Japan's life insurers are increasing the yield on new whole life insurance policies in response to rising long-term interest rates following recent hikes by the Bank of Japan, reported NHK Japan.
Sumitomo Life Insurance announced it will raise the yield from 1.3% to 1.75% in July—the highest level in 24 years. The updated rate will apply to single premium whole life policies.
The decision comes as yields on 10-year Japanese government bonds hover around 1.5%, boosting returns on fixed-income investments. Sumitomo Life, which invests policyholder funds primarily in bonds, is adjusting its offerings accordingly.
Asahi Mutual Life Insurance has also confirmed it will raise the yield on its whole life policies starting in July. Both insurers hope the enhanced returns will attract more customers, as the higher yields reduce the initial premium outlay required.