What happens if you don't die?
Many people (maybe even too many people) have life insurance in Japan. Far fewer have disability insurance. Today's post takes a look at some of the options if you are afraid of becoming permanently unable to work.
The national pension scheme includes disability insurance. This is shougai kosei nenkin or shougai kokumin nenkin, depending on which one you are paying into. The amount you receive depends on the severity of your disability (classified on a scale of 1-3) but seems to be roughly the same as the pension. This type of disability insurance pays out until you reach pension age, at which point you start receiving that instead.
Some life insurance policies include payouts for severe disability. This includes things like losing your sight, losing the ability to speak, paralysis, etc. You'll have to check your policy or ask your rep about this.
You can get specialised disability insurance. This appears to only pay out a (relatively small) lump sum in the event of becoming disabled, with a view to making a home barrier-free or preparing for life with the disability. Doesn't seem worth it if you can self-insure, as you would build up the amount of the payout after paying the premiums for ten years or so.
Income Support Insurance
Another option is income support insurance. This pays out a monthly income until you reach pensionable age. Unfortunately the income seems to be capped at 100,000 yen per month, which even combined with the nenkin disability is unlikely to replace most people's income. Given the limited protection and miniscule chance of becoming disabled I am not sure this makes much sense either.
In some cases your job can provide protection if you become disabled. A colleague of mine had a stroke and was unable to continue working, but the university paid most of their salary until they reached retirement age (for a period of three years).
Also if you are eligible for taishokukin it may pay out at an increased rate if you become disabled (particularly at work).
Overseas Disability Insurance
Someone posted this expat insurance on the Facebook page. I asked them for a quote and it ended up being $1200 a year for $45,000 income replacement (based on my salary of $60,000). They don't pay for the first three months and there is a lot of fine print. It's a British company, so they may be a lot more weaselly than the Japanese insurance companies I have dealt with here in Japan. The actual insurer is Allianz, so it might be worth seeing if they will do a policy directly.
So what to do? As with all things financial it is going to depend on your situation and your goals/character/decisions.
Looking at the options above, I think we will self-insure. We have a fairly substantial nest egg at this point, so we could probably survive on nenkin disability insurance plus spending down our capital for a while if we had to.
Also while I am employed my job is pretty bullet-proof so would provide additional cover. I no longer have life insurance as our children are all independent now and my wife would probably be okay running her business and dipping into our investments if anything happened to me.
It doesn't seem worth it for me to get disability or income protection insurance in Japan. The expat insurance above isn't compelling either, as it seems fairly expensive for something that is both unlikely and not disastrous (for us). Remember, the main purpose of insurance is to protect you from catastrophic damage. Becoming disabled would be pretty catastrophic on a personal level, but I think we would survive it financially.
How about you? Are you making provisions for disability?