MANILA, PH – October 2025 – In the world of financial planning, one solution that has sparked both interest and debate over the years is a Variable Unit-Linked (VUL) insurance plan. While it became well-known for offering life insurance with an investment component in one package, it has also garnered mixed feedback, often with negative reactions from Clients who felt their investments did not grow as expected.
“VUL has been misunderstood by many,” shares Ivan Corcuera, Head of Insurance Investments at Sun Life Investment Management and Trust Corporation. “It’s not a one-size-fits-all product, and it’s certainly not a shortcut to wealth. It’s a financial tool designed to protect first and grow second.”
A life insurance plan that combines lifelong protection and fund accumulation, VUL’s core purpose is to provide a substantial financial shield for a family when they need it most. The opportunity for growth, while a powerful and valuable feature, is a secondary benefit.
Understanding the Nature of VUL
To understand VUL, think of it as a single product with two distinct functions.
Its primary function is life insurance coverage, which provides a death benefit payout to beneficiaries upon the insured’s passing. This is the financial shield that ensures the family’s future is secure, covering essential needs like education, outstanding loans, and daily living costs.
Its secondary function is the investment component. A dedicated portion of the premiums paid is invested in expertly managed funds, offering the potential for the policyholder’s money to grow over time. This accumulating value, known as the fund value, can be accessed during the policyholder’s lifetime for future financial goals. This fund value is tied to the performance of the investment funds chosen, which means its value can potentially grow higher, but it can also decrease based on market movements. “The investment side of VUL is a long-term play,” says Corcuera. “It’s about building value gradually, aligned with your financial goals.”
Importantly, the fund value is not just for future financial goals – it also helps keep your policy active. A portion of the fund value is used to pay for the cost of insurance and any applicable charges. Corcuera explains, “This means that while the fund value offers the potential for growth, it also ensures that your life insurance protection remains in force. That’s why it’s important to monitor how your fund is performing and ensure that it’s aligned with your needs.”
How Your Premiums Work
When a premium is paid for a VUL policy, that amount is not simply merged into a single pool. First, a premium charge is deducted from it to cover distribution and administrative expenses, which gradually diminishes over time. After this deduction, the remaining amount is allocated to the policyholder’s chosen investment fund and converted into fund units based on the current Net Asset Value Per Unit (NAVPU). These units represent the investment component of your policy and are linked to the performance of the funds you select, which means their value can rise or fall depending on market conditions.
“The fund units serve a dual purpose,” explains Corcuera. “It’s a balancing act between protection and growth.” A portion of these units is deducted to pay for insurance and periodic charges, ensuring your policy remains active and your life insurance coverage intact. The remaining units continue to accumulate and determine your policy’s fund value, which can potentially grow over time. The fund value can be accessed during your lifetime for future financial goals, offering flexibility while maintaining the core purpose of protection.
The VUL Protection-First Mindset
It is important to view VUL as a protection-first insurance solution, not as a purely investment vehicle like a mutual fund or stock trading account. “The real strength of VUL lies in its ability to provide a guaranteed benefit to your loved ones,” Corcuera emphasizes. “Unlike a pure investment where beneficiaries only receive the value of accumulated savings, a VUL ensures that they receive a predetermined, substantial amount.”
Think of VUL not as a strategy for quick gains, but as a long-term commitment to secure your loved ones’ financial future. “VUL is your shield and your tool for financial growth,” Corcuera concludes. “But like any tool, it works best when used and understood correctly with clarity, commitment, and guidance.”
Learn more about VUL by visiting www.sunlife.co/VUL101 or talk to a Sun Life financial advisor today to find the VUL solution that matches your protection needs and long-term goals
