Major insurer, Nippon Life Insurance, will cut premiums for life insurance products by up to 20% as its payout is on the decline due to the rising longevity of policyholders, company officials say. The discounts will take effect on policies purchased after March.
On the back of people's longer life spans, other Japanese insurers also plan to lower mortality insurance fees. The size of the cut in insurance fees will vary depending on policyholders' age, sex and type of contracts, reports Kyodo News.
Sony Life Insurance will cut premiums for its mainstay products by 14.6% for 30-year-old men and 3.7% for women of the same age.
All the changes will be made after the industry's benchmark table containing mortality rates and average life expectancies was revised for the first time in 11 years. For the financial year ending 31 March 2019 and beyond, the table, used by each insurer to design products, shows improved mortality rates at every age bracket. The mortality rate, or the number of deaths per 1,000 individuals per year, for instance, for 40-year-old men fell from 1.48 to 1.18, while the rate for women of the same age was down from 0.98 to 0.88.
Meiji Yasuda Life Insurance will also discount premiums for collective life insurance contracts by up to 24% from April. Other insurers planning similar premium cuts include Tokio Marine & Nichido Life Insurance, Mitsui Sumitomo Aioi Life Insurance and Sompo Japan Nipponkoa Himawari Life Insurance.
While a rise in longevity has prompted the insurers to reduce premiums for life insurance, policyholders are expected to pay more for health insurance as more elderly people are likely to make claims for medical expenses, industry observers say.