Life Assurance?

[YokohamaGeezer]

Hi everyone
So here I am thinking - I'm 54 with a Japanese wife and 5-year-old son and I have no life assurance. If something takes me out in the next 15~20 years, I would like them to have something to fall back on - though my wife is not poor! Don't want to get rogered by commissions. Something simple that says: "pay this amount per month for the next 15~20 years and if you die we'll give your heirs XXX lump sum."

Does something simple like this exist in Japan? Any idea of costs per month to 'assure' say a million dollar (sen man) pay out?

Would need a reputable company.

Cheers and thanks for your help if you can send any this way
YG

[RetireJapan]

Hi YG

You can do a quick search on kakaku.com: http://hoken.kakaku.com/insurance/gla/

For a 55-year old man to insure a death payout of 30m (３千万) it seems to be about 15,000 yen a month.

By the way, $1m USD would be 1 oku (億) in Japanese and I think it would be more difficult to get that level of cover.

[Roman Empire]

Life insurance products are quite popular in Japan. They are calculated based on your age. If you're thinking about taking out a policy it would likely become more expensive on your birthday.

Broadly speaking, companies offer two types of life insurance policies:

For one type, called kakusute, you lose your payments. You have to decide how many years you plan to be insured when signing up for a policy, such as 15 or 20 years. The fee level will partly depend on the length of the policy. If the insurance term is longer, the fee will be higher. It will also depend on whether you want to pay yearly or monthly fees in addition to your age. In general, a benefit of this kind of policy is that you can cancel it anytime in the future if you want to.

For the other type, called shushin hoken (終身保険), the insurance company will save up your payments and you will be able to get them back with a small positive return after a fixed term you choose yourself. Say, 10, 15 or 20 years. Shushin hoken are popular among Japanese looking to earn predictable investment income while benefiting from the protection of a life insurance policy at the same time. Shushin hoken returns are already known when taking out the policy and much better than letting assets sit in a bank account against near-zero returns or holding them in cash.

The fee level of shushin hoken will likely be a bit higher than for kakesute, because you're effectively making an investment. It will also depend on policy length and whether you will pay yearly or monthly fees. The biggest drawback of shushin hoken is that you won't get all your invested money back if you decide before a set number of years to step out and cancel the policy.

Its possible to simulate the fees you'll pay on most websites of companies offering life insurance. Sen-man yen is not extremely high for Japanese standards, I think.

In my opinion kakesute is good as long as fees are reasonable; shushin hoken is better but if the amount saved is too large you'll miss out higher returns you would likely get by investing in other asset classes -- equities, bonds, ETFs, mutual funds.

One possibility is for example for your wife or you to take out a kakesute policy and for the uninsured other to take out a shushin hoken policy.

Finally, financial risks associated with sickness or disability are overlooked sometimes. Have you thought about how that can potentially impact your family financially?

[RetireJapan]

I believe life insurance payouts are not considered income for the beneficiaries, is that correct?

[Roman Empire]

I'm not sure what taxes apply if money is paid out to a beneficiary because the person who took out a life insurance policy dies.

If someone claims money from a shushin hoken after completing their insurance term, the fee amount and part of the returns seem to be tax free, according to Lifull. The tax amount that has to be paid over the returns depends on the size of the returns.

www.lifull-fintech.com/media/tips/manki ... n-pattern/

One of their examples shows the taxable amount will be half of 10,400 yen on a payout of 10 million yen, after paying in 39,540 yen a month for 20 years. That means the taxes will only be 520 yen. But of course the government can decide to raise taxes in the future.

[RetireJapan]

Thanks, RE! That's very helpful

[DragonAsh]

Getting to this topic a bit late, but:

I'm 54 with a Japanese wife and 5-year-old son and I have no life assurance. If something takes me out in the next 15~20 years, I would like them to have something to fall back on - though my wife is not poor!

Life insurance is protection for your family against the loss of the main breadwinner. Unless you plan on working past the age of 70, I'm not sure you'd need life insurance for 20 years. And if you or your wife's family already has a nest egg, it should reduce the amount of coverage you need. Obviously things such as access to the funds, your housing / family situation and such may change things.

I'm in roughly the same boat (50 years old this year, 8yr old and a 6yr old). I have my life insurance split into three policies with staggered start and end dates - all three are in effect for the next 8 years. One expires in 8 years, another in 10 years and another in 12 years. We simply won't be renewing them as they end, gradually reducing my coverage as my kids get older and closer to being out of the house and as our retirement nest egg (hopefully) increases. I don't plan on having any life insurance past the age of 65; our house is already paid for and at that point the nest egg that should have supported both my wife and I in our retirement now only needs to support her (I'm 7 years older than my wife so she will almost certainly outlive me).

I can't think of very many instances where I'd recommend shushi hoken; it's almost always a horrible, horrible deal. Life insurance is an insurance product, don't treat it as an investment or savings product. And, at your current age, getting any sort of proper coverage would be exorbitantly expensive, not 'a bit more expensive' : We're talking 90,000 a month for Y30 million in coverage; that's Y1 million a year. Get a 10-year teiki hoken plan and Y30 million would only be around Y20,000 a month.