life insurance policy yet, its high time that you get one while TIME and HEALTH is still on your side.
Last night, I read a post on a Facebook insurance group from an Anonymous member asking about the best insurance product and the best insurance company.
It is an advantage if you personally know the Financial Advisor because you have an idea of how he/she handles her own money. You would know if he/she really wants to help you grow your money, and if he/she will be that hand to hold until the end.
It's a lot of work on your part, I know. But it will all be worth it over time. Plus you will not make the same mistakes that we had with our first VUL.
Make sure that you understand every part of the policy application before you affix your precious signature. Ask all the questions you want to.
3. Enrolling at the customer portal, I saw that my husband was NOT only paying Php2,500 per month which he thought.
But instead, he was already paying Php3,200 per month -- and we had no clue!
I asked the agent about this. Her reply was, "Ay ate, wala ba natatanggap si Kuya na TEXT during anniversary asking if okay lang na magtaas ng premium?"
We are not aware of any text message of that sort. The agent sent me a sample and it contained words that meant "If you do not reply to this message, it means that you agree." I told the agent that my husband's registered number has been deactivated for the past years.
For situations like this wherein it involves changes in the policy, I think a written letter with the policyholder's signature is a MUST.
And this is where the importance of enrolling your policy online and regularly updating your contact details comes in.
I asked the agent what the increase in premium was for, she said it was to enable the fund to beat inflation.
Wait, what?
I thought the role of the fund is to make sure that our original premiums beat inflation, without us needing to add? (At this point of our conversation, my stress level was already gaining momentum. Lol!) Anyways...
And then we checked our options...
Honestly, my husband and I were disappointed with the policy. But we make decisions based on logic, and not on emotions. And so I asked the agent for other details, particularly the charges, and we looked at our options.
Option 1. We can continue paying as planned. If we choose to do that, it means that we are okay with the loss and that the more money we put in, the more money we allow to lose -- and we would need more time (so much more vs. based on the proposal) just to breakeven. Their Equity Fund's performance is neither impressive. It is performing lower than the market.
Option 2. We can stop paying, and just let the money grow over a very loooooong period of time. Because we are already in our 7th year of paying, there may no longer be admin and acquisition charges, only insurance charges. And so I asked how much will we still be charged until Year 10. The agent said, the charges are currently at Php2,000/month. What?!? For every Php3,200 that my husband pays, Php2,000 goes to the company and we are left with only Php1,200?!? This explains that loss. The charges are eating up our fund, and so we had very little money left to grow. For a policy that is already in its seventh year, this admin charges are huge compared to most companies.
Option 3. Just surrender the policy, and accept the Php78,000 loss.
4. The agent referred us to someone else
Among the many other flaws, this was mainly the reason that made us decide to go for Option 3. The agent referred us to someone else.
This was maybe because I was becoming a difficult client for her due to my asking questions. When I have difficult clients, I take them as a challenge. I tell myself, "Joan, dito ka natututo." As a common quote says, "A smooth sea never made a skilled sailor."
Before a client signs a policy with me as their Financial Advisor, I tell them that this is a "Till death do us part" kind of commitment between him/her and me. I make it clear to them that they will be hearing from me regularly for updates, for new investment products that they may be interested in, and updates in the local and global market.
The role of a Financial Advisor does not end when the policy is issued, or when the commissions have been received -- but that will only be the beginning of your financial journey together.
I remember a client saying, "Iba ka sa ibang agent kasi kahit issued na ung policy, nag update ka pa din. Nasisingit mo pa ung pagpunta samin." And I told them that I want to be there until they withdraw funds for their kid's college, and until they receive their monthly pension from their retirement fund when they reach 65. And most importantly, I will be there during the worst case scenario, handing the insurance benefit check to their beneficiaries. Clients have entrusted me with their time and money. The least I can do is do my job well until the day I deliver that promise.
Fast forward to 30 years or so later, I imagine myself with my clients, enjoying quality time over coffee. As long as we are disciplined enough to stick with our financial plan, we will retire rich.
Final Word
The purpose of this post is NOT to discourage you about VULs, or discourage you about a particular insurance company.
This post is written because this has been a common scenario. When I tell my friends about this experience, they can relate.
The purpose of this post is to INSPIRE you to keep learning financially. Your Financial Advisor is there to do the math for you in computing your target amounts and to provide you with options that can help you achieve your financial goals; but everything will still depend on your own decision, your action or inaction.
The purpose of this post is to teach you to CHOOSE WELL. Your Financial Advisor must be someone you trust (I had complete trust with ours, she is my cousin who has been a Financial Advisor for years), but more importantly, he/she must be competent enough not to give up on you when you become a difficult client. For me, being a Financial Advisor is not just a career that puts food on the table, but a calling. It is aligned to my purpose.
And as for my husband and I...
When we decided to surrender our policy, this is what I told my husband, "We can earn back the money we loss through other investments, but we cannot take back the 7 years that passed."
Let this experience of ours be a lesson to those who are reading this post.
If you have an existing VUL, its time that you contact your Financial Advisor for an update, and policy review. If you can no longer contact your Financial Advisor, you can book an appointment here and I can do a quick policy review with you online.
If you have plans of getting a VUL, sign one with a Financial Advisor that you personally know and trust, is competent, and with a company who is backed up with business expertise for more than a decade. Manulife Philippines, a subsidiary of Manulife Financial based in Canada, has been in the country for 117 years, and one of the leading insurance providers in the country today.
If you do not have a life insurance policy yet, its high time that you get one while TIME and HEALTH is still on your side.
As a policyholder, I encourage you to do your homework
Last night, I read a post on a Facebook insurance group from an Anonymous member asking about the best insurance product and the best insurance company.
It rained comments on pushing certain insurance products. While this is normal, this is what I wrote:
"Maybe best if you will talk to an FA you trust and know personally, do financial planning with her/him to review and re-assess your priorities. From there, she/he will recommend a plan that you may opt to follow. Madami kasing companies and products, mejo tedious if you'd compare everything."
The Anonymous member thanked me for being honest. For that, I am happy.
It is an advantage if you personally know the Financial Advisor because you have an idea of how he/she handles her own money. You would know if he/she really wants to help you grow your money, and if he/she will be that hand to hold until the end.
It's a lot of work on your part, I know. But it will all be worth it over time. Plus you will not make the same mistakes that we had with our first VUL.
Make sure that you understand every part of the policy application before you affix your precious signature. Ask all the questions you want to.
If you have common friends who are already clients of your chosen Financial Advisor, ask them. If they are happy with his/her services, there is a high chance that you would be happy, too, when you become a client.
70% of my clients are relatives, friends and former colleagues who I personally know. The remaining 30% are referred by them. These referrals show that I have happy and satisfied clients, and that I was able to put value on the table.
I hope this post was able to shed some light into your VUL policies. If you find this of value, kindly click SHARE and help us in educating more Filipinos.
I hope this post was able to shed some light into your VUL policies. If you find this of value, kindly click SHARE and help us in educating more Filipinos.
I am a Registered Financial Planner, and it is part of my advocacy to help more Filipinos be in a better financial position through Financial Planning. Assigned with this life purpose, I conduct a FREE cashflow management and financial planning session online via ZOOM. You can click here to learn more and book an appointment.
Thank you very much and be very blessed!
