Japan's major life insurers reported stronger revenue in fiscal 2025 as rising interest rates fuelled demand for yen-denominated single-premium whole life insurance products, which have become increasingly attractive for wealth management and inheritance planning.
Four leading insurers, including Nippon Life Insurance, saw sales of the products surge after raising guaranteed yields in response to higher long-term interest rates following the Bank of Japan's monetary policy tightening, reported The Japan Times.
Under single-premium whole life insurance, policyholders pay the entire premium upfront and beneficiaries receive a death benefit upon the policyholder's death. The products are commonly purchased using retirement savings and are popular for estate planning because they offer more favourable tax treatment than bank deposits. Many policies also provide surrender values exceeding the original premium if they are cancelled after a specified period.
Higher interest rates have enabled insurers to earn better returns on investments such as government bonds, allowing them to increase guaranteed yields and offer larger death benefits to new customers.
Premium income from yen-denominated single-premium whole life insurance at Nippon Life Insurance, Meiji Yasuda Life Insurance and Sumitomo Life Insurance reached a combined approximately JPY2.38tn ($15.9bn) in fiscal 2025, around 2.4 times the level recorded a year earlier.
Meanwhile, Dai-ichi Frontier Life Insurance reported a 23.9% year-on-year increase in premium income from all yen-denominated products. Its flagship single-premium whole life product, Premier Present 5, has benefited from higher guaranteed yields, which are reviewed twice a month in line with market interest rates.
According to the insurer, a 70-year-old customer purchasing the product with a JPY10m lump-sum premium in the first half of June 2026 could expect a death benefit of approximately JPY15.29m after a specified period, compared with a minimum benefit of about JPY10.61m for a comparable policy sold in August 2022.
Unlike foreign currency-denominated products, yen-based policies are not exposed to exchange rate fluctuations, enabling policyholders to benefit fully from favourable contract terms.
Despite the strong sales momentum, insurers cautioned that demand may moderate.
The Japan Times reported that a representative from Nippon Life said recent sales had begun to stabilise and the company did not expect fiscal 2025's exceptional growth to continue.
Insurers also noted that stronger sales do not necessarily translate into higher short-term earnings, as they are required to increase policy reserves when new contracts are written to meet future claims obligations. As a result, higher premium volumes can temporarily weigh on core operating profit.
Nevertheless, the industry expects higher interest rates to continue supporting product attractiveness and long-term business growth.