Insurance policy-time to bail?

[Dr.Strangelove]

Hi there,

My wife and I have an insurance policy each which gives us extra health insurance and a payout after retirement age.
We have been paying into it for around five years now though we are thinking of bailing out.

-Purchased through Houken Mado Guchi
-Around ¥6000 each per month.
-Will pay around ¥2700000 each when we reach 70. (0% increase)
- Some extra health cover if we need emergency care but this will be deducted from final payout.
-If we take out the policy now will be ¥350000 (after fees taken out so a loss of investment)

We are thinking of stopping now because the health cover isn't great, and we could be using the ¥144,000 per year for a different investment option.

However, it is good to have some guaranteed retirement money in Japan.

Any thoughts to help our decision?

[Beaglehound]

Am I understanding that the cost of any medical care you get as a result of this policy is then deducted from the final payout? Doesn’t seem worth it at all if that is the case. It’s not really an investment if they give you back the exact money you have paid in. From that point of view I would suggest that even if you are not comfortable accepting the risk of stock/bond investment, you would be as well keeping the money in the bank and not having to wait until 70 to access it. Assuming the surrender fees are not ruinous.

[captainspoke]

...We have been paying into it for around five years now though we are thinking of bailing out.
...
-Around ¥6000 each per month.
...
-If we take out the policy now will be ¥350000 (after fees taken out so a loss of investment)
...

Have I got this right? It looks like you're about even now: ¥6000 x 12months x 5yrs = ¥360,000

Since these products are generally not advantageous, I'd say it's time to bail out.

Missing from this picture is what the actual "payout after retirement age" is--what is the nature/conditions/amounts for that? But I'll guess that once the specifics of that are on the table, bailing out now will be the obvious choice.

[jcc]

The way you state it it sounds like you're just giving thema 0% loan which you can get part of it back early if you're ill.

Sounds pretty terrible.

Anyway, these kinds of insurance vehicles that also double up as invesetment vehicles are not good. You're better off dealing with them separately. Japanese compulsory insurance is generally good, but if you need additional stuff(e.g. a cancer insurance or something) get that with no expectation of something coming back later.

[mighty58]

if you need additional stuff(e.g. a cancer insurance or something) get that with no expectation of something coming back later.

I second this. The various Tomin/Kenmin plans, depending where you live, are reasonable if you feel you need extra medical coverage. It's "kakesute", so you won't get anything back, but it's reasonably priced insurance.
Or, you can be just be self-insured, ie. just pay your own way for the other 30%. If you're young and relatively healthy and are not pre-disposed genetically to something like cancer, you may not need the extra coverage at all, and having a decent level of savings will, in most cases, be more than enough to cover you.

[fools_gold]

Don't forget that If it's a life insurance plan, it should be tax deductible.

[AinT]

I have a similar policy but mine is only ~￥3000 per month.
They offered me about ￥2,000,000 at 65 OR 100% free hospitalized healthcare after 65.
I figured, with inflation and compared to what my investments will be worth by that time,I could pass on the 2 million and just go for the free hospitalized healthcare.