Regardless of your location, life insurance is a crucial means of safeguarding your loved ones in the event of your unforeseen death. But what are your options for life insurance if you’re living in a foreign country like Japan? Fortunately, there are several types of international life insurance policies available to foreign people living abroad. So how do you choose the right one for you and your family?
Types of International Life Insurance Policies
There are a few types of international life insurance policies that are available in Japan or products made by international insurance companies that accept applications from Japan residents. Each type offers distinctive features and advantages, such as flexible coverage, tax benefits, or investment opportunities. Some common types of international life insurance policies to consider are:
- -Term Life Insurance: This type of life insurance is non-permanent, providing coverage only for a specified period, usually between 10 and 30 years. If the policyholder dies within the specified period, the beneficiaries receive the death benefit. If correctly planned, the period of coverage can protect a breadwinner’s family during the most critical years, such as until his or her children are fully independent. Term life insurance is affordable and straightforward which makes it an excellent option for families with limited budgets.
- -Whole Of Life Insurance: This type of policy provides coverage for the policyholder’s entire life, as long as the premiums are paid. It offers a guaranteed death benefit which provides for non-negotiable monetary requirements in the future; for example, important things like inheritance taxes, legacies for family descendants, and shareholder protection agreements for business owners.
- -Universal Life Insurance: This is a variation of whole life insurance that provides permanent coverage. Universal life insurance offers more flexibility in premium payments and death benefits. It has a cash value component that earns interest, and policyholders can often adjust their premiums and death benefits over time.
- -Variable Life Insurance: This policy allows policyholders to invest their premiums in various investment options, such as stocks and bonds. A variable life insurance policy often guarantees a minimum death benefit, but the cash value of the policy will depend on the performance of the investments. It is an excellent option for individuals who want to combine insurance coverage with investment opportunities. However, it does involve the risk of investing, and you could possibly get back less than you put in..
- -Group Life Insurance: This policy is offered by some Japanese companies to their employees and provides coverage for a specified period. It is an affordable option, with the premiums often fully or partially subsidized by the employer. However, the coverage usually ends when the employee leaves the company if the insurance provider does not offer an option to convert the group policy into individual coverage – meaning that you’ll need to buy your own policy again at a later date and probably pay a higher price due to your higher age.
Factors to Consider When Choosing an International Life Insurance Policy
When choosing a policy, it’s essential to consider your needs, budget, and future plans. Policy premiums (the money you pay to the insurance company) will vary depending on the coverage they provide and the duration for which they provide it. Choosing the best policy often means finding your ideal balance of these factors, so you’ll need to carefully consider each aspect:
- -Coverage Amount: The coverage amount should be enough to provide financial security to your family in the event of your death. When calculating your coverage needs, make sure to take into account outstanding debts you have yet to pay off in addition to your family’s general living expenses.
- -Policy Duration: The policy duration should match your needs. If you have young children, you may want coverage until they are adults and financially independent. If you have a mortgage or other debts, you may want coverage until those are paid off. For example, if you have a 30-year mortgage, you may want coverage for 30 years.
- -Premiums: Determine how much you can afford to spend on the monthly premium for your insurance. Remember that you have to keep paying the premiums to maintain the policy benefits, so you’ll need to consider factors, such as retirement, that could affect your income and ability to pay premiums in the future, as well.
Once you have an understanding of your basic needs from calculating them with your adviser, it is essential to compare policies and get quotes from different companies. This process may take some time, but it can save you money and ensure that you select the right coverage. Your adviser will be able to give you a comparison of benefits across different products, giving you a number of advantages, including:
- -Cost Comparison: Every insurance company has different pricing structures, and premiums for international life insurance policies can vary significantly. By comparing quotes from different insurers, you can find a policy that suits your budget and offers the desired coverage.
- -Coverage Comparison: Insurance policies come with different features and benefits. It is essential to compare the coverage offered by different policies to ensure that you select the right plan. Different companies may offer various options for riders or policy add-ons, such as critical illness coverage or accidental death coverage.
- Credential Comparison: When purchasing international life insurance, it is crucial to choose a reputable company that will be there for your loved ones in the event of your death. Comparing policies and getting quotes from different companies can help you assess their reputation and customer service quality.
- -Policy Terms: Understanding the policy terms is crucial before buying life insurance. Different insurers may have different policy terms, and comparing policies can help you understand the policy language and determine if the terms align with your needs.
- -Customization: Not everyone’s needs are the same, and insurers may offer customizable policies to cater to different needs. Comparing policies and getting quotes from different companies can help you find the best-fit policy for you.
When to Seek Help in Your Search
Life insurance is in many ways a sales business, which means that insurance company employees may not always have your best interests at heart and may have limited time to spend understanding your individual situation and needs. Some may try to sell complicated policies that provide unnecessary cover at an unnecessary price. This is where a professional financial advisor can come in handy. Financial planners who are experienced in insurance can help reduce life insurance costs and ensure that you only pay for what you need. This can help you free up more of your money for investments that will build long-term and generational wealth to benefit you and your family for years to come.