BTID vs VUL and How I See Financial Planning With Respect to Life Insurance

Updated: November 24, 2017

Buy Term, Invest the Difference (BTID) versus getting a Variable Unit-Linked (VUL) life insurance is always a divisive topic, even among us Registered Financial Planners.

There have been many attempts to compare them based on actual figures and both sides can always come up with results that favor their stand.

However, I believe that protection always comes before investing and getting a term insurance is the cheapest option. I’ve met too many people who had to let their policies lapse because they can’t pay their VULs anymore.

Also, it’s important to note that insurance companies are dynamic organizations. Proof to that is the that fact they used to push for whole life, but now it’s VUL.

Because of the many advantages of doing BTID, most companies are now redesigning their VULs to lessen or cope with those advantages – which includes offering term insurance that can be upgraded to a VUL before the end of term.

Some have even increased the cost of their term insurance, to lower the gap between the cost of VUL plans.

So, I will not be surprised if someday, VULs become the better option to plain vanilla term insurance. Or maybe, there will be a new type of insurance that will make VULs obsolete like whole life.

But that’s in the future… for now, I believe BTID is still the better strategy.


Some people got offended when I said that those who get VULs are lazy. For me, that is the truth based on the numerous observation I’ve made through the years of those who mindlessly bought VULs.

They were too lazy to learn about investing, they were too lazy to understand VULs and/or they were too lazy to question the true intentions of their insurance agent.

However, what many people failed to recognize in that post is that I gave two other reasons to get a VUL. And those are to help a friend who needs to reach a sales quota and; if you’re looking for a “second-tier investment” for diversification.

On that latter reason… you are definitely not lazy if you already have pooled funds, stocks, real estate investments, etc. – and yet, you’re still looking for a place to invest; and thus, getting a VUL now makes sense.

Life insurance, whether term or VUL, is simply one of the many tools that a person can use for financial planning. It is not the only solution to the countless life scenarios that may happen.

Cash deposits, life and non-life insurance, short-term and long-term healthcare plans, investment funds, stocks, real estate, memorial plans and many others – these are all tools that are available for you.

Here’s the thing… I’d like to share my own financial strategy with respect to life insurance. So that you may better understand why I am on the side of BTID.

We can just agree to disagree if you believe otherwise.


How I See Life Insurance in Financial Planning

Get term life insurance because it’s the most affordable type that can protect your family financially in the short-term. A must for breadwinners who don’t have a good financial foundation, i.e. no savings, no investments.

Now that your family is protected just in case you die too soon, it’s now time to take care of the possibility that you live too long through investing. Invest to create passive income and grow wealth for retirement.

At this point, you have entered your wealth accumulation phase. Just renew your term life insurance when it expires during this phase.

After the value of your assets have substantially grown – if your net worth is more than P2.5 million in my opinion, as based on the current exemptions when it comes to estate taxes – then it’s time to upgrade the use of life insurance to both protection and a tool for estate planning.

At this phase, term life insurance is still the cheapest option, but VULs can now be included for consideration because:

  • You can comfortably afford paying the higher premiums.
  • You already have a good financial foundation, i.e. you have investments in various instruments (stocks, mutual funds, etc.) and own several high value assets (real estate, etc.)
  • You’re leaving the wealth accumulation phase, and preparing to enter the wealth distribution phase of one’s financial life.

In case you enter this “transition phase” at a time when you can’t get any type of life insurance anymore because no company wants to insure you; or it has become too expensive to get at your age, then all is not lost.

When it comes to estate planning, there are still other tools that one can use depending on your circumstances – you can put up a family corporation, liquidate a portion of your wealth and give them to your heirs to use for estate taxes, etc.


To conclude, I believe that life insurance plays a dynamic role in one’s financial life. Its first use is for protection just in case you die too soon – to which term life insurance is the best answer.

As you go through your wealth stages, life insurance slowly becomes a tool for estate planning, to which VULs (especially Single Pay VULs) become one of several options.

Thus, it’s important to really plan your life well.

As for me, upon reaching the proverbial retirement years, I will slowly liquidate all my assets and enjoy life until all that’s left of it is just enough to pay for my basic living expenses and my funeral.

At this point, paying estate taxes won’t be a big issue nor will it be a burden to my heirs, as I hope to have very few assets left.

In the meantime, while I journey towards that stage – everything I know and will learn about financial planning, I will make sure to pass on to my children, heirs and loved ones.

This is my final goal so that they will have no desire to inherit any money from me because they have learned to create and grow their own wealth.

What to do next: Click here to start your financial journey with IMG Wealth Academy
Photo credits: jakerust and dhilowitz


  1. Bro Fitz, you shared good points here. Investment and the option that a person has to pick must be started in analyzing the current situation he has and what are his plans in the near and far future. At the end, I also believe that it boils down to what his capacity and situation at the present to know which type of investment is best for that person.


  3. But i think its a case to case basis, especially if you are an OFW, some insurance company dont allow OFW for a term life insurance, (by the way, I have only inquired for one company), that is why as an OFW, VUL is a great choice. I was really rattled reading that having a VUL is for lazy people, but that was relieved when I have read the entire article that if you already started investing to other products it is ok to have a VUL, actually, I have started investing in stock market.. Thank you for your articles, Im learning a lot and it serves me as a reminder everyday. (I posted a comment because this article made me confused a little bit, kindly enlighten me more if what I thought is right or wrong?)

  4. My Mother just entered the “transition phase” you’ve mention in the article but she did not want to set up a family corporation and liquidate a portion of her assets to be given them to me and my siblings for estate taxes because she got her hands tied with my late father’s murder case and other financial obligations but I did not know that single pay VUL can help so I’ll try to convince her to get one even if that the money is came from my late father’s assets (which I don’t mind at all since me and my other siblings don’t want to handle it due to the fact my late father’s home province is relatively dangerous)

  5. BTID is a strategy for financial planning just like the VUL. Pls note the insurance cost of VUL is based on group term and this is the cheapest insurance. When the account value of ur investments has reach the insurance amt set at the inception of the plan(or the face amt) the insurance charge is stopped. You need to understand many benefits of the VUL. You can attach riders for critacal illness n hospital income that are important to consider in financial planning. The VUL insurance coverage is for life (as long there is acct value of the fund ) unlike term insurance the u can renew until 70 yrs old only.

  6. @Edrick
    My tombstone would read:

    “Here lies a man who became a millionaire — and then spent the rest of his life experiencing daily joys, traveling the world, and helping others.

    He died with zero net worth and left his family with no debts, no financial obligations to pay, and an exact roadmap on how they can too, live their lives to the fullest.”

  7. wow! need i say more? really got the point, what a wisdom…you can help your loveones more not by giving them the fish but instead teaching them how to fish .

  8. I must say.. this is a beautiful article, esp your closing statement.. “Everything I know and will learn about financial planning, I will make sure to pass on to my children, heirs and loved ones.. so that they will have no desire to inherit money from me because they have learned to create and grow their own wealth…” – Fitz
    Salamat at Mabuhay ka Fitz V !!

  9. I have started investing in VUL 3 years ago. For now, I can say that 1k a month is cheap knowing that I have life insurance and investment too. I think I need to learn more about BTID. You have good points Sir Fritz, maybe if I have known these points before, I might go with this option. But learning about VUL and the projected value of my investment in 10years, I think I am satisfied. I just need to accumulate more so I can make more top-ups so when time comes I can no longer afford it and it has enough FV, then I no longer have problem on my premiums. I did a computation about the total payment I will be making for 65 years, and I think, the value is cheaper given the amount of projected value is higher.

  10. Ano po ang pinagkaiba ninyong mga “registered financial planners” sa mga karaniwang insurance agents?

  11. Hi Sir, is it possible for you to share which term insurance you have? From which company if ever you’re allowed to share? Thanks po

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