Allianz Guru Series by Henry Yang: My First VUL Policy

In my first job, some years ago, I can still remember the excitement of getting my first paycheck. The sense of freedom where I can spend it on whatever I want. The weight tied to the responsibility (or lack of?) that it was money I earned and not an allowance from my parents. 
Guess what my first big purchase is. Yep, exactly as the title of this article. I got a Variable Unit Linked Insurance Policy, in short, a VUL. To be honest, I wanted to buy a gaming console, which I eventually bought months later. But Adulting 101 was a stronger force.

A few months later, I called my financial advisor and asked her if I could get my money back. Why?

1.      I didn’t have an emergency fund.

A few months into my first job, I experienced burnout. I resigned. All the cash flow from my job that I was excited about—gone. The first step in managing finances is setting aside cash for your emergency fund. A financial emergency doesn’t just mean losing your job; it can also be as simple as replacing a damaged home appliance or gaming console, or paying for a traffic violation. In my case back then, all of the above happened to me at different times.

2.      I didn’t understand how VUL worked.

When the VUL was pitched to me by my financial advisor, I got too focused on making money from it as an investment. I just looked at the fund projections, was happy with how the numbers are rising every year, and didn’t ask too many questions. When my first Statement of Account (SOA) arrived, I was surprised that the policy’s account value was significantly lower than the premiums I paid. On the next SOAs, I was even more surprised to see monthly deductions.

So, my tip is simple: ask, research, and ask again.

How will the fund grow and make the projections real? What are the costs and risks? Don’t be afraid to ask your financial advisor. Research and review multiple sources. Whenever something isn’t clear, especially in the policy contract, guess what? ASK.

3.      I didn’t have a long-term roadmap ready prior to investing in VUL.

Without a long-term plan, it’s very easy to have detours and get delayed by every shiny object that comes into view. Bank deposit with a digital bank, yes!  Foreign exchange trading, why not? Crypto ETF let’s go!

Same with building your wealth – if you haven’t identified your financial priorities yet, it’s easy to get swayed into various financial products that may or may not be fit for your long-term goals. I’m sure financial planning can be overwhelming, especially if you’re new to investing and unsure about how or where to start. Just take your time in researching, asking friends or family members who might have experience, and seek help from certified financial advisors. Here at Allianz PNB Life, we have Life Changers™ to guide you! 

I hope these lessons from my first VUL investment experience were insightful for you. More than knowing the importance of emergency funds and understanding how VUL works, it’s equally important to set a long-term financial goal. Always do your research, ask questions, and seek help from Allianz Life Changers™ before investing in any financial product.
Head of Investments

Henry is a graduate of University of the Philippines for Electrical Engineering - the first few years of his career are in building maintenance, electrical design and installations for construction projects and even teaching engineering to the next generation. Afterwards he took his Masters in Business Management also from UP Los Banos and worked at various investment-related roles from a top local bank, a US-based investment company and a global insurance competitor. He is also a CFA Charterholder. 

Currently, he is the Allianz PNB Life Head of Investments.