The insurance you need - and don't need

From fender-benders to fires, toothaches to tsunami, there is a lot of insurance coverage available to foreigners. This month, Prince Samuel, an insurance agent with Legend Travelers, distinguishes expatriate insurance needs.

KS: What types of insurance do you recommend foreigners have in Japan?

PS: Well, this varies with circumstance but the most obvious are: medical; auto, if you drive; property, if you own your own home; renters insurance, if your landlord requires it; and life insurance.

1) Medical insurance is not optional. An unexpected illness or injury can put you in financial ruin. You also face the risk of not being able to receive the treatment you need if you cannot afford it. Whether to buy private insurance or to join one of the govern- ment plans is a hot subject among foreigners. National Health Insurance Watch (www.nationalhealthinsurance.jp) has some excellent information on this subject. If you are on one the government plans, you can also buy a private insurance plan that will cover you for the 30% which you would ordinarily have to pay out of pocket.

2) If you drive, there are two types of auto insurance you need in Japan. One is compulsory by law and the other is voluntary - but you need both! Compulsory Automobile Liability Insurance (CALI), jibaeseki hoken in Japanese, is usually included in the purchase of a car. A voluntary insurance policy, called nini hoken, is something you must buy on your own. But don't think that because it is voluntary that you don't need to buy it. CALI covers bodily injury liability but it is skimpy and will not give you the coverage you need to drive in Japan.

Good voluntary auto insurance will have coverage for thirdparty liability (bodily injury and property damage), self-incurred personal accident (non car-to-car), uninsured motorist protection, own damage, and passengers' personal accident coverage. If you are driving a new car you will want all of these. If you drive an old jalopy, you might not need coverage for your own car but certainly you will not want to drive without the other coverage. CALI alone won't cut it and you can end up in deep trouble without it.

3) If you own your own property you will no doubt want to get property insurance. With all the typhoons, floods, tsunami, fires and earthquakes in Japan you will not want to be without suffi- cient coverage. Earthquake insurance is usually added on as an option for an additional premium.

4) If you are renting, you should ask your landlord or realtor if the liability rests on your shoulders. In most cases it does. Quite often the cost of an insurance policy is added to the list of other expenses a realtor will hand you. However, that does not mean you need to buy insurance from them. It may be loaded with all sorts of trivia you don't need and you can usually save yourself some money by buying it on your own.

5) Do you need life insurance? If you are young and single, probably not. If you are married and have children, some form of term life insurance is not a bad idea. Some medical plans have term life either built in or as an option.

Are there any types of insurance that you recommend NOT buying?

Well from an investment point of view there are three types that would most likely prove a waste of money: whole life, dental, and cancer insurance.

Whole life insurance: With term life insurance there is no return on your money should you decide to opt out of the policy. But, it will pay your beneficiaries should you die. With whole life, if you are on the plan a very long time, you could get something back. However, if you want to invest, there are better investments than whole life. Buy term life instead and spend the money you will save on a better investment.

Dental insurance: The biggest mistake people make when buy- ing private insurance is over buying. Some people seem to want every little expense to be covered by the insurance companies. But does that make for a good investment? People tend to view a policy with dental benefits as "a good plan."

With accidental or medical insurance where something may happen or may not happen, both the insurer and the insured have a chance to come out ahead in the game depending what fate has in store. But with dental, this is not treatment that might happen; this is treatment that will happen. Insurance companies know that and they create dental policies or options that either skimp on benefits or are expensive. When you buy dental insurance, you are in essence paying for your dental treatment out of your own pocket - in advance! Don't buy it.

Cancer insurance: looks appealing as everyone knows there is a high possibility of getting cancer. The focal point of these plans is that it indemnifies you. That is, if you are diagnosed with cancer, the insurance pays you a lump sum of money to do with as you please. It has little to do with how much your medical bills will be or whether you even receive treatment. A typical plan could cost you ¥50,000 a year (depending on your age when you join the plan) for an indemnity of ¥1 million. If you get cancer after being on the plan for 20 years, how will you come out ahead? Do the math. The benefits are too low in relation to the premiums. Better off starting a good savings plan than giving your hard earned money to the duck.

What should we be cautious of when buying insurance?

Make sure that the agent is licensed to sell insurance in Japan. Believe it our not, there are entities that are selling insurance in this country on tourist visas! To legally sell insurance in this country an agent or insurer must be licensed by the Japanese Government. If you buy insurance from an unlicensed entity you will have no recourse should things turn sour.

Text: Laura Markslag • Images: KS