Group 5 - Variable Universal Life (Final)

Variable Universal Life
Insurance
Group 5
Lists of Members
 Bùi Thanh Nam  Nguyễn Thị Phương
 Lê Minh Ngân  Vũ Nhật Quang
 Phạm Phương Ngọc  Lương Thị Ngọc Quỳnh
 Đinh Vũ Công Nguyên  Vũ Văn Sơn
 Nguyễn Thu Phương  Đặng Phương Tâm

Table of contents
I. Principle of Variable Universal Life

II. SWOT Analysis of Variable Univerval Life
III. Vietnamese Variable Universal Life products
Principles of Variable
Universal Life
1. Definition
Variable Universal Life (VUL) Insurance is a policy

that combines:
 the premium and death benefit flexibility of
universal life
 the investment choices of variable life
protection + investment
2. Features
 Maturity: permanent life insurance
 the death benefit will be paid if the insured
dies any time as long as there is sufficient cash
value to pay the costs of insurance in the policy
 Flexible premium:
- Minimum premiums that must be paid each month or period.
- Premiums can exceed these minimums. In Vietnam, the total excess

premium cannot be 10 times larger than premium at beginning of year.
- To keep the policy in force, enough cash to pay that month's cost of
insurance  no premium needs to be paid.
2. Features (cont.)
 Flexible death benefit:
The death benefit can decrease or increase periodically.
 Flexible investment:
 Option to invest in their preferred investment portfolio
 Option to switch between the investment fund options
2. Features (cont.)
 Cash value: minimum not guaranteed, depends

on investment performance
 Policy loans: Allowed
 Partial withdrawals: Allowed
 Surrender charges: Yes

Customer Segmentations
 Insurance Purposes
 Investment Purposes
Insurance Purposes
 Someone has affordable income, ranging from 40-55 years
old, mostly living in big cities like Hanoi, HCM… and long-
term planning investment (10-20 years) such as long-term
retirements, children’s enrollment expenses.
 Reason:
 Diversify the selections for insured by a flexible

amount of insurance coverage
 No tax for return in VN
Investment Purposes
 Investors who lack of professions of financial market, market

forecasting capacity.
 Pay premiums at anytime, any amount (subject to limits) for
insurers managing the portfolio  gain high rate of return.
 Reason:
 No time to manage portfolio investment
 Safe investors who want to gain cash value and

return from investment.
SWOT Analysis of
Variable Universal Life
3. Strengths and weaknesses
a. Strengths:
 Transparency: the insurance company has to
disclose the information about the performance
of portfolio.
 Separate accounts protect insured in the event
of the insurer’s insolvency.
 Withdraw cash value as policy loans without tax
penalties.
3. Strengths and weaknesses (cont.)
b. Weaknesses:
 Expensive: high premiums compare to other life insurance products
e.g: annual minimum premium of:
Prulink: 6 mil VND
Pru cash back: 3 mil VND
Pru-Health assure: 2.4 mil VND
 Complex: Policyholders require at least basic knowledge of securities and investing
 Market risk: the policyholders take all investment risk.
 Limited Investment Options: The policyholders only can choose stocks or bonds
which insurer provides
Threats
1. Unstable stock market
- Vn stock market is too dynamic and has downward trend which are not
be defined to be a direction stable so that links to small profit of
insurance companies
 Especially in 2009, when Vn stock market was so gloomy, clients of
insurance companies tended to join into some other insurance products
that are protective and saving
2. Variable demands of customers
- Vn Insurance market is more and more competitive because of

attending of a large number of insurance companies so that satisfying
the variable demands of customers is a mainly competitive advantage.
Threats
3. Competition between financial institutions ( banks,

investment companies…) and insurance company to
attract the surplus money of individual.
 Banks gave a lot of products which are highly competitive
compared to insurant products, such as : period saving,
step-up interest saving, permanent saving including
campaigns like : promotional gift, lottery…
 In fact, this is the main reason for the sink of insurance
market in 2004-2006
Threats
4. Adjustment in law of insurance industry has been being built

but still not catching up with the development of this
business, especially in the case Vietnam which is entering
deeply into global economy.
5. Knowledge and understanding about VUL of customers as

well as governmental agencies seem not to be enough, that
really creates barrier for the activities of this kind of
insurance.
6. Because of variable options for customers ( 5 categories),

VUL require effective management
Opportunities
1. Population and demand of education:
 Now, VN has 85 mil people, 13th in all over the world, tends to
increase 1 mil/year.
 Population is younger: 52 mils in labor age range, 60 % in total
 Expectation of life obviously increases( 50 years old in 1960 to
72 years old in 2005 )
-> a request of education and training both in Vn and abroad
-> requirement of ability for finance

Opportunity
2. Devolopment of Viet Nam economy:
 After “ doi moi”, Vn ecomony had a significant development and
continues to grow up with high speed ( projected 7% per year )
 According to World Bank, in 2010, GDP per person would reach to 1000
USD
 Vietnamese has saving tradition and the highest level of saving/
income.
-> higher living standard
-> appearance of more and more middle- class families and a need of
financial independence of elder people.
Opportunities
3. According to the judgement some experts, in this stage,

the appearance of VUL will define the background for
the future development, when VN stock market is stable
and increase in a good direction.
 This may be the product for the near future when
investors are familiar with combining between insurance
and investing in stock market accept the risk of investing
 When financial market booms, client will convert to buy
and sell products that are investible.
Opportunity
 Development of life insurance market in VN:
Vietnamese Variable
Universal Life Products
Vietnamese VUL Insurers
Prudential Manulife
PRUlink - Phú bảo gia đầu tư MAXX Phúc Lộc Thịnh
Vượng
Benefits - Protection for the insured and
family in case of risks occur - Fund choices
- Other supportive Insurance - Top-up
Benefits - Fund Switching
- Investment Benefits - Partial withdrawal
- Withdrawal and addition - Premium holiday
investment - Grace period
- Fund Switching
Entry Age 18-60 18-65
Age at Expiry 80 99
Premium Term 65 99
Minimum 6 million VNDs/year
Premium
Minimum Insured 30 million VNDs 35 million VNDs
Amount
Premium Method Annual Annual or Monthly
PRUlink’s supportive benefits
PRUlink Funds
Prulink’s Insurance Activities
Tổng số phí bảo hiểm 43.042.964.516 VND

nộp trong năm
Số phí bảo hiểm phân 16.639.466.781 VND
bổ cho phí ban đầu
Tổng số phí bảo hiểm 27.490.413.355 VND
đầu tư vào các quỹ
MAXX’s Funds
MAXX’s Insurance Activities
Only 2 Variable Universal Life Insurer?
High requirements:
 Minimum capital requirement: 200 bil. VNDs
 Adequate information technology: to monitor unit linked

funds
 Adequate ability to value assets and unit price of each unit
linked funds
 Possessing at least 2 funds
Only 2 Variable Universal Life Insurer?
Variable Universal Life Insurance: not attractive to customers

 Turbulence in Vietnamese Stock Market
 Customers aim for more protective insurance products.

Conclusion
Thank you for listening!!!

Group 5 - Variable Universal Life (Final)

Uploaded by

Copyright:

Available Formats

Group 5 - Variable Universal Life (Final)

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Group 5 - Variable Universal Life (Final)

Uploaded by

Copyright:

Available Formats

Variable Universal Life

 Bùi Thanh Nam  Nguyễn Thị Phương

 Lê Minh Ngân  Vũ Nhật Quang

 Phạm Phương Ngọc  Lương Thị Ngọc Quỳnh

 Đinh Vũ Công Nguyên  Vũ Văn Sơn

 Nguyễn Thu Phương  Đặng Phương Tâm

I. Principle of Variable Universal Life

Variable Universal Life (VUL) Insurance is a policy

- Minimum premiums that must be paid each month or period.

- Premiums can exceed these minimums. In Vietnam, the total excess

The death benefit can decrease or increase periodically.

 Cash value: minimum not guaranteed, depends

 Partial withdrawals: Allowed

 Surrender charges: Yes

 Diversify the selections for insured by a flexible

 Investors who lack of professions of financial market, market

 No time to manage portfolio investment

 Safe investors who want to gain cash value and

 Expensive: high premiums compare to other life insurance products

e.g: annual minimum premium of:

Prulink: 6 mil VND

Pru cash back: 3 mil VND

Pru-Health assure: 2.4 mil VND

 Complex: Policyholders require at least basic knowledge of securities and investing

 Market risk: the policyholders take all investment risk.

2. Variable demands of customers

- Vn Insurance market is more and more competitive because of

3. Competition between financial institutions ( banks,

4. Adjustment in law of insurance industry has been being built

5. Knowledge and understanding about VUL of customers as

6. Because of variable options for customers ( 5 categories),

1. Population and demand of education:

-> a request of education and training both in Vn and abroad

-> requirement of ability for finance

-> higher living standard

3. According to the judgement some experts, in this stage,

Tổng số phí bảo hiểm 43.042.964.516 VND

 Adequate information technology: to monitor unit linked

Variable Universal Life Insurance: not attractive to customers

 Customers aim for more protective insurance products.

You might also like