How Much Life Insurance Does The Average Family Have In Japan?

average insurance benefits for a japanese family

Life insurance is crucial for ensuring your family’s financial security and peace of mind, but determining the appropriate coverage can be challenging. This is especially true when living in a foreign country like Japan, as there are more potential costs to consider. Starting with a basic understanding of life insurance coverage in your country of residence can help. So, how much do you need…?

Understanding Life Insurance Coverage

How Much Life Insurance Does The Average Family Have In Japan?

Life insurance provides financial protection to your loved ones upon your death by paying out a lump sum to your designated beneficiaries. It can cover funeral costs, debts, and ongoing living expenses. There are several types of life insurance policies, including:

  • -Term Life Insurance: A policy that provides coverage for a specified term or period.
  • -Whole Of Life Life Insurance: A policy that provides coverage for the duration of your entire life.
  • -Universal Life Insurance: A form of whole-of-life insurance that features an investment component and allows for the potential for cash value accumulation.
  • -Final Expense Insurance: A policy designed specifically to cover end-of-life expenses, such as funeral costs.

international life insurance in english for japan residents

Most life insurance policies will be written in specification to a few key terms. These include:

  • Understanding Life Insurance Contracts in Japan
  • -Policyholder: The person with whom the life insurance company makes the insurance contract and the payer of the insurance premiums
  • -Premium: The amount paid by the policyholder to the insurance company in exchange for coverage.
  • -Death Benefit: The amount paid by the insurance company to the policyholder’s beneficiaries upon the policyholder’s death.
  • -Policy Term: The length of time the policy is in effect.
  • -Beneficiary: The person or entity designated to receive the death benefit.
  • -Life Assured: The individual whose life is covered by the insurance.


How Much Life Insurance Does the Average Family Have in Japan?

The amount of life insurance coverage a family in Japan has varies based on their financial situation and life stage. While families with children require a higher death benefit to cover child-rearing expenses, the benefit amount decreases as children grow up and become financially independent. Households with higher incomes tend to have a higher death benefit amount, but this comes with a higher premium payment.

How Much Life Insurance Does the Average Family Have in Japan?

The Life Insurance Culture Center’s 2018 Nationwide Survey on Life Insurance found that Japanese household heads’ average conventional death insurance sum is 14.06 million yen. This is an average, and the death benefit amount depends on age, life stage, and income. For example, for a head of household who is newly married with a newborn child the amount increases to 22,300,000 yen.

As children grow up and finish school, the death benefit amount decreases to 11.7 million yen since there is no longer a need to worry about child-rearing and education expenses. We note a large variance in benefits nationwide and that the death benefit amount differs not only by age and life stage but also by the income level of the household.

Universally, life insurance premiums increase with an increase in death benefit, and the average death benefit amount increases with annual income. In the Life Insurance Culture Center’s “Survey on Life Security” in 2019, men average 18.66 million yen and women 8.01 million in active death benefits.

Despite the significant difference in the average amount of death benefits for men and women, the participation rate of life insurance as a whole is almost the same, with 81.1% for men and 82.9% for women- with the rate higher for women. The difference in the average amount of death benefits is likely because more men are responsible for household finances, have financial dependents, and have higher incomes on average.

So, what does all of this mean for you? Should you base your own life insurance needs on the average national coverage? What additional factors do you need to consider, and how do these factor into your own life insurance needs?

How to Calculate Your Life Insurance Needs

People living in a foreign country like Japan often have greater life insurance coverage needs than domestic families. Cost of living expenses are significantly higher for international families because international travel is more frequent, school costs can be an out-of-pocket expense, and university fees could alone run into the hundreds of thousands of dollars or currency equivalent. 

All of these considerations need to be taken into account as you calculate your insurance needs. Fortunately, your financial adviser can help you with this. Here are some steps you can take with your adviser to evaluate the proper amount of life insurance coverage for your specific situation:

  1. How to Calculate Your Life Insurance Needs
  2. 1. Determine your current financial situation: Calculate your income, assets, and debts to get a clear picture of your current financial situation. This includes factors such as:
    1. a. Mortgage or rent payments
    2. b. Outstanding debts, such as credit cards or car loans
    3. c. Daily living expenses, such as food and utilities
    4. d. Emergency fund
    5. e. Childcare expenses
  1. 2. Determine your future financial needs: Consider your family’s future financial needs, such as living expenses, and education expenses.
    1. a. Your children’s educational expenses
    2. b. Cost of your funeral, burial, and transportation of your remains
    3. c. Childcare expenses for your spouse in your absence
    4. d. Your spouse’s retirement 
  1. 3. Determine your time horizon: Decide on the number of years you would like your life insurance policy to cover. This could be until your children graduate from university or until your mortgage is paid off, for example.

Once you have thoroughly evaluated your coverage needs and determined your ideal life insurance term, you can work with your financial adviser on evaluating available insurance policies. 

Given the additional considerations that come with living abroad, many foreign people find that international life insurance policies offer them the most suitable coverage. Many international policies are portable, meaning they continue to provide benefits even if you decide to move to another country. 

Remember, life insurance means financial security for your loved ones in the event of your death – and it only becomes more costly as you get older. Establishing a policy now means greater peace of mind for you and your family – and at a lower cost.

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Sources and Further Reading

- “An International Analysis of Life Insurance Demand.” Brown, Mark J and Kim, Kihong. The Journal of Risk and Insurance, Volume 60 No. 4

- “Joint Life Insurance Policies” Cox-Steib, Joshua. BankRate (2021)

- “What Happens to Your Life Insurance When You Leave a Job?” Nealon, Lizzie. BankRate (2021)