Long term Life Insurance vs possibility of leaving Japan

[crew]

Most Term Life Insurance I have seen require Japan residency. If there is a small possibility you will relocate out of Japan say for 1-3 years, or permanently, does it make sense to get the locked-in term insurance? I:d like to lock in the premiums while I am young and healthy, but might be paying too high a premium of it will get cancelled in the middle of the period anyway.

I assume they will not renew once you lose your residency. Will having a PR have any effect on this?

[mikeinjap]

My insurance person told me that all insurance companies require you to have residency/physical address in Japan because they are afraid of not being able to find you when its pay time. Unofficially, he told me that you could technically continue paying the premiums while not physically being in the country because they will most likely not check or find out. Also, most life insurance policies are valid even when you are not in the country. But you probably want to have residency because you might not be able to make a claim unless you do.

If you're interested though, I do recommend speaking with an insurance consultant about the different options available.
They're usually free and can meet you anytime, anywhere. I met mine at a softbank shop while was inquiring about changing providers.
However, I do recommend you have a certain level of Japanese understanding or have a Japanese spouse/friend with you.

If you do go for life insurances, always make sure to go for ones that are accumulative (貯蓄型) and not the throw away (掛け捨て) type.
We learned that my wife has been paying the "throw away" type insurance for over 10 years. If we had known, we would have changed to the accumulative type earlier.

[captainspoke]

...
If you do go for life insurances, always make sure to go for ones that are accumulative (貯蓄型) and not the throw away (掛け捨て) type.
...

Sorry for the question, but as a US person, do those correspond to whole/universal life (貯蓄型) and term insurance (掛け捨て)?

At least in US, I was under the impression that term insurance was typically the better choice (掛け捨て). Am I misunderstanding something here?

[crew]

If that means whole/universal vs term, I agree with CaptainSpoke, term insurance is definitely the better choice. I don't think it applies to the US only.

while not physically being in the country because they will most likely not check or find out.

In Japan though there will be paper work that will establish if you were indeed a resident or not, and I worry this might affect a claim.

[TokyoWart]

Life insurance rates here in Japan are high, probably because the risk-free rate of return is so low in Japan, so I would not try to maximize my ability to use a Japanese policy if there is a chance of leaving the country. Take a look at this example of typical yearly premiums for life insurance in the US (I don't think anything is close to this cheap in Japan):

https://www.nerdwallet.com/blog/insuran ... nce-rates/

I also note the discussion on "accumulative (貯蓄型) and throw away (掛け捨て)". Admittedly I am on the extreme end of those who detest whole life products after seeing the awful policies sold to friends, but that 掛け捨て terminology is right out of the Whole Life playbook to make one think term insurance is a waste. Insurance is a cost, not an investment, so lower costs are better. Many of those whole life products effectively reprice the insurance component every year so you are actually paying more for the actual insurance while also having the savings component in an unusually low yield investment.

[crew]

Life insurance rates here in Japan are high, probably because the risk-free rate of return is so low in Japan, so I would not try to maximize my ability to use a Japanese policy if there is a chance of leaving the country. Take a look at this example of typical yearly premiums for life insurance in the US (I don't think anything is close to this cheap in Japan):

https://www.nerdwallet.com/blog/insuran ... nce-rates/

I also note the discussion on "accumulative (貯蓄型) and throw away (掛け捨て)". Admittedly I am on the extreme end of those who detest whole life products after seeing the awful policies sold to friends, but that 掛け捨て terminology is right out of the Whole Life playbook to make one think term insurance is a waste. Insurance is a cost, not an investment, so lower costs are better. Many of those whole life products effectively reprice the insurance component every year so you are actually paying more for the actual insurance while also having the savings component in an unusually low yield investment.

I just sucked up a loss of the equivalent to 500,000 yen just to get out of my VUL. In the end, I would still be saving more if I get term, despite the 500,000 yen setback. Its that bad. And I share your disgust with how insurance companies package it as "investments".