VUL Insurance Concepts

Insurance Concepts Review
TRADITIONAL LIFE & VARIABLE UNIVERSAL LIFE
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Insurance Concepts Review
PART 2: VARIABLE UNIVERSAL LIFE
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Course Content
Part 1: TRADITIONAL LIFE Part 2: VARIABLE UNIVERSAL LIFE

a. Insurance Commission a. Concept of Variable Universal Life
b. Insurance Commission Exam (IC)/Insurance b. Financial Planning Process
Institute for Asia and the Pacific (IIAP)
c. Types of Investment Assets
Examination Process
d. Types of Funds
c. Concepts of Life Insurance
e. Types of Variable Contract
d. Premium, Basic Plans and Riders
f. Definition of Terms
e. Legal Aspects of Life Insurance
g. How does VUL work?
f. Policy Provisions
h. Basic Computation of Units
g. Annuities
h. Ethics

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Concept of VUL
Traditional Policies Non-Traditional Policies
1. Premiums, cash values and 1. Cash Values/Fund Values

death benefits are pre- are not pre-determined
determined. 2. Additional premiums may
2. Policyholders do not have be allowed (on top of
investment options regular premiums)
3. Implicit charges 3. Policyholders may have
investment options
4. Explicit charges
Examples: Term, Whole Life, Examples: Universal Life,

and Endowment Variable Life, and Variable
Universal Life

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Concept of VUL
Universal Life (UL) Variable Life (VL)
1. Unbundled 1. Fixed premium, minimum

2. Flexible Premiums, Death death benefit
Benefit 2. Cash value depends on
3. Seen as savings account investment performance
plus term insurance 3. Policyowner has a choice of
4. Interest credited to account investment funds
value, usually subject to
minimum interest rate
5. Policyowner does not have
a choice of the investment
funds

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Concept of VUL
Variable Universal Life
Investment Premium Death

Control Flexibility Benefit

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Concept of VUL
POT OF GOLD ILLUSTRATION
Single Premium or Top-Ups/Excess
Regular Premium Premiums
Initial/Premium Initial/Premium
Charge Charge
Purchase Units in
Select Funds
Insurance Periodic
Charge Charge

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VUL Advantages
Professional
Diversification Management Flexibility Access
Transparent
Administration Charges Investment Risk Client is Involved

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Peso Cost-Averaging
Peso cost averaging is an investing technique intended to reduce exposure

to risk associated with making a single large purchase. The idea is simple: spend
a fixed peso amount at regular intervals (e.g., monthly) on a particular
investment or portfolio, regardless of the unit price

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Peso Cost-Averaging
Example:
If you invest Php 10,000 today, and the unit price is 1/unit, you will
receive 10,000 units. If you invest the same amount next month, and
the unit price is 90 centavos/unit, you will have purchased 11,111 units
then. By adding your investment (Php 10,000 + 10,000) and dividing the
by the total number of units (10,000 + 11,111), you would end up
having an average purchase price of 95 centavos per unit.
Php 20,000 investment = 21,111 units

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Peso Cost-Averaging
How can we maximize the returns of the fund?
Regular Top-Ups Habit of Saving Buy low, sell high
* It complements peso-cost averaging

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Financial Planning
VARIABLE UNIVERSAL LIFE
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Financial Planning
RISK
GOALS
TOLERANCE
FINANCIAL
PERSONAL
RESOURCES
CIRCUMSTANCES
o Managing one’s financial resources in order to achieve specific goals

o Necessary to develop a financial plan that is suited to client’s unique requirements

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Financial Planning Process
Set Goals
Analyze Resources
Evaluate the Plan
Implement the Plan Evaluate Investment

Options

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To enhance or provide a comfortable standard

of living; to provide for dependents
To improve one’s financial situation
To supplement retirement income
To provide funds for the education and bringing

up of children
SET To provide a fund for paying necessary costs

GOALS and taxes when a person dies
To save for the down payment/major purchase

or event (house/car/debut or wedding)

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Keep stock of what you already have (cash/

time deposits,
To enhance dollar
or provide deposits, real estate)
a comfortable
standard of living; to provide for
The investment decision is greatly affected
dependents
by the level or amount of funds available
For the investor: the more funds, the
greater/wider is the choice of investment
available
To provide funds for the education and
bringing up of children
Set aside the less liquid assets from those you
To provide
could ause
fund forinvestment
for paying necessary
purposes & include a
ANALYZE costs and taxes when a person dies
RESOURCES contingency fund
To save for the down payment/major
Review
purchase monthly
or event expenses byorseparating the
(house/car/debut
essential or living expenses from the non-
wedding)
essential or discretionary expenses.

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You will realize that you can’t afford to set

aside funds
To enhance for all your
or provide goals at the same time.
a comfortable
Categorized goals:
dependents
short-term (less than 5 years)
medium term (5-10 years)
long term (over
To supplement 10 years)
retirement income
Tip #1funds
To provide – Don’t invest
for the in something
education and you don’t
understand
To provide a fund for paying necessary
EVALUATE • Educate yourself
costs and taxes when a person dies
INVESTMENT • Understand the investment product
OPTIONS • Go
To save for out of your
the down way to see what investments are
payment/major
purchaseavailable
or eventin(house/car/debut
the market or
wedding)

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Evaluate …or provide a comfortable

To enhance
1. Potential
standard Return
of living; to –provide
How much
forcan you reasonably expect to earn
by investing in the product? Historical return on investment or yield
dependents
on the investment.
2. Safety – What are the risk involved? Can you lose all or part of
your investment?
3. Liquidity
To provide & Marketability
funds (Accessibility
for the education and of Funds)
bringing- Ifup
theof
individual
children requires the fund in a short time. Can you readily
convert your instrument into cash?
- Consider the cost or penalty of realizing the investment before its
maturity period. Are there any penalties for pre-termination?
- Is there a ready buyer or a market for your investment? How
purchase
much or isevent (house/car/debut
the initial cost in setting up ororbuying into the
investment? Minimum investment amount?
wedding)

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Evaluate …or provide a comfortable

To enhance
4. Performance
standard of living;oftothe investment
provide for
- country’s economic factors
dependents
- competencies/capabilities of the management team
To improve one’s financial
- the invested company’ssituation
level of costs
5. Taxation Treatment
To supplement – Different
retirement incometypes of investment vehicle/s
enjoy (or burden) a wide range of tax treatment. What are the tax
implications?
To provide fundsWhat
forare
thetheeducation
subsequentand
taxation liabilities of the
investor?
purchase or event (house/car/debut or
wedding)

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Tip#2 - No Risk , No Gain

To enhance or provide a comfortable
Tolerance
standard for the
of living; magnitude
to provide for and variability of future
return loss.
dependents
- The higher
To improve the risk, the
one’s financial higher must be the potential
situation
return in order to attract people into investing in it.
2 Types of Investors
To provide funds
1. Some for the may
investors education and to PLAY it
be tempted
safeof–children
bringing up CONSERVATIVE instruments (people
with less financial resources – less tolerance
for Risk).
costs2.andHigh
taxesnetwhen
worthaindividuals
person diesare the ones who
are less averse to risk – they have money to
cover for losses. (people with more money –
purchasehigh
or event (house/car/debut or
tolerance for RISK).
wedding)

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Types of Risk Investment:
dependents
1. Low Risk investment - Bank deposits/short-term
government
To improve securities
one’s financial (locked-in at interest)
situation
To supplement retirement
2. High Risk income
investment – investment in shares
Investor’s
bringing level of risk averseness depends on…
up of children
1. Age
costs2.andInvestment
taxes whenObjectives
a person dies
3. for
To save Financial Condition
the down payment/major
4. Personality
wedding)

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Tip#3 - Match the investment product with your

To enhance or time horizon
provide a comfortable
- A match between the investment horizon and the
dependents
maturity of an investment asset is very important
1. Short retirement
To supplement – Term Goalsincome
- Consider investments that are not risky or
To provide funds
highlyfor the education
speculative (ex. and
Government securities,
time deposits, high-grade commercial paper,
To provide abond
fund mutual funds
for paying & money market funds)
necessary
2. Medium – Term Goals
- the
To save for Objective: “medium risk-medium return”
down payment/major
purchase -orLess speculative
event investment
(house/car/debut or returns such as
wedding) blue-chip stocks & balanced mutual funds

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3. Medium – Long Term Goals

- Objective:
To enhance or provideto MAXIMIZE investment return
a comfortable
ratherto
standard of living; than MINIMIZE
provide for investment risk
- take some risks since you have more time to
dependents
make-up for possible losses
- establish a portfolio that is heavy on “high-risk-
highretirement
To supplement return” (ex: stocks)
income
wedding)

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Tip#4 -orDiversification
To enhance provide a comfortable
- Risk are inherent in all types of investments
dependents
• Process of investing across different asset classes
and across
To supplement different
retirement market environments
income
To provide
• Provenfunds for the education
effective in reducingand
risk without sacrificing
bringingreturns
up of children
• “Don’t put all your eggs in one basket.” Spreading of
risk by putting the money under management into
To saveseveral
for the categories of investments such as stocks,
down payment/major
bonds
purchase and money
or event market instruments.
(house/car/debut or
wedding)

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dependents
Avoid procrastination
Achievingretirement
To supplement one’s financial
incomegoal is financial
discipline
Stick to plan if you haven’t changed your goals
or personal
To provide circumstances
a fund for paying necessary
IMPLEMENT
THE PLAN To save for the down payment/major
wedding)

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A continuing process because the plan has

To enhance or provide
to be evaluated a comfortable
regularly
dependents
The plan may have to be revised from time
to timeone’s
To improve due to changes
financial in the market
situation
conditions & the investor’s needs & wants
Changes…
-- in the Market Conditions:
- new investment products
- revisions
To provide of paying
a fund for tax lawsnecessary
- prolonged
costs and taxes when period of economic
a person dies growth or
EVALUATE difficulties
THE PLAN To save for the down payment/major
-- in the
purchase Investor’s
or event personal requirements:
(house/car/debut or
wedding)- being promoted/getting married/ getting older

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Types of Investment Assets
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Types of Investments
1. Fixed Income Securities
Investments with a fixed principal amount, a fixed period of

time (term) and a specific rate of interest (coupon).

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A. Money Market Securities
• Commonly referred to as “cash and deposits”

• Any deposit instruments with a maturity of 1 year or less
e.g. Treasury Bills and Bank Deposits

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B. Bonds
Loan that pays interest over a fixed term or period of time
3 general types of bonds - Government Bonds

Corporate Bonds
Convertible Bonds

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2. Equity Securities (Stocks)

• Pieces of a corporation pie
• The ownership interest of shareholders in a corporation
Preferred Stocks
Common Stocks

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3. Common Trust Fund
• A form of pooled investment maintained by a bank

• Sells and buys back units of participation at net asset value
• Monitored by Banko Sentral ng Pilipinas (BSP)

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4. Mutual Funds
• Open-end investment company

• A regulated investment company with a pool of assets that
regularly sells and redeems its shares
• Monitored by Securities & Exchange Commission (SEC)

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5. Property
• Something owned; any tangible or intangible possession that is
owned by someone
3 Types of Properties:
✓ Agricultural Property
✓ Domestic Property &
✓ Commercial/Industrial
Property

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6. Insurance
A promise of
compensation for
specific potential
future losses in
exchange for a
periodic payment

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Types of Funds
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Types of Funds
Stocks or Equity Funds
Bond Funds
Balanced Funds
Money Market Funds
Cash Funds
Specialized Funds
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Types of Funds
Stocks or Equity Funds
- invests in shares of stocks- prices

may be volatile.
- mainly to generate long-term

for capital appreciation through
investment in high-quality equities
diversified across sectors.
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Types of Funds
Bond Funds
- invests mainly in long-term debt

instruments and high-quality fixed
income instruments that are classified
as below average risk.
- aims to generate fixed regular

income.

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Types of Funds
Balanced Funds
- invests in both shares of stock and debt

instruments.
- the allocation my be fixed or may vary

at the portfolio manager’s discretion.
- it combines the current income from

bonds and capital appreciation
prospects from stocks. For example,
60% of the funds are in bonds &
40% in equities.

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Types of Funds
Money Market Funds
- invests purely in short-term

(one year or less) debt instruments.
- may be diversified or specialized

type of money market instrument
(prime commercial paper/short-
term government securities).

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Types of Funds
Cash Fund
- Invests in cash and other forms of

bank deposits.
- Low risk and relatively safe.

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Types of Funds
Specialized Funds
- Restrict investments to a particular

country or region Income securities.
- Offers exposure to different markets

in different industry/regions.

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Types of Variable Contracts
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Key Features of VUL
• Single Pay
Payment • Regular Pay
Period
For Regular Premium:
• Premiums are paid regularly

• Have flexibility of varying the level of regular premium payments,
making single premium top-ups or taking premium holidays
• If funds are sufficient, the policyowner may stop paying for
premiums
• The policyowner may vary the sum of his policy without changing
the level of his regular premiums

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Key Features of VUL
• Philippine Peso
• US Dollar
Currency
• Single Pricing Method

• Dual Pricing Method
Types of
Pricing
Method
• Policy Fee
• Mortality/Assurance Charges
• Unallocated Premiums
Types of • Full Withdrawal Charges
Charges
• Investment Management Charges (Bid Offer Spread & Fund
Management Fee)

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Type of VUL Contracts
Type of Life Insurance LINKED to Investment Funds
SINGLE PREMIUM INVESTMENT REGULAR PREMIUMS INVESTMENT

LINK ED WHOLE LIFE PLAN WHOLE LIFE PLAN
1. The amount of insurance 1. Paid on regular intervals for

protection is a percentage investments & life
(usually 125%) of the single protection.
premium paid 2. Life protection is the priority.
2. For long-term savings and 3. Premium holiday or top-ups
investment; offers nominal are allowed.
life protection 4. Partial & full withdrawal are
3. Top-ups are allowed allowed.
4. Right to withdraw full or
partial units

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INVESTMENT - LINK ED
INDIVIDUAL PENSION PLAN
1. Usually involves a high

allocation of the premium
contributions to investments
through simply accumulating
the fund to retirement.
2. No life insurance cover
other than a return of
investment funds.
3. There are tax advantages
for employees.

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INVESTMENT - LINK ED INVESTMENT-LINK ED DREAD

PERMANENT HEALTH INSURANCE DISEASE INSURANCE
1. Provides health coverage 1. A policy which advances the

such as disability income. whole sum assured in the
2. Contains cash value unlike event of the diagnosis of a
the traditional health plans. critical illness.

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Definition of Terms
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Definition of Terms
Unit Pricing is the process whereby the unit price of units is set.
Offer price or Selling Price the price which the insurer uses to allocate units to a policy
when premiums are paid.
Bid price or Buying Price the price which the insurer will give for the units if the
policyholder wishes to cash in or claim under the policy.
Top –ups are single premium injections which can be used to buy
additional units.
Premium Holiday refers to the cessation of premium payments on a variable
life insurance contract for a period, with a view to continue it
later on.
Forward Pricing is a pricing structure wherein the buying and selling prices of
units are determined at the next valuation date.
Allocation of premiums means the periodic distribution of premiums to insurance and
units.
15-day cooling-off period the contract may be returned within 15 days of receipt by
the policyholder.
Grace Period 30 days grace period.

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Definition of Terms
Policy Fee it covers setting up and administrative expenses
Mortality Charges it covers mortality cost (dependent on age)

Unallocated Premiums a part of the premium being deposited for marketing &
setting-up expenses of the policy
Full Withdrawal Charges deducted when the policy is fully withdrawn
Bid-Offer Spread difference between bid and offer prices
Fund Management Fee it is imposed on each investment fund (.5% - 2% per annum)
- used to cover investment expenses
Fund Switching Charge What is Switching?
- Facility for transferring from one fund to another
- Limited number of switches are usually not charged
- Useful in retirement and education fees planning
Fund Allocation Charge changes in fund allocation in the policy

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How does VUL work?
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How does VUL Work?
Single Premium
Php 100,000
Total Charges
Admin & Mortality

Policy Fee
Charge
• Is usually imposed once as a • Covers the cost of providing

flat fee at the start of the life protection for the insured
policy • Varies according to the age of
the insured
• May be paid once at the start
of the policy or on a recurrent
manner

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How does VUL Work?
Single Premium
Php 100,000
Total Charges
Policy Fee Administrative &

Mortality Charge
Php 200 3% of the Premium
Php 100,000 x 3%
= Php 3,000.00
Php 3,200.00
Php 96,800 : Net Available for Investments

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How does VUL Work?
Php 96,800 : Net Available

for Investments
Units Purchased & Remaining
Offer Price Bid Price

Is the price used to
Is the price used for
allocate/create units
@ 1.50 cash-in or claims
Purchased Units 1.40
Php 96,800/1.50
64,533.33 units created
Note:
OFFER PR ICE or SELLING PR ICE is the price which the insurer uses to allocate units to a policy when premiums are paid.
BID PR ICE or BUY ING PR ICE is the price which the insurer will give for the units if the policyholder wishes to cash in or claim under the policy.
BID -OFFER SPR EAD is the difference between the bid price and the offer price.

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How does VUL Work?
Offer and Bid Prices
REMEMBER
Offer Price is always greater than the Bid Price
Bid Offer spread is expressed in percentages, e.g. 5% or 0.05
Prices (and computation) are rounded down to 4 decimal places

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How does VUL Work?
OFFER Price is the price Php 96,800 : Net Available

used to allocate units for Investments
Bid Offer Spread is Offer Price or

the difference Selling Price
between Offer and 1.50
Bid Price
BID Price is the price 6.67%
for cash-in or claims
Policy amount Units bought

Php 90,346.66 64,533.33
Bid Price
(buying price)
1.40

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How does VUL Work?
PARTIAL AND FULL
WITHDRAWAL Php 96,800 : Net Available
for Investments
64,533.33 Units Purchased & Remaining
Partial Withdrawal BID PRICE

Is the price used
Php 20,000 for Cash-in or
(Full or Partial Withdrawal
of Units is Allowed) Claims 1.40
Units to be CANCELLED
Php 20,000 / 1.40
14,285.7143 units
Units Remaining after

Withdrawal
64,533.33 - 14,285.7143
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= 50,247.6157 units
How does VUL Work?
Computation of Units
Single Pricing Method
➢ There is only one price quoted whether the policyowner is buying or selling his units.
Dual Pricing Method

➢ The policyowner buys the units at the offer price and sells the units at the bid price.
EXAMPLE:

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How does VUL Work?
Computation of Units
Important Formulas
No. of Units = Single Premium/Unit Price

rounded down to 4 decimal places
Bid Price = Offer Price (1 - Spread%) or BO1S
Offer Price = Bid Price / (1 - Spread%) or OB/1S
Yield/Interest = (Full Withdrawal Value / Single Premium) 1/n -1
Accumulation of Fund = x (1 + i) n

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How does VUL Work?
No. of Units (bought) = Allocated Premium/Unit Price
No. of Units (cancelled) = Amount/Unit Price
Fund Value = No. of Units x Unit Price

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How does VUL Work?
Basic Computation
Example:
A policyowner pays a single premium of Php 50,000 and the unit

price at that time is Php 1.50. The insurance company deducts an
initial char ge of 5% and a mortality charge of 1.6%, both as a
percentage of single premium. The initial charge is deducted before the
premium is allocated while the mortality charge is deducted by
canceling the units.

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How does VUL Work?
Basic Computation
1. The following outlines the steps in the calculating the number
of units bought after all the charges
We calculate the charges first.
Initial Charge (5% Single Premium) Php 2,500.00

Mortality Charge (1.6% x Single Premium) 800.00
Because the initial charge is deducted before the single premium is used to
buy units, we calculate the remaining single premium.
Single premium Php 50,000.00

Less: Initial Charge - 2,500.00
Single Premium (Net of Initial Charge) 47,500.00

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How does VUL Work?
Basic Computation
2. The Single Premium (Net of Initial Charge) will then
be used to buy units
No. of Units Bought = Single Premium (Net of Initial Charge)

/ Unit Price
= Php 47,500.00 / 1.50
= 31,666.6667 units
3. The Mortality Charge is deducted by canceling units.
The no. of units to cancel (Mortality Charges) is:
Mortality Charges = Mortality Charge / Unit Price

= 800.00/1.50
= 533.3333 Units
31,666.6667 - 533.3333 = 31,133.3334 units

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How does VUL Work?
Basic Computation
Withdrawal Benefit
Partial or full withdrawal of units can be made by the policyholders
at anytime while their policy is in force. Withdrawals are made by
selling or canceling some or all of the units using the unit price at
the time of withdrawal.
When full withdrawal of units is made, the insurance policy is terminated. All
policy benefits like the sum assured guarantee and other supplementary
benefits will cease.
Example:
Suppose that the policyowner has 10,000 units and the unit price is
1.97. He wishes to withdraw (partially) Php 10,000 from his policy.
The following the computation on how the withdrawal is made, how
many units need to be cancelled and how many units will remain after
the withdrawal.

66
How does VUL Work?
Basic Computation
Withdrawal Benefit
Because the withdrawals are made by selling units, the no. of units
that needs to be sold to fund the withdrawal is calculated.
No. of Units to sell = Withdrawal Amount / Unit Price

= Php 10,000.00 / 1.97
= 5,076.1421 units
The remaining no. of units after Withdrawal is therefore:
= 10,000 - 5,076.1421
= 4,923.8579 units

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How does VUL Work?
Dual Pricing Method
No. of Units (bought) = Allocated Premium / Offer Price
No. of Units (cancelled) = Amount / Bid Price
Fund Value = No. of Units x Bid Price
Bid Price = Offer Price (1 – Spread%) or BO1S
Offer Price = Bid Price/ (1 - Spread%) or OB/1S

68
How does VUL Work?
Basic Computation
Dual Pricing Method
Under the dual pricing method, there are two prices quoted :
- The price used to create/allocate units (offer price) is higher than the
price used to cancel/cash-in/claim units (bid price).
- One price can be worked out from the other if the bid offer spread
(Spread %) is known using the formulas:
Bid Price = Offer Price x (1 - Spread%) or BO1S

Offer Price = Bid Price/(1 - Spread%) or OB/1S

69
How does VUL Work?
Basic Computation
Dual Pricing Method
Example: If the offer price is 1.50 and the bid offer spread is 5%, the
bid price can be worked out as:
Bid price = Offer Price (1 - spread%)

= 1.50 (1-5%)
= 1.4250

70
How does VUL Work?
Basic Computation
Dual Pricing Method
A policyowner pays a single premium of Php 50,000 and the offer
price at that time is 1.50. The company’s bid-offer spread is 4%
The insurance company deducts an initial charge of 5% and a mortality
charge of 1.6%, both as a percentage of single premium. The charges
and fees are deducted by canceling units after the whole single premium is
used to buy units.
1. We calculate first the number of units allocated without charges:
No. of units allocated = Single Premium

Offer Price
No. of units allocated = 50,000
1.50
No . Of units allocated w/o charges = 33,333.3333 units

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How does VUL Work?
Basic Computation
Dual Pricing Method
2. Because the initial charge and mortality charge are deducted by

canceling units after the single premium is invested, we add the
charges then convert into units using the bid price (bec. the
policyholder, in effect, buying units to pay for the initial and mortality
charges. In the example, only the offer price is given. Thus, we have to
compute for the bid price using the given bid- offer spread.
Bid price = Offer price (1 - Spread%)

= 1.50 (1 - 4%)
= 1.44

72
How does VUL Work?
Basic Computation
Cancellation of Units
3. We now calculate for the number of units to cancel:
Initial Charge (5%Single Premium) 2,500

Mortality Charge (1.6% x Single Premium) 800
----------
Total Charges in peso 3,300
Total charges in units = Total charges

Bid price
= 3,300
1.44
Total charges in units = 2,291.6667 units

73
How does VUL Work?
Basic Computation
Cancellation of Units
Now subtract the total charges in units from the no. of units allocated
for investment.
No. of units bought 33,333.3333

Total charges - 2, 291.6667
31,041.6663 units (after all charges)

74
How does VUL Work?
Basic Computation
Accumulation of Fund Over a Period of Time
To compute for the accumulation of fund over a period of time.

Where the amount is X after n years and it increases by i (interest
rate), we will you use this formula X (1+i) n
Example A:
What is Php 20.00 after 10 years if it increases by 5% annually?
Using the formula, X (1+i) n
20 (1+ 0.05) 10 = Php 32.58

75
How does VUL Work?
Basic Computation
Accumulation of Fund Over a Period of Time
Example B: Over the next 6 years, the offer price is

projected to constantly increase by 7% annually. Compute
for the bid price and offer price after 6 years if the bid price
now is Php 1.20 and the bid offer spread is 5%.
Offer Price (present) = P1.20/unit

(1-0.05)
= 1.26
Offer Price (after 6yrs) = x (1+ i) n

= 1.26 (1 + 0.07) 6
= P1.89
Bid price after 6yrs = 1.89 (1- 0.05)

= P1.80

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Test Taking Tips
INSURANCE CONCEPTS
77
Test Taking Strategies
Before the Exam
1. Be prepared, read and review.

2. Before the test, list everything you will need for
it that is allowed.
3. Review your Traditional Life and VUL Simulated
Exams and Reviewers.

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Test Taking Strategies
During the Exam
1. Read the directions carefully.

2. Get the big picture.
3. Answer easy questions first.
4. Eliminate answers to difficult questions
5. Review your test to make sure that you
have answered all questions.

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VUL Insurance Concepts

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VUL Insurance Concepts

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Insurance Concepts Review

TRADITIONAL LIFE & VARIABLE UNIVERSAL LIFE

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Part 1: TRADITIONAL LIFE Part 2: VARIABLE UNIVERSAL LIFE

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Traditional Policies Non-Traditional Policies

1. Premiums, cash values and 1. Cash Values/Fund Values

Examples: Term, Whole Life, Examples: Universal Life,

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Universal Life (UL) Variable Life (VL)

1. Unbundled 1. Fixed premium, minimum

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Variable Universal Life

Investment Premium Death

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Peso cost averaging is an investing technique intended to reduce exposure

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Php 20,000 investment = 21,111 units

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How can we maximize the returns of the fund?

Regular Top-Ups Habit of Saving Buy low, sell high

* It complements peso-cost averaging

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o Managing one’s financial resources in order to achieve specific goals

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Implement the Plan Evaluate Investment

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To enhance or provide a comfortable standard

To improve one’s financial situation

To supplement retirement income

To provide funds for the education and bringing

SET To provide a fund for paying necessary costs

To save for the down payment/major purchase

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Keep stock of what you already have (cash/

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You will realize that you can’t afford to set

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Evaluate …or provide a comfortable

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Evaluate …or provide a comfortable

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Tip#2 - No Risk , No Gain

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To enhance or provide a comfortable

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Tip#3 - Match the investment product with your

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3. Medium – Long Term Goals

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To enhance or provide a comfortable

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A continuing process because the plan has

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1. Fixed Income Securities

Investments with a fixed principal amount, a fixed period of

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1. Fixed Income Securities

• Commonly referred to as “cash and deposits”

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1. Fixed Income Securities