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Life Insurance In Japanese

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Life Insurance in Japan Question

  • Join Date: Jul 2007
  • Posts: 325

Life Insurance in Japan Question

I wonder if anyone can help me?

does anyone have any info on getting life insurance over here in Japan?

good idea? pit falls?

I have a J wife and are going to live here for the long term

any info would be appreciated

  • Join Date: Nov 2003
  • Posts: 522

Theres a lot of good companies out there RJ..

Bear in mind with the Japanese life insurance policies there has been a lot of bad publicity lately as in non payment of claims. Last thing you want is the ins. co. turning around in 20 years and saying null and void, coz whatever information wasnt disclosed at time of signing.

Check the fine print, and exactly what you are covered for.
There are 2 main types.

Term insurance, its very cheap in the short run.Pays out only if you die, no cash value whatsoever.

Whole of Life. It’s a bit more expensive but from year 2 there will always be a cash value, other benefits available also within it. Most important, make sure any life cover is portable, should you decide to relocate overseas. Most Japanese firms policy’s will be void if something happens to you in US/UK etc.

hope this helps

  • Join Date: Jul 2007
  • Posts: 325

yes it does help a little

but anymore advice welcome

  • Join Date: Nov 2006
  • Posts: 673

We recently did a lot of research in this area and ended up getting our insurance through Sony Life. They offer “tsumitate” plans, which mean that you get your money back EITHER when you die or when the policy matures, so either way we will get our money.

It is also kind of an investment policy. They take your money and invest it in stocks, bonds, etc. You can specify what percentage you want going toward Japanese stocks, foreign stocks, Japanese bonds, foreign bonds. They have several pre-established plans to choose from or you can choose your own. We did one of the pre-established plans but at our consultant’s recommendation, increased the amount we put into foreign bonds slightly as he thought those would be more profitable than the domestic ones.

We can’t afford to pay a lot per motnh right now, so we go t a really small policy to start with, but this is the way it works out: If my husband dies, we get 2 million yen. If he doesnt die, the policy matures in 20 years and if interest rates are steady at 3.5%, we get about 2.2 million yen. We only pay about 1.8 million yen into the policy, so even if interest rates arent great, our chances of getting back more money than we puti n are pretty good.

The only real downside is that it doesnt cover hospitalization etc like policies with Aflac or Alico, etc would. We are enrolled in the Kenmin-Kyosai for that.

  • Join Date: Jul 2007
  • Posts: 325

  • Join Date: May 2006
  • Posts: 336

Do you mean life insurance from your home country? But does it cover medical expenses overseas?

I know you are passionate about insurance – sometimes even more than other investment products. Do you usually push for medical or life insurance. In the context of gaijin working in Japan, do you think a life insurance product that has higher valuations than those from our home country is necessary.

Putting in better context

1. A professional has already good medical insurance coverage for himself as well as his family.

2. He has life insurance from his home country.

3. If he takes the trouble to submit japanese hospital bills back to his home country, the bureaucracy may possibly reimburse him/her for the bills even if he already got it covered in Japan albeit at a very slow pace.

4. He has sufficient investment portfolios – sufficiently willed to his family. If they are not in a will – at least the beneficiary to the investments have been stated.

The question is whether insurance is still necessary.

And these days, insurance cost is expensive – mortality charges are increasing and if you have bought them at a younger age when you first started work – which I did then its very worthwhile. Else, insurance is just a tool to churn the economy. If you are looking at some unit link investment packaged to insurance, its mixing to things that do not go well together – insurance and investments. Either you go for a conservative insurance to protect life or monitor your investments well and not waste unnecessary charges – why mix both as usually you do not monitor investment link prices for your insurance and you could have bought them at a high peak and see your insurance lose its value.

So, tell me what are you selling in an insurance that is sorely needed in the above context. Just trying to evaluate your value proposition critically.

  • Join Date: Nov 2003
  • Posts: 522

I never mention the medical insurance, unless the client does.
I recommend the life insurance because I have seen the pain people go through when there is nothing in place. My father didn’t believe in it, and my mum was too proud to ask her siblings for support(even though we did). I’ve never known a housewife to say she has enough life insurance cover.

Most of us are fit and healthy, and think we don’t need it, but we can’t control that taxi speeding round the corner or some plane flying into our building..

You got your car/house/ pet cat insured but people tend to forget about protecting themselves and their loved ones. Its the foundation of any good financial planning..In the UK, if someone tried to sell you an investment and you had no insurance in place, they would need some form of disclaimer in place. Otherwise, theres a potential lawsuit there.

I always tell people to check out insurance companies from their home country, but to read the small print as to what is covered and whether you are covered should you relocate.

I don’t quite follow point number 4. Couple of different things there, but if no will in place all assets are in limbo. Life insurance is paid out immediately which can be used to pay off the mortgage/ bills/lawyers fees/death duties etc.
In the UK, death duties have to be paid before assets are released, so again having the insurance in place will cushion the blow, and tick you over until assets are released. Waiting time in California is 18 months if no will in place..Long time to go with no cash. You may have seen here in Japan, people having to sell their gardens and the government turn it into a car park.

Someone who has some serious money behind them would normally have set up his estate to protect the next of kin,from the ravages of the taxman, so yes, the insurance isn’t necessary,

But for the average guy in the street, with a young family, it really is a no brainer. He’s the breadwinner, he decides whether he wants to be remembered as a nice guy, or as a cheap bum.!

I agree with you in that I try not to mix investment with insurance. In some rare cases, however, there will be an occasion where, if the client is young for example, and therefore premiums are low, in the later years, the value of the product has grown equal to/more than the insurance payout. Take the cash and enjoy it. Had something happened immediately after taking it out, the family was covered. Or it’s 25 years later, kids are independent, spend it. Normally I would suggest splitting the 2 products.

At the end of the day everyone is different and has different needs so I can’t really say what is wrong or right.
I will say that for Americans its the only investment product they should think of having. Its the only true tax free product that can offer them access to the equity markets and provide them with a tax free income in their later years.

Love and peace all

  • Join Date: Oct 2004
  • Posts: 634
  • Robert, your love of investment-type insurance for Americans doesn’t hold up to investigation. From the well-respected financial advisor Suze Orman at http://www.suzeorman.com :

    “I hate whole life insurance. I hate universal life insurance. I hate variable life insurance.The only type I like – for the purposes for insuring your life – is term insurance! If you are smart with the money you have today and you get rid of your mortgages, car loans and credit card debt and put money into retirement plans you don’t need insurance 30 years from now to protect your family when you die.”

    For more on life insurance Google “life insurance rip off”.

    • Join Date: May 2006
    • Posts: 336

    Robert, your love of investment-type insurance for Americans doesnft hold up to investigation. From the well-respected financial advisor Suze Orman at http://www.suzeorman.com :

    gI hate whole life insurance. I hate universal life insurance. I hate variable life insurance.The only type I like – for the purposes for insuring your life – is term insurance! If you are smart with the money you have today and you get rid of your mortgages, car loans and credit card debt and put money into retirement plans you donft need insurance 30 years from now to protect your family when you die.h

    For more on life insurance Google glife insurance rip offh.

    • Join Date: Nov 2003
    • Posts: 522

    Hi Plats, Hawaiichee.

    Went to Suze`s site but not quite sure what I`m looking for.

    Basically any American who has an investment in America is taxed yearly/ or when you encash.

    With the universal life insurance, you can invest in a range of mutual funds, but there is no tax payable so growth is compounding year on year. Then, after 7 years you can start accesing that cash on a tax free basis, subject to amount invested previously. When that avenue is exhausted, you can then borrow against the insured sum.And guess what, thats tax free also.

    So, in the short term you got protection for the family. Long term you got a tax free cash flow coming in.
    Brilliant.
    There are a few caveats, but thats keeping it simple. It is truly the only tax free product available for yanks.

    Term insurance is certainly cheaper over the shorter term, and I recommend in relation to uni/variable which offers a cash value.. .

    Love and peace all

    • Join Date: Sep 2005
    • Posts: 1561

    I wonder if anyone can help me?

    does anyone have any info on getting life insurance over here in Japan?

    good idea? pit falls?

    I have a J wife and are going to live here for the long term

    any info would be appreciated

    1. One relatively new regulation that came out last year from the MoF whereby a Japanese “resident” cannot purchase life insurance from an offshore company. This was designed to prevent many wealthy Japanese nationals from going offshore and buying huge policies to fund the inheritance tax. However, this rather careless definition also applies to ‘resident gaijin’ like ourselves – and as a result, many legalistic American companies who have operations in Japan do not want to take any risk losing their license —- and will direct you to buy insurance from their Japanese subsidiaries.

    So, if you plan to buy life insurance in your home country, your challenge will be to buy a policy from a firm that does not care about the new (Japanese) regulation and/or does not have significant operations in Japan. Make certain that the policy is backed properly and duly rated .. something like AAA.

    2. And, if you have an overwhelming legal positivist urge and decide you will purchase life insurance here in Japan, here is one ad hoc comparison that might change your mind. One friend reported the following:

    He got a term life insurance policy of $2 million USD with a guaranteed duration of 20 years at $1400 that was AAA from a US provider. He is/was in his early 30’s.

    A rough quote he got for an almost equivalent policy from a US insurance firm operating in Japan was closer to Y800,000 in annual premiums (!) And, the duration was much shorter . ten years if I recall correctly. In any event, there was a HUGE difference.

    3. I fully understand the advice that numerous financial advisors like Suze Orman and others have put forth regarding term life insurance versus whole, universal or variable. Basically, the advice is to go for term life insurance (which will have lower premiums) and YOU invest the difference.

    Great. Wonderful. However, for those people who procrastinate, are not great at personal financial planning and saving. and as a result, only follow the first part of that advice but not the second, they put themselves at a disadvantage. You have to be very honest with yourself – and if you are someone who is much more of a passive investor and a little lax in planning, then you really might want to consider a whole or universal plan.

    • Join Date: May 2006
    • Posts: 336

    1. One relatively new regulation that came out last year from the MoF whereby a Japanese “resident” cannot purchase life insurance from an offshore company. This was designed to prevent many wealthy Japanese nationals from going offshore and buying huge policies to fund the inheritance tax. However, this rather careless definition also applies to ‘resident gaijin’ like ourselves – and as a result, many legalistic American companies who have operations in Japan do not want to take any risk losing their license —- and will direct you to buy insurance from their Japanese subsidiaries.

    So, if you plan to buy life insurance in your home country, your challenge will be to buy a policy from a firm that does not care about the new (Japanese) regulation and/or does not have significant operations in Japan. Make certain that the policy is backed properly and duly rated .. something like AAA.

    2. And, if you have an overwhelming legal positivist urge and decide you will purchase life insurance here in Japan, here is one ad hoc comparison that might change your mind. One friend reported the following:

    He got a term life insurance policy of $2 million USD with a guaranteed duration of 20 years at $1400 that was AAA from a US provider. He is/was in his early 30’s.

    A rough quote he got for an almost equivalent policy from a US insurance firm operating in Japan was closer to Y800,000 in annual premiums (!) And, the duration was much shorter . ten years if I recall correctly. In any event, there was a HUGE difference.

    3. I fully understand the advice that numerous financial advisors like Suze Orman and others have put forth regarding term life insurance versus whole, universal or variable. Basically, the advice is to go for term life insurance (which will have lower premiums) and YOU invest the difference.

    Great. Wonderful. However, for those people who procrastinate, are not great at personal financial planning and saving. and as a result, only follow the first part of that advice but not the second, they put themselves at a disadvantage. You have to be very honest with yourself – and if you are someone who is much more of a passive investor and a little lax in planning, then you really might want to consider a whole or universal plan.

    I think you summarised the different views very succinctly. Thanks!

    Did not quite understand what you meant by buying huge policies to fund the inheritance tax.

    Also, did not know about the regulation about japanese not being able to buy from foreign insurers. Most of them are registered as local companies now. So, how does this issue affect us – customers.

    • Join Date: Sep 2005
    • Posts: 1561

    I think you summarised the different views very succinctly. Thanks!

    Did not quite understand what you meant by buying huge policies to fund the inheritance tax.

    Also, did not know about the regulation about japanese not being able to buy from foreign insurers. Most of them are registered as local companies now. So, how does this issue affect us – customers.

    With regard to inheritance taxes avoidance/evasion, a large universal life policy could be used to effectively transfer significant amounts of wealth to one’s heirs (upon your passing) — and having it outside of Japan, they could effectively evade/avoid Japanese inheritance taxes.

    If you visit your local AIG, Prudential, AFLAC, or Hartford office or agent in the US, and indicate that you are a resident of Japan, they will most likely tell you that you are ineligible to purchase insurance from them, and must do so through their subsidiaries in Japan. These companies are rather paranoid about violating any Japanese regulation. As I mentioned in my previous post, the terms and conditions for comparable policies are way higher in Japan.

    • Join Date: Nov 2003
    • Posts: 522

    I can`t seem to find anything on the net re the mof or whichever dept. saying the insurance is illegal.
    Do you know where I can get some info from?

    • Join Date: Sep 2005
    • Posts: 1561

    I can`t seem to find anything on the net re the mof or whichever dept. saying the insurance is illegal.
    Do you know where I can get some info from?

    You’re right. I don’t think there is a specific directive regarding this (or, at least I can’t find it). What happened in 2005 was a revision in the Revised Insurance Business Law that primarily addressed introduction of policyholders protection rules for unauthorized Kyosai.

    Author: Keitaro Oshimo, Nagashima Ohno & Tsunematsu, Tokyo

    The Insurance Business Law (the IBL) will be amended effective as of April 1 2006. Among other things, the amendment changes the most fundamental concept in the IBL – the definition of insurance business.

    The current IBL defines insurance business as the business (except for businesses regulated specifically by other laws) of underwriting, in relation to an unspecified group of persons, insurance under which, in consideration of a premium, an undertaking is made to pay a fixed sum in connection with life or death of the insured or to indemnify loss that may arise from a fortuitous event, or other types of insurance. As of April 1, the words in relation to an unspecified group of persons will be deleted.

    The change of the definition is intended to place unregulated kyosai under the jurisdiction of the IBL and the Financial Services Agency (the FSA), the administrative body that enforces the IBL. Kyosai are mutual aid societies traditionally formed by a group of persons with a common interest, such as doctors or agricultural workers, that provide modest benefits, for example, funeral expenses, from the pooled contributions of their members outside the ambit of the IBL.

    If all kyosai were formed by specific groups to provide modest benefits, they would not require the comprehensive regulatory framework under the IBL, such as product approvals, reserving requirements, solvency margins, disclosure requirements or inspection by the FSA. But increasingly, big kyosai are acting in the manner of insurance companies in that they offer a wide range of competitive products to an unspecified group of persons. They require membership, but the members have nothing in common except that membership, which can be obtained by anybody in consideration for nominal fees, and the only practical reason to become the member is to obtain the kyosai products.

    The insurance industry called for FSA regulation over such kyosai to ensure a level playing field. The FSA finally decided to bring kyosai under jurisdiction of the IBL by changing the definition insurance business, that is, the deletion of the words in relation to an unspecified group of persons. At the same time, the amended IBL introduces small-sum, short-term insurers, which are placed under lighter regulations than the insurers with fully fledged licences, as well as certain de minimus exemptions. Unregulated kyosai are urged to convert into either fully fledged licensed or lighter regulated insurers, or reduce their operations to qualify as exempted businesses accordingly. Foreign reinsurers that assume kyosai business are advised to review the status of their counterparty from April 1 2006.

    Despite the FSA’s intention to regulate the big kyosai, changing the definition of insurance business has posed a question as to whether or not certain businesses, which are different from unregulated kyosai and do not compete with the insurance industry, will also be regulated. That is, whether provision of prepaid services such as car breakdown assistance or product warranties, which have not been regarded as insurance, will continue to be outside the ambit of the IBL. The general public would think intuitively that these services are not insurance regardless of the change of the definition while lawyers and accountants know that the distinction of insurance contracts and prepaid service contracts is subtle.

    Perhaps there should be authoritative guidelines concerning distinction between insurance risk and other risks and what constitutes an insurance contract, showing examples of insurance contracts. But no guidelines have been established, and it is sometimes explained (perhaps erroneously) that prepaid service contracts, such as car breakdown assistance or product warranties, are not insurance because they are provided to a specified group of persons, for example, road service members or purchasers of goods from certain retailers. So the deletion of the words in relation to an unspecified group of persons has generated rumours that these services will be deemed insurance as from April 1 2006.

    The FSA has not stated that prepaid services will be regarded as insurance and placed within the ambit of the IBL. Nevertheless, the rumour that the FSA views these services as insurance is spreading, and service providers are becoming uneasy. Customers are already declining to renew the service contracts on the belief that provision of the services will become illegal after April 1.

    The FSA should consider publishing certain standards to distinguish insurance contracts from other prepaid services if it does not intend to regulate such service providers. That is, the FSA should endeavor to minimize the adverse effect on the service providers caused by groundless rumors by publishing its views officially.

    It is understandable that the FSA is hesitant to publish general guidelines. Guidelines, by their nature, are available to anybody, including unregulated kyosai, which might refer to them conveniently to argue that their services are not insurance. From the standpoint of the regulator, response to individual inquiry, which applies solely to the inquirer, would be more appropriate.

    Like other government bodies, the FSA has established no action letter procedures, where the regulator responds to an individual inquiry based on specific facts, and the response is disclosed to the public on the FSA’s website.

    Requests for issuance of no action letters have already been lodged on behalf of prepaid service provider clients. Hopefully, as published no action letters accumulate, the line between insurance and other services will become clearer.

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