Insurance - too much/too little?

[kansaifolk]

Hello,
I know that most Japanese spend a lot on extra insurance, which leads me to believe it is necessary.

Not really understanding the medical system here, it is hard to know what is necessary. As a main breadwinner in our family with 2 kids, I currently have life insurance, hospital stay insurance, and long-term disability insurance through shigakukyosai's supplemental insurance scheme.
As renewal time is up, my spouse is encouraging me to increase coverage to get the "big 3" supplemental insurance. I am hesitant, as it doesn't seem cost effective. 60,000 year extra, and it would give me a one-time pay out of 3,000,000 yen if I got cancer, for example.

Is it true that in Japan, if you develop cancer, for example, you are looking to pay about 3 million in your own expenses?

Thanks!

[Dan]

My main issue with health insurance is that it doesn’t prevent you from getting sick..!

But whether ¥60,000 is a lot or too much to pay for taking out extra insurance depends on your reference framework, especially compared to how much money you have left over to invest and how much you are currently already paying for your existing insurance plans.

It sounds like your current plans already give you pretty decent coverage. Will the extra insurance provide coverage to other members of your family or is it only for yourself?

On a monthly basis, paying ¥60,000 a year comes down to ¥5,000 a month. If you have not already switched to a reasonable provider from one of the big three mobile phone operators that might be less than your monthly phone bill. It is also not a lot if it gives your wife peace of mind.

But it could also be as much as paying an extra month of groceries — if your family currently pays about ¥60,000 a month. That’s quite a lot, especially if you’d calculate how much you could get in compound interest over the long term by investing ¥60,000 a year extra.

[StockBeard]

As always, Insurance should be here to handle dramatic expenses that you cannot handle otherwise.

The "big 3" and hospital "long stay" insurances feel a bit strange to me, as I don't understand how they are not already handled by regular health insurance + cap on maximum hospital bills, but that being said I am pretty sure that I am subscribed to one of those too, as "recommended" by my JP wife.

Life insurance: that's one I would cancel as soon as you get close to FI, or when your kids leave the house. also check if your work does not already cover that for you (mine does, and I discovered it only this year, after paying for another life insurance for almost a decade )

Disability: that's one I would personally keep: a disability would increase my cost of life and is not something I have planned in my finances, so I need the insurance.

In my experience, people in Japan are over-insured.

[Jamo]

In my experience, people in Japan are over-insured.

Definitely. I believe it's due to their "anzen, anshin" (security, safety etc.) mindset. Recently my wife wants us to get bicycle insurance... It's been in the news a bit lately. Not the one for if your bike gets stolen, but for accidents. I'm sure there's plenty of people getting suckered in there too.

[RetireJapan]

Definitely. I believe it's due to their "anzen, anshin" (security, safety etc.) mindset. Recently my wife wants us to get bicycle insurance... It's been in the news a bit lately. Not the one for if your bike gets stolen, but for accidents. I'm sure there's plenty of people getting suckered in there too.

To be fair, bicycle insurance is super cheap. I have it. Come to think of it, we also have accident/liability insurance. Typical oversinsured family in Japan!

[Jamo]

To be fair, bicycle insurance is super cheap. I have it. Come to think of it, we also have accident/liability insurance. Typical oversinsured family in Japan!

It's too late for you now, assimilation is almost complete...

[StockBeard]

I guess it depends if your bike insurance is a liability insurance (damages you do to others with your bike). Liability insurance I would definitely take, assuming I'm not covered by another insurance.
But insurance to protect the bike, or myself: no thanks, the health insurance already covers me, and the bike itself is not worth being insured.

[RetireJapan]

Yeah, I think it was something like up to 50 million in liability to third parties.

[StockBeard]

In that case I would probably take it actually. I have heard horror stories from bike owners here in Japan, in particular when you're a foreigner, and even when it was obvious the culprit part was the other (e.g. car owner who rammed into a friend's bike asked for 2 millions for damage to their car. Having support from an insurance in that kind of situation would have greatly limited the stress - I'm not sure how the story ended). Even if I don't want to buy too much into the "debito" paranoia, the risk to lose a lot as a foreigner is real if you run into such a dispute.

[DragonAsh]

I have also heard of such horror stories, but never first-hand, always the 'friend of a friend' stuff. Quite frankly I'd take it with a grain of salt. That said, it is so cheap - something like Y100 million in coverage for Y3000 a year - that paying for it and simply buying one less 缶コーヒー a week can be cheap peace of mind depending on your Significant Other.

As for insurance for cancer and the life - we have a bit of personal experience with this. In general, your max out-of-pocket expense the first year would be around Y500,000; average figures are around half that, even with the very long hospital stays compared to the US/UK. Assuming it's taken care of and the second year is just check ups and such, you're paying less than Y100,000 for the entire second year.

How long is the insurance plan? Does the price increase each year? Paying Y60,000 a year may not seem like much, but if your insurance plan is for 20 years, that's Y1,200,000, almost certainly more than you'd have to pay out of pocket. The 高額療養費 program caps how much you need to pay out-of-pocket each month.

Insurance is to prevent some sort of catastrophic event that wipes out the family finances. Unless you have zero savings, that is unlikely to happen in Japan: I don't think Japan's healthcare system is perfect, but you rarely hear about people having to file for bankruptcy etc due to medical bills. If you have a bit of a nest egg - say Y3-5 million or so - I personally think the "big 3" insurance plans are a waste of money.

And yes, most Japanese families are massively over-insured. Even worse, they often have whole life insurance with a 'savings' component that is such a rip-off, any insurance salesman hawking it should be publicly flogged. Thankfully my wife is not one of the converts (she's also never been to Hawaii, sometimes I wonder if she's actually JPN or not...)