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Finance

Japanese insurers raising life insurance premiums

TOKYO -- Japanese insurance companies are under increasing pressure to raise premiums on popular lump-sum life insurance products as the Bank of Japan's aggressive easing measures has lowered yields on the country's government bonds.

     Single-premium whole life insurance is a popular policy that lets the insured pay a lump sum for coverage.

     The product's promised rate of return is determined based on the standard premium rate for life insurance products, which is updated four times a year by the Financial Services Agency. The agency uses Japanese government bond yields as the basis for calculation.

     Currently, the 10-year JGB yield falls in the 0.3% range, while the yield for 20-year JGBs stands at around 1%. If they remain unchanged until the end of March, the reference yield for single-premium life insurance policies will drop from 1% at present to 0.75%. This requires insurance companies to boost reserve funds for benefits, thus prompting them to consider raising premiums.

     Top insurer Nippon Life Insurance has already decided to raise premiums in stages. Those purchasing single-premium products from April and beyond will pay premiums 3-6% higher than in January. The rate of increase will be 5-6% for 40-year-olds, 4-5% for those age 50 and 3-4% for 60-year-olds, for example.

     Meiji Yasuda Life Insurance, Fukoku Mutual Life Insurance and Taiyo Life Insurance are expected to follow suit. Daido Life Insurance already pulled some single-premium products in January.

(Nikkei)

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