This is but another sign that perhaps things are starting to change in Japan with the BOJ looking to hold interest rates at a higher level amid their recent policy shift. Nippon Life Insurance is now reportedly set to raise the expected interest rates for its annuities and whole life insurance for the first time in 40 years. The move will go into effect in January 2025.
The change is to apply to pension insurance, whole life insurance, education insurance, and other types of insurance where premiums are paid monthly.
The interest rates for annuity insurance will increase from 0.60% currently to 1.00%. Meanwhile, for whole life insurance from 0.25% to 0.40%, and for education insurance from 0.85% to 1.00%.
Now that the BOJ is starting to normalise monetary policy, things are starting to reverberate as Japan’s largest insurer is also taking a big step up. The higher expected interest rates means that life insurance holders will pay less in premiums for those affected by the change. The examples provided by Nikkei:
“For example, if a 20-year-old male pays insurance premiums for 45 years and signs a contract to receive a total pension of 10 million yen from age 65, the monthly premium will fall by 4.7%, from 17,190 yen to 16,380 yen. The total accumulated contribution will fall from 9.28 million yen to 8.85 million yen, reducing the burden on the policyholder. If a 30-year-old woman takes out a whole life insurance policy with a payout of 5 million yen, the monthly premium will be reduced by 1.2%, from 14,990 yen to 14,815 yen.”
Now that Nippon Life has made the first move, other insurance companies in Japan are also likely to follow suit in doing so.
This article was written by Justin Low at www.forexlive.com.
