Will My Life Insurance Pay Out If I Live In Japan?

restrictions on life insurance payouts for expats

Living in Japan can be a fun and fulfilling experience. Many of its residents love the high standard of living, excellent public transportation, and low crime rate. However, living in a foreign country always comes with risks. One of the most important aspects to consider is your life insurance coverage. Many people assume that their life insurance policy will pay out regardless of their location – but is this really the case?

Understanding Factors That Influence Life Insurance Pricing

Understanding Factors That Influence Life Insurance Pricing

Life insurance is a financial product designed to provide financial protection and support to the beneficiaries of the insured individual in the event of their death. It is a contract between the policyholder and the insurance company, wherein the policyholder pays regular premiums in exchange for a death benefit. 

This death benefit is a lump-sum payment that the insurance company provides upon the insured’s death. This payment goes to the beneficiaries (usually the insured person’s family or dependents). The death benefit helps the beneficiaries cover expenses such as funeral costs and allows the family to sustain themselves financially after the death of a household income earner. 

The cost of life insurance premiums is influenced by several factors that determine the level of risk associated with insuring an individual. These include things like occupation, age and health, lifestyle, and hobbies. Each of these factors influences the likelihood that the insurer will have to pay the policy’s death benefit (i.e. the likelihood of that person’s death in any calendar year).

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The Impact of Moving Overseas with Domestic Life Insurance

Domestic life insurance policies base their rates on the statistical averages for the nation in which they are based. Because of this, it is difficult for domestic policies to take into account the additional risks of policyholders who travel or live in foreign countries. 

In addition, the overall mortality risk for individuals who live or often travel overseas rises considerably. This means that insurance companies are more likely to have to pay the insured’s death benefit. Because of this, the pricing models used to calculate the premiums for the policy are no longer appropriate. 

Because of all of these factors, many domestic policies have exclusions or restrictions on their death benefit payments for international travel and emigration. This makes it essential for anyone planning to move to another country to thoroughly assess their current life insurance policy. You want to make sure that you are not paying for a benefit that your family will never receive.

Assessing Your Domestic Life Insurance Policy

If you’re planning to live in or are already living in Japan, you’ll want to check your domestic life insurance policy to make sure your loved ones are still covered. By thoroughly assessing your home country plan, you can determine whether your cover remains active despite your move to a foreign country. If not, you will need to consider alternative protection. Here are some key considerations to keep in mind:

 Assessing Your Home Country Life Insurance Policy

  • -Analyzing policy terms for international coverage: Some policies may offer limited or no coverage outside of your home country, while others may provide more comprehensive international coverage. Be sure to review the policy terms carefully to understand the extent of your coverage.
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  • -Checking for common exclusions and limitations: All life insurance policies have exclusions and limitations that may impact your coverage. Some of these may have to do with foreign travel and relocation. Be sure to review these exclusions and limitations carefully to understand how they may impact your coverage.
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  • -Consulting with your financial adviser so that you don’t miss anything: Combing through the fine print of your life insurance policy can be a confusing and frustrating process. It helps to have a professional eye that knows what to look for. A trusted financial adviser can identify any potential gaps in your coverage and help you determine if you need to consider a new policy.

Many people will find that their domestic life insurance policies will not cover them if they move abroad. If this is you, it may be time to consider international life insurance. Unfortunately, some families find out the hard way that their insurance was not in good standing after the death of the life assured. This outcome is easily avoidable.

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International Life Insurance: The Solution for Living in Japan

The portability of international insurance plans makes them a flexible option for people who are moving – or have moved – abroad. They often offer more extensive coverage options than domestic policies, meaning greater security for your loved ones. 

International policies are more complex than domestic policies, but they usually cost around the same as comparable domestic policies on a cost-per-unit-of-benefit basis. Many international insurers offer affordable plans that can be customized to your needs and save you money. 

This is a much better solution for your family’s financial well-being than paying to maintain an old domestic insurance policy and hoping that the insurance company do not figure out that you have been living outside of your home country. Some people do keep their domestic policy, hoping that the insurance company does not find out that they were living in Japan at their time of death. This gamble could leave your family without any money after the claim is denied for breach of contract.

Finding the Right International Life Insurance

Finding the right insurance policy can be a challenging, time-consuming process. It’s important to take the right steps to ensure that you have the right provider and the right coverage. Here are some points to keep in mind:

Finding the Right International Life Insurance
  • -Research reputable providers: Ask your financial adviser for recommendations for companies with a strong financial rating and a history of paying out claims. You may also want to check reviews and ratings from other policyholders or consult with a financial advisor to identify reputable providers that will insure people living in Japan.
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  • -Evaluate coverage options and policy terms: Work with your  adviser to determine your specific needs. This can help you understand what to look for in coverage options. Also make sure to review the policy terms, including any exclusions or limitations.
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  • -Compare premiums and potential discounts: The cost of international life insurance policies can vary, so it’s important to compare premiums from different providers to find the best value. Your adviser may also help you identify discounts based on factors such as age, health, or payment frequency.

 

Ensuring Financial Security When Moving to Japan

Whether you’re looking forward to life in a new country or you’ve already established one, you need to make sure your loved ones are protected. International insurance can help you do just that, but it can be difficult to know where to start.

By working with a cross-border financial adviser, you can rest assured that your family’s financial future is secure. Don’t wait until it’s too late. The sooner you talk to an experienced adviser, the sooner you can gain peace of mind for yourself and your loved ones – wherever you are.

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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)

- Handbook of International Insurance. ed. Bertrand Venard, J. David Cummins (2007)