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Term vs VUL Break-Even
Should you buy term life and invest the difference yourself, or pay 5× more for a VUL that bundles both? Year-by-year compounding, with the year DIY overtakes VUL flagged.
Net position after the coverage horizon
Term + DIY wins by ₱1,399,573
Term + DIY overtakes VUL in year 1
| Term + DIY invest | VUL (bundled) | |
|---|---|---|
| Total premiums paid (term) / Total premiums paid (VUL) | ₱240,000 | ₱1,200,000 |
| Investable difference (term − VUL annual gap) / VUL charges (non-investment portion) | ₱960,000 | − ₱180,000 |
| DIY fund value (compounded) / VUL fund value | ₱2,676,697 | ₱2,237,124 |
| Net position (term) / Net position (VUL) | ₱2,436,697 | ₱1,037,124 |
Tool reviewed 2026-06-14
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How it works
The setup. You want ₱5M of death-benefit protection for 20 years. Two options: (a) buy ₱5M term life for ~₱12K/year and invest the rest yourself, or (b) buy a ₱5M VUL at ~₱60K/year that includes an attached fund.
Term + DIY path. Each year you pay the term premium and invest the difference (vul_premium − term_premium) in your own low-cost fund. We compound at your DIY return rate annually.
VUL path. Each year you pay the full VUL premium. The "allocation" % goes into the fund (compounds at the VUL return rate); the rest disappears as mortality, admin, and rider charges.
The compare. At the end of your horizon, we net both: fund value minus total premiums paid. We also track the first year Term + DIY overtakes VUL (the "break-even year"). If it never overtakes within your horizon, we say so.
Pure browser-side math. Assumes you survive the coverage horizon — the death benefit is identical at the face amount you set. No tracking, no accounts.
§ 03
Frequently asked questions
What's the difference between term life and VUL?
Term life is pure protection — you pay a small annual premium, and if you die within the term your beneficiaries get the face amount. No cash value, no investment component. VUL (variable universal life) bundles term insurance with an investment fund: your premium pays for both the cover and an attached unit-linked fund. VUL is usually 4–8× more expensive than term for the same death benefit.
How does 'buy term and invest the difference' work?
You buy the cheaper term policy, then take the annual premium you would have paid for VUL minus what you actually paid for term, and invest that difference yourself in a low-cost index fund (FMETF), mutual fund, or balanced fund. Over a long horizon, DIY investing typically beats VUL because VUL funds carry mortality, admin, and rider charges that drag returns.
When does VUL actually win?
Three honest cases: (1) you're a chronic non-saver and the forced premium discipline is the only way you'll save; (2) you want a single bundled product and value the convenience; (3) the VUL fund return materially outperforms what you'd realistically achieve DIY (rare given fees). For most disciplined savers, term + DIY wins.
What VUL fund return should I assume?
PH VUL equity funds have historically returned 6–8% per year over rolling 10-year windows, but fund fees of 2–3% are baked in. Use 7% as a midpoint. Don't use the 10–15% projections agents sometimes show — those are illustrative, not promised.
What DIY return should I assume?
If you'd invest in PSEi-tracking FMETF or a broad balanced mutual fund, 8–10% is realistic for the equity portion over long horizons. If you'd invest more conservatively (bond fund, money market), use 4–6%. The DIY edge depends on your actual portfolio — not what you wish you'd do.
What's the 'VUL allocation %'?
Years 1–3 of a VUL, most of your premium pays charges (mortality, admin, surrender). Steady-state, 80–90% of the premium flows into the fund. We use a single average allocation for simplicity. If your VUL policy illustration shows year-by-year allocation, average the steady-state years.
Does this account for the death benefit?
Both term and VUL pay the face amount on death — that's the same. This tool isolates the question: if you live through the coverage horizon, which option leaves you wealthier? It assumes you survive; the death-benefit case is identical for both products (at the face amount you set).
Should I include an inflation adjustment?
The model uses nominal pesos throughout, so both columns are comparable. If you want a real-terms answer, subtract your inflation assumption (3–4% in PH) from both DIY and VUL fund returns — the comparison still holds, the absolute peso figures just shrink.
Does this save or transmit my data?
No. Everything runs in your browser. We don't collect, store, or transmit any of your inputs.
§ refs
Sources & references
From official issuer, regulator, and data-provider sites. Verify any figure against the primary source before acting on it.