Hello Retire Japan. I am just beginning my adventure for purchasing Life Insurance. I have skimmed some Retire Japan forum posts as well as r/japanlife posts, but it's pretty confusing as I don't even understand the basics. I'd like to ask some questions. If anyone can respond to any of these, I would really appreciate it.
For my situation, I am a 32 year-old healthy married guy (US citizen), wife is healthy Japanese citizen and we have a baby on the way. Both my wife and I work and earn pretty much the same amount, and the entire family could live on one salary as it is, and still make savings. We don't have a mortgage but rent, but we may decide to purchase a house later, not sure. We also have retirement savings. Still, we are thinking that we should both get life insurance in case something happens to either of us.
I will crunch the numbers later on exactly how much of a payout we would want. It seems like since we're already doing well we would want a modest sum to help out the other person for 1 - 3 years while dealing with the loss, and also making sure my daughter's education is secure.
1. What is "term life insurance" and is there any other type? It seems like I pay a monthly or annual amount for a period of time, and in exchange my wife gets money if I die. Example: I pay 30,000 yen a month for 10 years. The coverage lasts until I am 65. If I die, my wife gets a lump sum. If I die in an initial period (1 - 3 years) my wife gets nothing; if I die sometime within the 3 - 10 years, my wife gets some money but not all. Am I on the right track?
2. A person on Reddit recommended "William Russell" but it seems like they are international, not Japanese. I am afraid of my wife getting screwed with international transfer fees, not to mention paperwork BS in general. I am thinking of just going with a domestic company because it will be easier to process the paperwork and also my wife will have more recourse if they try something sneaky.
3. Are those hoken-madoguchi places any good? I see them all over the place but I don't really know what they are. I think they collect many companies' policies and try to find one that fits our needs.
4. What happens if I die abroad? I may be spending some time abroad in order to give our child international exposure. Does it depend on country, time spent, etc? Or am I just screwed out of the money? I am a Permanent Resident here, if that matters, and will make sure to keep that status while abroad.
If anyone is able to chime in with answers to these questions, additional points to consider, or in general anything else they have learned I would really appreciate it.
Life Insurance Basics
Re: Life Insurance Basics
I can't answer all of your questions, but for 2, agreed that a Japanese policy is probably better.
Your wife probably knows Co-Op. They have reasonable policies and prices.
https://coopkyosai.coop/thinking/i_live.html
In Japan most people have way too much insurance. General guidance is to keep your coverage as low as you sensibly can, as long as your wife is comfortable with that.
Your wife probably knows Co-Op. They have reasonable policies and prices.
https://coopkyosai.coop/thinking/i_live.html
In Japan most people have way too much insurance. General guidance is to keep your coverage as low as you sensibly can, as long as your wife is comfortable with that.
Aiming to retire at 60 and live for a while longer. 95% index funds (eMaxis Slim etc), 5% Japanese dividend stocks.
Re: Life Insurance Basics
I also found myself asking the same questions back when we were expecting our first baby (congrats btw), so let me take a stab at some of your questions:
1. What is "term life insurance" and is there any other type?
You can generally separate life insurance into two categories: term and whole-life insurance.
- Term insurance is buying insurance simply as an insurance product (without any investment component like in whole-life plans), getting the precise coverage you need, for the period you need it. This is called kakesute in Japanese because, with no investment component, you're simply paying for coverage, and your premiums will never return. This is not a bad thing, as you only pay for what you need. Premiums are much cheaper with term insurance than with whole-life, given the same level of coverage.
- Whole-life insurance is an insurance product that doubles as an investment program. Your premiums get invested (by the ins.co.), and if you're still breathing at the end of the term, you get your money + the investment returns back. If you die, your survivors get the insurance payout.
But there are hidden catches:
a. It's an inefficient way to invest, as the ins.co takes large (often hidden) fees. If you want to invest, you're better off doing it yourself.
b. The insurance premiums are much more expensive, relative to the payout amount, because the insurance component is built-in. Larger payout plans (anything over 4,000万円) are particularly expensive, or not even available. As such, whole-life is inferior both as an insurance product and as an investment vehicle.
2. Go with a domestic company if you'll be primarily based in Japan. There are several legal protections that you might be giving up with an off-shore plan.
3. Are those hoken-madoguchi places any good?
Depends how you use them. They are brokers that can sell several company's products, but generally work on commission. However, if you know what you want, it's an easy way to get estimates and talk through a plan. I used one, and specifically told them I was looking for a term-life policy, making it very clear I was not interested in whole-life, and they hooked me up just fine. They can also help you work through determining how much coverage you need if you're having trouble figuring it out yourself. If you're going with your wife, make sure you're both on board about what you want before you go though, don't let the sales people pounce.
4. What happens if I die abroad?
I also had this specific question, as I'm in a job where I could have some expat stints during my career. I don't know if every plan does this, but as I told them this was a requirement for me, the plans they presented do pay out in case I die while a non-resident of Japan.
Two other points:
- Get coverage now while you're young, for the long term. The younger you are when you start, the cheaper it will be. And if something adverse were to happen healthwise in the next 10 years, and you find yourself needing a new plan, you may be out of luck.
- Have a real deep think-through about the level of coverage you need. You mentioned 1-3 years worth of expenses (that's maybe 2,000万円-ish?), and if that's all you need the insurance will not be expensive (not even close to 30,000/month). But how is your family going to survive after that 3 years? For me, I was thinking that if I die with young kid(s) while in my 40s, my wife could have 40-50 years ahead of her, and may not be able to work at all for the first 10-15 years if she needs to raise kids on her own, which would also severely hinder any future earnings power she might have. As such, I chose a much higher starting amount (120m yen) to ensure there was base level of support for them (using the 4% withdrawal rate as a rough guide, 120m would beget 400,000/month).
1. What is "term life insurance" and is there any other type?
You can generally separate life insurance into two categories: term and whole-life insurance.
- Term insurance is buying insurance simply as an insurance product (without any investment component like in whole-life plans), getting the precise coverage you need, for the period you need it. This is called kakesute in Japanese because, with no investment component, you're simply paying for coverage, and your premiums will never return. This is not a bad thing, as you only pay for what you need. Premiums are much cheaper with term insurance than with whole-life, given the same level of coverage.
- Whole-life insurance is an insurance product that doubles as an investment program. Your premiums get invested (by the ins.co.), and if you're still breathing at the end of the term, you get your money + the investment returns back. If you die, your survivors get the insurance payout.
But there are hidden catches:
a. It's an inefficient way to invest, as the ins.co takes large (often hidden) fees. If you want to invest, you're better off doing it yourself.
b. The insurance premiums are much more expensive, relative to the payout amount, because the insurance component is built-in. Larger payout plans (anything over 4,000万円) are particularly expensive, or not even available. As such, whole-life is inferior both as an insurance product and as an investment vehicle.
2. Go with a domestic company if you'll be primarily based in Japan. There are several legal protections that you might be giving up with an off-shore plan.
3. Are those hoken-madoguchi places any good?
Depends how you use them. They are brokers that can sell several company's products, but generally work on commission. However, if you know what you want, it's an easy way to get estimates and talk through a plan. I used one, and specifically told them I was looking for a term-life policy, making it very clear I was not interested in whole-life, and they hooked me up just fine. They can also help you work through determining how much coverage you need if you're having trouble figuring it out yourself. If you're going with your wife, make sure you're both on board about what you want before you go though, don't let the sales people pounce.
4. What happens if I die abroad?
I also had this specific question, as I'm in a job where I could have some expat stints during my career. I don't know if every plan does this, but as I told them this was a requirement for me, the plans they presented do pay out in case I die while a non-resident of Japan.
Two other points:
- Get coverage now while you're young, for the long term. The younger you are when you start, the cheaper it will be. And if something adverse were to happen healthwise in the next 10 years, and you find yourself needing a new plan, you may be out of luck.
- Have a real deep think-through about the level of coverage you need. You mentioned 1-3 years worth of expenses (that's maybe 2,000万円-ish?), and if that's all you need the insurance will not be expensive (not even close to 30,000/month). But how is your family going to survive after that 3 years? For me, I was thinking that if I die with young kid(s) while in my 40s, my wife could have 40-50 years ahead of her, and may not be able to work at all for the first 10-15 years if she needs to raise kids on her own, which would also severely hinder any future earnings power she might have. As such, I chose a much higher starting amount (120m yen) to ensure there was base level of support for them (using the 4% withdrawal rate as a rough guide, 120m would beget 400,000/month).
Re: Life Insurance Basics
Hello mighty58 and beanhead. My apologies for the late response- I just wanted to say thank you very much for taking the time to give these thoughtful replies.
beanhead- well noted. Yeah, I think I need to stick in-country. Just seems... Smarter. Less chance for things to go wrong. As long as I understand the policy.
mighty58- very good points and I appreciate you taking the time to type them out. I am glad that dying abroad will not leave my wife penniless, if I make sure that is included in the policy. Also, well-noted about the amount of coverage needed. I'll crunch the numbers and discuss with my wife. Thanks again.
If anyone else out there has additional Life Insurance advice I would be really grateful.
beanhead- well noted. Yeah, I think I need to stick in-country. Just seems... Smarter. Less chance for things to go wrong. As long as I understand the policy.
mighty58- very good points and I appreciate you taking the time to type them out. I am glad that dying abroad will not leave my wife penniless, if I make sure that is included in the policy. Also, well-noted about the amount of coverage needed. I'll crunch the numbers and discuss with my wife. Thanks again.
If anyone else out there has additional Life Insurance advice I would be really grateful.
Re: Life Insurance Basics
1. Check what policies your work or your S.O`s work offers. There are some excellent deals available to government workers, teachers etc.
2. Term insurance is more transparent, and I would argue more logically. Prices mostly depend on sex and age.
3. Do not over-insure yourself. If both spouses work, what are you getting insurance for? To cover childcare costs, university, etc. Set a number, do not shoot for the moon.
4. How long do you need it for? We will cancel ours when our youngest turns 20. Premiums jump up later in life and make it less attractive.
5. Be wary of the upsell. Stick to your plan.
Re: Life Insurance Basics
Sorry for my late response. Thanks very much for these tips!
Re: Life Insurance Basics
I don't want to make a new thread, so I am using this one. I had similar questions as expat2011 and the replies from everyone was helpful.
I started by looking at what company insurance was available (I have a contract with Rakuten) and they do have an employee term life insurance plan.
https://www.rakuten-life.co.jp/oneyearApply/product/
It claims it grants a 15% discount and uses 1-year renewable policies, no medical check required, can keep the policy when you leave the company, etc. I am not sure if that is a good deal.
They provide the details of the monthly fee per year here:
https://www.rakuten-life.co.jp/life/one ... -price.pdf
Some simple math for a 25M policy from age 40 to 65 (I am showing both Male and Female costs for comparison):
For those who want to look into the nitty-gritty details, the contract T&C are here:
https://www.rakuten-life.co.jp/pdf/insu ... conditions
I started by looking at what company insurance was available (I have a contract with Rakuten) and they do have an employee term life insurance plan.
https://www.rakuten-life.co.jp/oneyearApply/product/
It claims it grants a 15% discount and uses 1-year renewable policies, no medical check required, can keep the policy when you leave the company, etc. I am not sure if that is a good deal.
They provide the details of the monthly fee per year here:
https://www.rakuten-life.co.jp/life/one ... -price.pdf
Some simple math for a 25M policy from age 40 to 65 (I am showing both Male and Female costs for comparison):
- male total costs = 2,997,000 JPY
- female total costs = 1,863,000 JPY
For those who want to look into the nitty-gritty details, the contract T&C are here:
https://www.rakuten-life.co.jp/pdf/insu ... conditions
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EmaxisSlim Cultist
- Veteran
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Re: Life Insurance Basics
That seems quite expensive.vapid wrote: ↑Wed Jan 12, 2022 5:32 am I don't want to make a new thread, so I am using this one. I had similar questions as expat2011 and the replies from everyone was helpful.
I started by looking at what company insurance was available (I have a contract with Rakuten) and they do have an employee term life insurance plan.
https://www.rakuten-life.co.jp/oneyearApply/product/
It claims it grants a 15% discount and uses 1-year renewable policies, no medical check required, can keep the policy when you leave the company, etc. I am not sure if that is a good deal.
They provide the details of the monthly fee per year here:
https://www.rakuten-life.co.jp/life/one ... -price.pdf
Some simple math for a 25M policy from age 40 to 65 (I am showing both Male and Female costs for comparison):
- male total costs = 2,997,000 JPY
Essentially a max 3M cost for a possible 25M payout, if the worst was to happen, seems like a nice cushion. But I would like some advice on how to compare this with the more standardized options on kakaku
- female total costs = 1,863,000 JPY
For those who want to look into the nitty-gritty details, the contract T&C are here:
https://www.rakuten-life.co.jp/pdf/insu ... conditions
I would consider Term insurance instead, a bit more competitive pricewise.
Here is our policy, It is intended to cover childcare costs in the event of a worst-case scenario.
Primary earner- 20m
Secondary earner - 8m.
Monthly cost @ Mid 30s - > 2900 yen a month total.
Re: Life Insurance Basics
Good to know. I will do some more searching on kakaku. Thanks.
Re: Life Insurance Basics
Thanks for the reminder, yet another thing I need to sort out too.
My understanding is that as a guideline for term life you should be looking at, in yen, five-figure monthly payments for nine-figure payouts. That's echoed by mighty58's great advice above, quoted again for emphasis.
My understanding is that as a guideline for term life you should be looking at, in yen, five-figure monthly payments for nine-figure payouts. That's echoed by mighty58's great advice above, quoted again for emphasis.
mighty58 wrote: ↑Fri Mar 19, 2021 2:20 pm - Get coverage now while you're young, for the long term. The younger you are when you start, the cheaper it will be. And if something adverse were to happen healthwise in the next 10 years, and you find yourself needing a new plan, you may be out of luck.
- Have a real deep think-through about the level of coverage you need. You mentioned 1-3 years worth of expenses (that's maybe 2,000万円-ish?), and if that's all you need the insurance will not be expensive (not even close to 30,000/month). But how is your family going to survive after that 3 years? For me, I was thinking that if I die with young kid(s) while in my 40s, my wife could have 40-50 years ahead of her, and may not be able to work at all for the first 10-15 years if she needs to raise kids on her own, which would also severely hinder any future earnings power she might have. As such, I chose a much higher starting amount (120m yen) to ensure there was base level of support for them (using the 4% withdrawal rate as a rough guide, 120m would beget 400,000/month).