Life Insurance: Should I Cancel my VUL and Switch to BTID?

Updated: November 9, 2021

A lot of people who don’t know much about investments are often convinced by life insurance agents to buy VUL or Variable Unit-Linked Insurance, or also known as Variable Universal Life insurance.

The marketing pitch is great. When you get a VUL, you get a 2-in-1 product – life insurance and investment. And in today’s world of combo meals, getting a VUL product makes sense.

Unfortunately, not many are aware of BTID. This is the concept of buying term insurance and investing the difference in costs of getting a VUL, on your own instead. Thus, the acronym for it — “Buy Term, Invest Difference”.

This financial strategy, as I see it, makes better sense as I’ve written before:


To briefly explain my reasons, buying term insurance is cheaper. And also, this strategy allows you to choose and manage your own investments, which can also save you on some fees.

You can choose to invest directly in the stock market. Put money in various mutual funds. And withdraw cash from these investments anytime you need it.

Of course, doing BTID requires financial discipline. But not many have that.

And that’s where getting a VUL can make sense. The major advantage of availing a VUL is the convenience of having to think about “just one thing” and everything else takes care of itself.

One won’t need to think about where and when to invest. Just pay your premiums regularly and you’ll be fine.

However, as a financial advocate, I prefer to encourage people to develop financial discipline. I want more Filipinos to be educated about investments and help them manage their own portfolio better.

That’s why I prefer teaching BTID. And I’m happy that most of my readers also believe that it is a better financial strategy.

Switching to BTID

Unfortunately, a lot of people who discover and learn about BTID are already paying for a VUL policy.

Most often, it was sold to them by a friend during a time when they didn’t know much about life insurance and investments.

If you’re not really into learning about personal finance, getting a two-in-one insurance and investment product will make sense.

But then, here you are now, learning all about BTID. And start to regret buying that expensive VUL policy.

You begin to contemplate and ask yourself: Should I just cancel my VUL and switch to Term Insurance and do BTID?

I’ve been asked this question a lot of times, and my answer is usually the same. I tell them — NO, don’t switch, especially if you can afford it anyway.

Canceling your policy and switching to BTID will make you lose more money. The extra profit and the savings from doing BTID won’t be enough to cover the costs of losing your VUL policy. So just stick with it.

The only problem here is if the VUL premiums are too high and you can’t afford it anymore, given your current situation. In this case, you can do the following:

First, tell your insurance agent about it. Particularly, ask how many months can the VUL’s fund value cover, in case you decide to miss payments because you’re on a tight budget.

If you’ve been paying for a few years already, then you’ll most likely have several months before your policy lapses.

Second, study your budget and eliminate unnecessary expenses. I’ve helped a lot of people afford their VUL this way. And it could help you too.

And lastly, find ways to earn extra income so you can continue with your payments. I admit that this will be difficult, but it’s better to try than just doing nothing until your policy lapses.

In Summary

I believe that BTID is a better financial strategy. You should choose it if given the choice.

However, if you already have a VUL policy, then you’re still better off than most Filipinos who don’t have insurance nor investments at all. So no need to feel bad.

Just continue paying your VUL premiums. And focus on making more money instead, so you can create surplus cash for stocks, bonds, mutual funds, and other types of investments.

And in the worst-case scenario that you really can’t pay for your VUL policy anymore. Then you have no choice but to just let it lapse.

When this happens, I recommend NOT immediately doing BTID.

Instead, go back to the basics and learn about money management first, until you develop the habit of saving.

Because if you don’t have financial discipline, you’ll most likely fail at doing BTID too.

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  1. I was actually convinced to buy VUL until I came across with your column. It somehow enlightens me to buy BTID instead. I would classify myself as a first grader in terms of stocks and investing and with your blogs I am learning a lot. I would liken it as a legit summary for all 100 books available in the market.

    Keep on writing Fitz and thank you very much.

  2. All of the major life insurance companies offer term insurance. Many agents choose to sell VUL instead of term insurance because they earn higher commission from VUL.

  3. For people with financial discipline plus a good grasp of investments, it would really be good to BTID. However, having been a financial advisor for 40 years, I know that very few people really have financial discipline and for these people, instead of Buy Term, invest the difference it would become BUY TERM, WHERE’S THE DIFFERENCE because more often than not, they would end up spending rather than investing the difference. Hence the most important thing is to be honest with our self. If you truly have financial discipline, by all means, buy enough term to protect your economic value (because insurance is the only investment that does not rely on time and is self completing) and invest the difference but be ready for ups and downs.

  4. Yes, VUL is expensive but take note that term insurance is normally up to age 65 only. If you want insurance even after when you are 65 years old then you might want to think buying VUL instead. In addition, if you are diagnosed with health problems in the future you cannot buy term insurance anymore. For me, do BTID if you are more concern of your investment. If you are more concern of insurance then VUL is the way to go. 🙂

  5. @rick simeon
    At age 65, a person would normally have no more financial dependents, and thus they don’t need life insurance anymore. For estate planning, there are other financial tools available that can help — getting a SPVUL, setting up a family corporation, etc.

    You can get a long-term renewable term insurance with accident and critical illness benefits. If in the worst case scenario that this one lapses, and you suddenly have health problems before you can renew, then that’s where the investments can help.

    Financial discipline is important to successfully do BTID. If you don’t have it, then VUL is the way to go.

  6. I am not against BTiD, in fact I like it better than VUL. Before, I’m only doing BTID, now I’m doing both of them for added security and diversification.

  7. I called Philam and Sunlife before. They would always refer me to an agent who would offer the VUL instead of term life but I specifically told them that I would only get term life. I have read numerous articles before, including this site, about getting term and not VUL if you are good at managing risks. When agents talk to me, I would let them blabber about the advantages of VUL over term (sayang naman yung time nila). When they are fully aware that I am only after the term, they will just snub me. They would always say that they would refer me to an agent who is licensed to offer the term life. Maybe like Fitz said, they are only after the commissions. Feeling siguro nila I’m not worth the effort of convincing. I have entertained 3 agents already, nakakasuya na hehe.

    Pero, at least some banks offer the life insurance for free…BPI and SBC… just maintain a balance. It’s good enough for the time being.

  8. My teen daughters have VUL which I started last 2016. I found this VUL as an obligation to make payment rather than an obligation to invest in MF or UITF. Don’t get me wrong but my teen daughters have also MF. When you say VUL, it looks like you are oblige to make payment in order the plan to be in effect as much as possible; while in MF, it seems that there is no urgency nor deadline whether you have to put or not to put money. Dahil nga kung minsan ay may ugali tayo na procrastination, nasasabi natin na saka na lang magdagdag ng pera sa MF kasi hindi naman maglalapse yan. Unlike sa VUL, naoobliga ka kasi ayaw mo na maglapse ang policy. It is just a matter of how we characterize ourselves.

  9. Hi Sir Fritz! What about if I have already paid for 10 years for my VUL but I want to stop paying already because I am investing in the stock market anyway. Initially, I thought that it was just 10 years to pay. I did not know they (Sunlife) will continue to bill me after 10 years. What is the proper thing to do?

  10. @Raymond… just continue paying. It’s better to keep it for the long-term benefits. The market is down, and your VUL’s investment value can’t cover the cost of the insurance, that’s why you need to pay more. When the market goes back up, you won’t have to continue paying.

  11. Hi Sir, May I ask you if you have Critical Illness protection? I do believe that BTID is way better for us people that would like to manage our own investment but most of term insurances only have death benefit beside from Sun LifeAssure (but still expensive for term insurance). I’m torn if I should get a whole life policy (health protection focused) or with VUL that covers Critical illness with minimal premiums (18K/year) since I would like to strengthen my health protection. Looking forward to your advise. Thanks!

  12. Yes. If you already have VUL, keep it. Diversification is also one reason you should.

    However if you still don’t have it, when you have more money, you can still do VUL afterwards if you’d like. After all when you withdraw the earnings from it you won’t get taxed as opposed to Mutual Funds or stocks for example.

  13. Thank you po for your efforts and sharing that helps us understand better this stuffs.

    I bought a VUL late 2018 lang po and bale biyearly payments ko, so 1 year pa lang ung paid ko. My next payment due is this Feb, I understand na for the first few years puro charges and commission mapupunta ang payment, so does it make sense to pull or convert na lang to term as 1 yr pa lang naman ako?

    Thanks and mabuhay,

  14. Thanks for the info. I already bought a VUL (late 2014) and still paying (almost 7 years of paying!). I remember the policy is 10 years to pay before I can stop paying.

    I asked the agent before if there are other investment options and she suggested VUL since it’s a insurance and investment in one. She said that my policy will still accumulate funds when it matures and I can withdraw some of the money earned as long as it won’t exceed from the allowed cash out.

    I want to avail BTID but I don’t think I can pay for it because I’m paying VUL and splitting my savings to ING and to another bank.

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