Life Insurance

[nonnynonny]

Does anyone settled here have life insurance (seimei hoken)? What's the deal?

I know you get a tax break (koujo) for it on your income tax return. Does that make it worthwhile? Dogs and Demons says lots of people are "essentially forced" sign up to avoid "high" inheritence taxes, but doesn't add any detail and then goes on about the insurance companies being in the same kind of mess as the banks. Does that mean settled foreigners subject to the same tax system should also sign up? To get a tax break, do you have to sign up with a Japanese insurance company?

I'm married with no kids yet. Our savings are healthy, so my wife should be okay if something happens. I have a large income, and so (grudgingly only to the extent that so much is wasted on concrete and US foreign policy) pay a corresponding amount of tax.

All comments appreciated.

[richard]

For individuals, both life insurance and fire insurance are deductible on your income tax return. Car insurance is not. Japanese tend to view life insurance as worthwhile to purchase not only for this deduction but also because of the payment upon death.There are also plans that have equity built in and can be cashed out before death but these are usually long term and so these are viewed as a hedge against future inflation or lack of income in later years of life. You would have to check the benefits of each accordingly. Whether it makes sense financially (immediate tax benefits v.s. long term costs) to purchase a policy or not, I am not in a position to give advice. Certainly a financial planner or accountant could be. Also I THINK that the tax office recognizes Japanese policies only.

The life insurance companies have been experiencing the same thing as the banks, a severe downgrading of their assets (mainly real estate and stock holdings) that were purchased during the bubble era. Real estate as you may be aware has been experiencing a minus equity since from about 1993 or 94. Just recently the JT had an article which said that the minus equity has decelerated over the last fiscal year but it is still in the minus column. Because of this extreme pinch that they are finding themselves in, the insurance companies wanted to try and change the benefits of all the policies held by policy holders but there was general outrage and the government stepped in. There was one company that went belly up 2 or 3 years ago (can't remember the name just right now).

And then there is the famous (or infamous depending upon your point of view) story of the Yasuda Semei's purchase at auction of VanGogh's "Sunflowers" during the bubble era. The story goes that there is a strong possibility that their purchase was a forgery. The bubble mentality caused people to do throw common sense out the window and the life insurance companies were no exception to this.

I daresay that other readers will have other input to this, some good some perhaps not so good.
Hope this helps a little. Good luck.
R.

[Hiyodori]

Nonny, The tax deduction from your income is 100% up to 25,000 yen/year in premiums, and tapers off thereafter to a maximum decuction of 50,000 if you pay more than 100,000 per year for life insurance.

I have life insurance in Japan from zenrosai (www.zenrosai.or.jp). Many, if not all, insurance providers in your home country will not sign you up if you are living abroad, and I finally decided to go with zenrosai because I'll be living mainly in Japan for at least another 10 years or so.

In my view, if you have no dependents (spouse, child(ren), etc.), you don't need life insurance. If you have dependents, then you need enough to ensure that they are able to continue to live as they are now while you are alive. Meaning, for example, that you need enough for your children to get them through college, not until they are 80 years old.

I believe that you should do your saving/investing separately from life insurance, so look for a low cost "term life" policy that is renewable. One thing to consider is that Japanese mortgage loans usually have an insurance rider that pays off the balance of the loan should you die before paying it off, so you don't have to take any remaining debt on your home/condo into account.

Please make sure to post when you finally decide to buy, or not buy!

By the way, the zenrosai website has no information in English except for an annual report, and the following quote:

"ZENROSAI stands for the National Federation of Workers and Consumers Insurance Cooperatives.
Based on the cooperative principle, ZENROSAI provides insurance and mutual help for its members, under the supervision of the Ministry of Health, Labor and Welfare and the Consumers' Livelihood Co-operative Society Law.
ZENROSAI is a non-profit organization, owned, managed and utilized by members who wish to protect themselves financially and improve their living standards. Founded on the "One for All and All for One" ideal of cooperatives, ZENROSAI is organized on the basis of person-to-person cooperation."

Cheers

[Welesley]

I was going to sign up with American Family in Japan but it was too expensive for what you got. I do not know about the other systems.

I went with TransAmerican, from my investment advisor and my (Japanese) wife could also get it. About 1million USD coverage for about 1000 USD per year 20 year term. That is much better than Japan wanting 20,000 yen per month per person.

I agree that retirement saving and life insurance are separate. Japanese like to lump them together and not get good returns on either.

I suggest looking around carefully first

[Hiyodori]

Welesley, If I may ask, how did you sign up with TransAmerica? Their information specifically states that you must be a resident of the US (rates vary slightly by state) to apply. They also serve Canada and HK through subsidiaries. If you used a "permanent" address back home, do you think that there is any associated risk?

Cheers

[Welesley]

I use a Japanese address. I just completed the application I am not covered yet. I was told that it is all above board. I think my broker has some special deal, he said he is the only one in Japan who can sell the TransAmerican in Japan.