Vul vs. Btid

Attribute | Buy term insurance AND Invest the difference (BTID) | Variable Universal Life Insurance (VUL) |

Price | The price for these two is the same because BTID means that VUL premium - Term insurance premium = Invest the difference in mutual funds. |

| Term insurance is the cheapest insurance available because of the nature of coverage, paying period and probability of lapsing. | A VUL costs higher than term insurance because of the nature of coverage, paying period, guarantee of protection and probability of lapsing. |

Cost effectiveness | Term insurance gives you a higher coverage for small premiums. Cost effective for now, but may not be in the future. See “paying period” below. | Expensive now, because the charges on premiums for the first 3 years are high. It only becomes cost effective after 3 years because the insurance charges get lower. |

Coverage | Temporary coverage – you are only covered for a certain period of time. Example: 1 year, 10 years, until age 65 or 70. | Permanent coverage – you are covered until you are old. Example: until age 88 or 100. |

Paying period | Commonly, you have to pay regularly to be covered but there are companies who offer limited pay term insurance. Regular means payable every single year while limited means paying for a certain number of years. | Flexible. You can either go for regular pay or limited pay. You can even take premium holidays from time to time. |

Guarantee of protection | Only when you have paid the premium will your coverage is guaranteed to be in-force. | You are guaranteed to be covered for as long as there is an investment fund value. |

Probability of lapsing | When you forget or are unable to pay the premiums, you have to pay within the grace period. Otherwise, the policy becomes lapsed and you are no longer covered. | When you forget or unable to pay your premiums, the insurance charges will be automatically deducted from the investment. |

Returns | Generally, this strategy...