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Difference Between MF & Variable Life Insurance

Hi what's the difference between Mutual Funds and Variable Life Insurance being offered by AXA or Philam?

Which is better?

Thanks!

Comments

  • --SuperBoy----SuperBoy-- Manunulat PExer
    any thoughts? an agent in metrobank is urging me to transfer my TD to AXA. thanks.
  • doc piodoc pio Member PExer
    You can get higher returns in a VUL than a time deposit, but you can also lose money. If you don't need the insurance, then maybe mutual funds will be better for you because they are better monitored than UITF's and VUL's from banks.
  • --SuperBoy----SuperBoy-- Manunulat PExer
    but i don't know anything about Mutual Bonds. i 've been reading the thread, kinda getting the idea but i have no means of knowing which is better. and also, i don't know how to invest in one. thanks
  • bluetheherobluethehero unsung hero PExer
    ^go to www.icap.com.ph then try to get some info about mutual funds.

    as to how to invest, it is always best to go to the mutual fund office itself and ask about their different funds.

    but for the question, in my limited understanding,

    both are managed portfolios or pooled funds. the only difference is that the Variable Life Insurance has an insurance component. meaning, everytime you place money for investment, a percentage is allocated for insurance, while the rest are placed in the investment portfolio. for example, Pru-Life UK has a minimum of 75% investment 25% insurance for a minimum of 50K initial investment and 1k mandatory monthly investment (not sure if this still applies).

    Mutual Funds obviously have no other components except for the portfolio itself.

    so what's the basic consideration if an investor is having a dilemma between a mutual fund and variable life insurance? well, 1) do I need an insurance, 2) after carefully examining the previous performance of the mutual fund company and the variable life insurance company, which fund had the better return, 3) which between the two has the higher risk?, 4) which has the investment terms and policies that will suit my finances?
  • doc piodoc pio Member PExer
    Actually, SuperBoy, the secret is not to overthink it. Just look at ICAP, check out the top three performers of each category, then put a little money in the one you choose every month. My advice is DON'T LUMP SUM YOUR INVESTMENT, unless you understand the market.
  • tekton12tekton12 Member PExer
    Actually, SuperBoy, the secret is not to overthink it.

    This is a good point. There is an interesting article here http://www.leithner.com.au/circulars/circular97.htm which demonstrates the pitfalls of overanalyzing your investments. It shows how a group of geniuses (the MENSA Investment Club) seriously underperformed the S&P 500 index over a stretch of 15 years. They only returned 2.5% annualized versus the S&P 500's 15% annualized during the greatest bull market in US history. Their mistake was they traded too frequently, using fancy trading platforms and software. Anyway, the article speaks for itself.
  • --SuperBoy----SuperBoy-- Manunulat PExer
    Thanks for all replies!
    ^go to www.icap.com.ph then try to get some info about mutual funds.

    as to how to invest, it is always best to go to the mutual fund office itself and ask about their different funds.

    but for the question, in my limited understanding,

    both are managed portfolios or pooled funds. the only difference is that the Variable Life Insurance has an insurance component. meaning, everytime you place money for investment, a percentage is allocated for insurance, while the rest are placed in the investment portfolio. for example, Pru-Life UK has a minimum of 75% investment 25% insurance for a minimum of 50K initial investment and 1k mandatory monthly investment (not sure if this still applies).

    Mutual Funds obviously have no other components except for the portfolio itself.

    so what's the basic consideration if an investor is having a dilemma between a mutual fund and variable life insurance? well, 1) do I need an insurance, 2) after carefully examining the previous performance of the mutual fund company and the variable life insurance company, which fund had the better return, 3) which between the two has the higher risk?, 4) which has the investment terms and policies that will suit my finances?

    Ummm, meaning everytime I put money on VLI, a part of goes to insurance? meaning i'm paying for the insurance. thought it comes free with the investment. i'm don't really need an insurance.

    And also, for everybody, what's the feedback for AXA Honey Pot? Right now that's my "only" option since i bank with metrobank and the manager there is encouraging me to transfer my TD to AXA.

    But i wanna learm more. Thanks.
  • bluetheherobluethehero unsung hero PExer
    ^in my understanding, yes. every time you place an investment, a portion goes to the insurance. it's part of their policies that a portion will go to insurance. otherwise, why would they call it Variable Life insurance if each time you invest, you will only put your money in their investment portfolio? don't forget that you are still placing investments in an insurance company.
  • --SuperBoy----SuperBoy-- Manunulat PExer
    thanks bluethehero. its still a little fuzzy for me. like, how does my money earn in VLI, as well as in MF. if they say year to end earnings of 35%, that seems to be good deal.*

    sorry for being so newbie.
  • bluetheherobluethehero unsung hero PExer
    ^you don't have to know the complications of the earnings, both the VLF and MF investors earn depending on the performance of the funds.

    ganito, kunwari ikaw, tapos si investor B at si investor C, ay magiinvest. ikaw, ang investment mo ay P1M, tapos si investor B ay 500K, tapos si investor C ay 100K.

    a) VLF
    pagsasamahin ng VLF company lahat ng pera mo at nina investor B at C at ng iba pang investors at iiinvest sa stocks, government securities, time deposits, etc. yung company na ang mamomroblema kung ilang percent sa stocks, sa governments securities, or simply put, sa percentage ng investments. usually, the company will set the percentages depending on the risk willing to be accepted by the investors. and like i said, may portion sa insurance.

    b) MF
    pareho lang sa taas, ang pinagkaiba lang, walang insurance component.

    so nasa sa iyo na yun kung saan ka magiinvest. try to research the performance of their funds. ask them, and tell them to show their track record in investing.

    lastly, remember that hindi lahat ng sinasabi nila nagkakatotoo. the earnings are depending on so many factors (stock market, political stability, economy, etc.) pero they are expected to keep true with their promise.

    bottomline: MF and VLF are there for investors that are willing to leave their money and have it earn via passive income. nagkakaiba iba lang sila depende sa performance ng fund. for example, Mutual Fund company A may have a yield of 20%, while Variable company B have a yield of 25%. using those yields, you can now compute your investment earnings using the yields.

    yields are computed on different ways, usually, merong year to date, annual, 3 year, and 5 year. o kaya, you can use the Net asset value from the date you invested to the date you wish to know the amount of your earnings. for example, you invested May 1, 2006, tapos you wanna know your earnings as of today, you can use the NAV of May 1, 2006 and today as reference to compute your earnings.

    if there are experts in mutual funds and Variable life insurance, please help me explain the matter in layman's term. baka mali na pala pinagsasasabi ko rito. hehe.
  • doc piodoc pio Member PExer
    bluethehero, let me try. Simple lang yan. If you don't need the insurance, don't get AXA. I say this only because I also bank with Metrobank and I also have been offered this product. You see, the manager gets a commission for selling to you. Tell him that you want to buy mutual funds instead, specifically, First Metro. I bought from Metrobank also, and my yield for one year is 60%.
  • --SuperBoy----SuperBoy-- Manunulat PExer
    First Metro? I will ask about that. Is that Balanced Fund?

    Oh, and thank you bluethehero, i kinda getting the picture already. will have to reseach more though as what MF to get. Since i don't need the insurance so i guess i won't get the VLI, it seems i will be wasting a part of what im investing for something i really don't need anyway.
  • earathouearathou Member PExer
    is VLI the same with Insurance with Investment?

    Insurance with invesment is offered with life insurance and also has investments.
    it is like giving the usual insurance premiums and upto the end of payment you can get a yearly cash benefit. And upon maturity you can get another lumpsum amount - this what they called the investment amount you earn. The amount is fixed.

    The lumpsum amount value is approximately the same total payments you give.

    Just like paying for 10years has a total of 200K~. and on the 20th year you can have another 200K (fixed).

    So you can get additional 200k at the same time you are covered by life insurance by them.
  • --SuperBoy----SuperBoy-- Manunulat PExer
    no, as far as my research teaches me, Variable Life Insurance is much like Mutual Funds, only that it has a life insurance coverance amounting to around 1.2 of your total investment. it is paid in lumpsum amount.

    another question, is it best now to invest either in MF or VLI now when its only days before election? or should i wait after the election and play it by ear if the election will have an effect on the investment

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