Variable Universal Life Insurance combines life insurance with investment options, allowing policyholders to allocate a portion of their premiums into various funds. This approach not only provides life coverage but also offers potential investment growth, which requires a clear understanding of related terms and features.



This page offers essential information and explanations about VUL insurance terms and concepts, with a focus on relevance to Filipino policyholders. The content aims to improve your understanding of VUL policies and equip you with the knowledge needed to evaluate these insurance products effectively.

Key Terms to Know

Understanding the specific terms associated with Variable Universal Life (VUL) Insurance is crucial for making informed decisions. Here is a detailed explanation of each key term:

• Commission: Refers to the Insurance Commission, the regulatory body responsible for overseeing the insurance industry in the Philippines. The Insurance Commission ensures that insurance companies and their products comply with legal and regulatory standards to protect consumers.
• General Account: This refers to the portion of an insurance company's assets that is not invested in separate variable accounts. General accounts typically include more conservative investments such as cash and bonds, and are used to support the insurance company's overall financial stability.
• Incidental Insurance Benefit: Additional coverage features included in a VUL policy that offer protection beyond the basic life insurance component. These may include benefits for accidental death, disability, or other unforeseen events, providing extra financial security.
• Minimum Death Benefit: The guaranteed amount that will be paid out to the beneficiaries upon the policyholder's death, regardless of the investment performance of the separate variable account. This ensures that the policyholder's family receives a guaranteed sum even if the investment account value is low.
• Net Amount at Risk: This is the difference between the minimum death benefit and the current value of the separate variable account. It represents the amount that the insurance company is at risk of paying out in the event of the policyholder's death, beyond what is covered by the account value.
• Separate Variable Account: These are accounts within a VUL policy where the policyholder's premiums are invested in various funds such as stocks, bonds, or real estate. The performance of these investments affects the cash value and death benefit of the policy.
• Unit Pricing: The process of determining the value of each unit of the investment funds in a VUL policy. This value is based on the performance of the underlying assets in the fund and is used to calculate the policy's investment value.
• Offer Price (Selling Price): The price at which new units are purchased when premiums are paid into the VUL policy. This price reflects the value of the units at the time of purchase.
• Bid Price (Buying Price): The price at which units can be redeemed or sold back to the insurance company. This price is used to calculate the amount the policyholder will receive if they choose to withdraw or redeem units from their investment account.
• Top-Ups: Additional premiums paid into the VUL policy beyond the regular premium payments. These extra funds are used to purchase additional units in the investment accounts, potentially increasing the policy's cash value and investment returns.
• Premium Holiday: A temporary suspension of premium payments allowed under certain conditions. During this period, the policyholder does not need to make regular payments, but the policy remains in force, with the possibility of deductions from the policy's cash value.
• Withdrawal Value: The amount of cash available to the policyholder when they choose to redeem or withdraw units from their VUL policy. This value is based on the current bid price and the number of units held.
• Partial Withdrawal: A type of withdrawal where only a portion of the investment units are redeemed. This allows the policyholder to access some of their cash value while keeping the remaining units invested.
• Forward Pricing: The method used to determine the price of investment units based on the next valuation date. This means that the price at which units are bought or sold is not determined immediately but at a later date.
• Allocation of Premiums: The process of distributing the premiums paid into the VUL policy between the insurance component and the investment component. This allocation affects the policy's cash value and the amount of coverage provided.
• Over-The-Counter Market: A trading market for securities that are not listed on formal stock exchanges. These securities are traded directly between buyers and sellers, often involving less regulation compared to exchange-listed securities.
• Actively Engaged: A requirement for insurance agents to maintain a certain level of annual commission earnings to ensure they remain actively involved in selling and managing insurance products.
• Variable Contract Agent: A professional who is licensed to sell or negotiate Variable Universal Life insurance contracts. These agents are trained to handle the complexities of VUL policies and provide tailored advice to clients.
• Insurance Broker: A licensed professional who assists clients in soliciting or negotiating insurance contracts. Brokers work with multiple insurance companies to find the best coverage options and terms for their clients.

Policy Requirements and Features

When purchasing a VUL policy in the Philippines, several essential requirements must be met:

• Insurance Commission Approval: All VUL contract forms and related documents must be approved by the Insurance Commission.
• Policyholder Age: Policyholders must be at least 18 years old.
• Minimum Death Benefit: Policies must include a minimum death benefit, which varies depending on whether the contract is single or annual premium.
• Withdrawal Value Calculation: The withdrawal value of a policy must be calculated at least monthly and should reflect the allocated units minus applicable charges.
• Cooling-Off Period: Policies include a 15-day cooling-off period during which the policyholder can return the policy for a refund of the market value of the units.
• Grace Period: A 31-day grace period allows for late premium payments, with unpaid premiums potentially deducted from benefits.
• Incontestability: Policies become incontestable after two years, except for non-payment or specific policy violations.
• Adjustments: Provisions for adjustments due to misstatements of age or sex and options to continue paying premiums if missed.
• Partial Withdrawals and Transfers: Policies must allow partial withdrawals and transfers between accounts, with approvals required for changes in investment policies.
• Beneficiary Designation and Policy Assignments: The designation of beneficiaries and conditions for policy assignments must be clearly stated, along with exclusions related to suicide within two years.

Managing Your VUL Policy

Managing your VUL policy involves understanding how separate variable accounts operate:

• Separate Accounts: These accounts must be established with regulatory oversight, keeping assets distinct and applied exclusively for policyholder benefits.
• Investment Guidelines: Investments within separate accounts must adhere to regulatory limits and guidelines.
• Company Insolvency: In the event of company insolvency, assets are protected and applied to contractual claims.

By comprehending these aspects, you can make informed decisions about your VUL insurance, ensuring that it meets your financial goals while providing the necessary protection.

For further assistance or personalized advice, feel free to contact us or consult with a licensed insurance professional. We are here to help you navigate your VUL insurance journey effectively.