Is Seimei Life Insurance worth the tax benefits?

[Snowmonkey]

Hi guys,

My wife is suggesting I get Seimei Life Insurance with Tokio Marine.

Personally I'd rather just skip it all together however she claims that it's worth having for the tax benefits.

I'm a permanent resident here, originally from Australia and will be turning 50 in 6 weeks so it might be worth getting this before then.

We have two children and are both earning reasonable incomes. Our elder child is now working and completely independant, and our remaining child will finish college next year, so from next year I won't have any dependants to claim, which is why I'm considering this.

My salary is just that of a language teacher but I've been socking away money into the stock market and have a substantial amount invested so there are dividends I need to show as income also. In fact our savings are sufficient enough that we don't really need to work. That's also part of my reason for hesitating on this as the suggested plan is for 20 years! I don't have to be working but still need to make the monthly payments. Basically, I'd only take out this insurance for the claimable tax benefit, apparently I can claim a 50,000yen deduction annually. And if I see out the full term, I get back basically all I put in(just no interest gain, minus any health claims along the way).

Does anyone have this or considering this?

What are your thoughts on these products?

Any any suggestion on which company offers best "bang for buck?

[mule96]

It would be hard to believe that you can claim more than what you paid. The NTA site https://www.keisan.nta.go.jp/r1yokuaru/ ... id015.html says the following for contracts made on from Heisei 24.

• For an annual premium of less than 20,000 JPY you can deduct the full amount.

• Between 20,000 JPY and 40,000 JPY you can deduct 10,000 plus half of the premium.

• Between 40,000 JPY and 80,000 JPY you can deduct 20,000 plus 1/4 of the premium.

• For a premium of more than 80,000 JPY you can deduct 40,000 JPY.

For contracts made before Heisei 24, you could deduct 50,000 for paid premiums of more than 100,000.

So I am not sure where the full deduction of 50,000 comes. Maybe it is an outdated information?
I also wouldn't start a life insurance in your situation, better to safe/invest that money!

[captainspoke]

...
I also wouldn't start a Life Insurance in your situation, better to safe/invest that money!

I agree. Sounds like you've made the right moves so far, just keep that on track.

[Wales4rugbyWC23]

Given your current financial situation and the fact that your children are both nearly grown up, I would give life insurance a miss. Your only possible reason for taking it up at your stage in life is maybe the situation with your house with how many more years your have left on your mortgage. In seven years time when I am fifty I will still have twenty years left of a 35 year mortgage. Although many Japanese banks will either make you take out a life insurance policy at the beginning of your mortgage or give it you it free. Certainly in the UK a lot of insurance companies sell policies related to mortgage payments in the case of an early death. UK bank are not so insistent on taking out life insurance when apply for a mortgage.

[AreTheyTheLemmings?]

Timely! My wife and I are currently reviewing our various insurance policies.

I do have life insurance because I'm the sole breadwinner and if I were to die my missus would be left with no income. If that weren't the case, though, I would probably give life insurance a miss - especially since our mortgage comes with the kind of coverage mentioned above by Wales4rugbyWC19.

I assume there are tax benefits, but those were not a factor in deciding whether or not to take out life insurance.

[Kanto]

Timely! My wife and I are currently reviewing our various insurance policies.

I do have life insurance because I'm the sole breadwinner and if I were to die my missus would be left with no income. If that weren't the case, though, I would probably give life insurance a miss - especially since our mortgage comes with the kind of coverage mentioned above by Wales4rugbyWC19.

I assume there are tax benefits, but those were not a factor in deciding whether or not to take out life insurance.

My wife and I also just signed up for a very affordable policy through her work. We only intend to stay insured until the kid, (or kids?) are in college.

We both work, so it is mainly for childcare/schooling expenses, which could be difficult for a single parent to budget if we decided to go private.

[Snowmonkey]

Thank you for all your replies.

I tend to agree with all of you. It doesn't seem worth the small tax saving I'd get. I asked my wife why she said I could claim a 50,000yen discount. Apparently it's possible by combining two insurances, for example Seimei & Gan.

If I were in a higher tax bracket, it might make sense but as I'm not, I'm going to pass.

Wales4rugbyWC19, good consideration, however I live in rural Japan so there's no mortgage to worry about either.

I don't understand the love affair Japanese have with these products.

[Kanto]

I don't understand the love affair Japanese have with these products

There is a general attitude of mistrust in Japan when it comes to traditional investing. The average Japanese household is risk-averse and conservative.

Insurance plans can often be bundled with annuities or other low-risk investment vehicles. Thus insurance is often seen as a safe way to invest for your future. This positive correlation carries over to all insurance products it seems.

That is my take on the matter.

[mule96]

I tend to agree with all of you. It doesn't seem worth the small tax saving I'd get. I asked my wife why she said I could claim a 50,000yen discount. Apparently it's possible by combining two insurances, for example Seimei & Gan.

As I have similar discussions right now, I know that these discussions are not easy. But if my understanding is right, she is wrong.

According to this, Gan-Hoken is part of Seimei-Hoken:
https://www.nta.go.jp/law/shitsugi/shotoku/05/77.htm

So it remains the same, if you spend more than 80,000 JPY for Seimei-Hoken and Gan-Hoken, you can deduct 40,000 JPY.

There are similar deductions for 介護医療保険/Medical Care Insurance and 個人年金保険/Personal Pension Insurance (?).

[Snowmonkey]

Thanks mule96. Yeah, I think my wife was just quoting on the benefit she gets as she loves these things. I'm just going to stick with what I know.