Foreign Currency Insurance and Parents’ Money

You returned to your parents’ home and found out they heard about a new insurance policy at the bank. Or, you feel like you saw the words ‘dollar-denominated’ in a pile of documents.

This article is for those situations.

If you yourself are being recommended this at a bank counter, the things to check are almost the same, so please continue reading.

To be upfront, I am not a person of such high standing that I can criticize foreign currency products. I was once on the buying side.

First, my conclusion

1. The generation of our parents has the most consultations regarding troubles with foreign currency insurance.

About half of the consultations are from people 70 and older, and the average contract amount is around 10 million yen

2. When I was 30, I also put 1 million yen into a foreign currency insurance policy at a bank counter.

I quit immediately.

I don’t remember how much I got back.

3. If it were me now, I wouldn’t choose it. Insurance is insurance, and investment is investment. It is usually cheaper to keep them separate

4. What you are doing today is not canceling. You are just asking one question: ‘Do we have one?’

If this is enough for you, you can close this page. If you want to check the basis for the numbers and how to read the documents, please continue.

Furthermore, this article is free to read in its entirety.

1. To be honest from the start: I also put in 1 million yen. And, I don’t remember it well

It was when I was 30.

At a major bank counter, I received guidance from a young representative and put 1 million yen into a foreign currency insurance policy.

I canceled it immediately.

That is all I remember.

I cannot recall the name of the product.

I have neither the securities nor the documents left in my possession.

I don’t even remember how much I got back.

I have no way of verifying now whether it was a loss or a gain.

It’s a pathetic story, but I will write it exactly as it happened.

Since I have decided that the actual amounts in this series must be genuine, I will not make up plausible numbers for things I cannot remember.

However, this sense of patheticness itself is probably what I most want to convey in this article.

If you buy something you cannot explain in your own words, a dozen years later you won’t even remember what you bought.

The reason I don’t remember is because I didn’t understand it at the time.

I put 1 million yen into something I didn’t understand.

That is the fact.

Therefore, this article is not an expert’s commentary. It is a record of someone who once bought it, re-examining it from scratch.

2. About half of the consultations are from people 70 and older. ‘I thought it was a savings account’ is typical.

This was where I stopped while researching.

According to an alert issued by the National Consumer Affairs Center of Japan on February 20, 2020, the number of consultations regarding foreign currency life insurance was 538 in fiscal year 2018.

Compared to 144 cases in fiscal year 2014, this is an increase of more than three times.

And, those 70 and older account for about half of all consultations, and the average contract purchase amount is hovering around 10 million yen.

The amount I put in was 1 million yen. The digit is off by one.

When reading the consultation cases cited by the center, the pattern is clear. I will quote one.

A financial institution employee visited my home and recommended a financial product, saying that money wouldn’t grow just by leaving it in a savings account. (Omitted) Although the 5 million yen in fixed-term deposits I had was not yet at maturity, I was advised that it would be better to change it to an Australian dollar-denominated product. The employee kept repeating that the principal was guaranteed, and because they were so persistent, I gave in to the pressure and signed the contract against my will. (Received August 2019, Contract party: Woman in her 70s)

This person only realized it was insurance after the policy document arrived following the contract.

When I checked again later, it turned out the principal was not guaranteed.

A loss of about 800,000 yen had occurred.

There are other consultations lined up like this as well.

• I intended to open a time deposit, but I had enrolled in a foreign currency-denominated variable individual annuity insurance policy

• I told them it was for future nursing home entry funds, but it was a contract for foreign currency-denominated life insurance

• A foreign currency-denominated life insurance policy arrived for my elderly father, but he says he has no memory of signing up for it

• My elderly aunt who lives alone had signed up for about 20 foreign currency-denominated individual annuity insurance policies one after another

The center writes this as the first piece of advice for consumers.

Foreign currency-denominated life insurance is also sold by entities other than life insurance companies.

It is common for what you heard at a bank to actually be insurance.

What I bought at the counter was the same.

However, this article does not recommend having your parents cancel their insurance.

The decision is up to the parents themselves.

For contracts held by elderly people, canceling can lock in losses, or depending on their health, they may not be able to return to the same coverage.

What I want you to do today is just reach the point of ‘knowing whether it exists.’

If you reach the stage of taking action, please do not get the order wrong. I wrote about that in another installment.

3. I would not choose that product now (there are two reasons)

Foreign currency-denominated insurance is a product that mixes insurance and investment.

Money paid in yen is converted to dollars for investment, and then converted back to yen when received.

Therefore, the amount returned changes based on exchange rates.

Although it is an insurance company product, it is also sold at bank and securities company counters.

So, is it a fraudulent product?

I will be honest about that. No, it is not.

It is a product properly created by insurance companies and sold under the supervision of the authorities.

What bothers me is not whether it is good or bad, but the fact that it is “mixed.”

Reason 1: You cannot explain in your own words what you are insuring against

Whether to have insurance or not, I always ask the same thing.

If that happens, can you get by with your savings and public systems?

Only leave things you cannot handle to insurance.

If it is personal or property liability car insurance, you can say it in one word.

It is for compensation if you hit someone.

If it is term life insurance, it is for living expenses after the breadwinner passes away.

For both, you can say “this is what I am preparing for” in five seconds.

Can you say the same for foreign currency insurance?

I could not.

When I was 30, if I had been asked at that counter, “What are you insuring against?”, I probably would not have been able to answer.

I only had the idea in my head that it would grow.

If you cannot state its role as insurance, then it is something else wearing the mask of insurance.

There is no reason to pay money under the name of insurance premiums for something whose role you cannot explain.

Reason 2: It is not being compared to see if it is superior as an investment

So, how is it as an investment? Here, I will not use my own impressions, but rather cite official documents.

The secretariat document submitted to the Financial Services Agency’s council (Customer-Oriented Task Force) on September 26, 2022, states the following:

There are points made that when proposing single-premium foreign currency-denominated insurance as an investment product, there are almost no cases where it is compared with foreign currency-denominated bonds or similar products that have similar investment effects.

It continues by stating that proposals are not made based on its position within the overall assets, and there are also points made that it does not sufficiently explain its relative superiority in terms of investment performance.

It can be read that it is not being shown side-by-side with products that perform similar functions.

If they are not being compared, neither the seller nor the buyer knows whether it is superior.

What I heard at the counter was also only about that one product.

I have no memory of it being compared to anything else.

So, what should you hold instead?

Since it is unkind to end with just a denial, I will also write my answer. You simply separate the things that are mixed together into three parts.

• If you need insurance — Buy term insurance in yen. Get only the necessary coverage at the lowest cost.

• If you want to grow your money — Buy it as an investment. Choose stock or bond funds by looking at the costs.

• If you want to save money — Keep it as savings. In a form that you can access immediately.

Do not mix them; buy them separately according to their roles.

With just that, you can usually find a substitute for what foreign currency-denominated insurance was trying to do.

Moreover, you can see where and how much you are paying.

It seems convenient to bundle everything into one, but the moment you bundle them, you can no longer see where and how much you are paying.

The reason I cannot explain the one I had when I was 30 is probably because of that.

I will write this for the sake of fairness.

I would not go so far as to say that there is absolutely no one for whom it is suitable.

For people who have surplus funds with no specific purpose, cannot tolerate price fluctuations, but still dislike just leaving the money sitting there, I think it can be one option.

With the premise that you can accept exchange rates and the fact that you cannot move your money for a long period.

I am in my 40s and do not have excess money. Therefore, I would not choose it.

That is all there is to it.

I do not know if your parents fit those conditions.

(If the insurance you have on hand might not be foreign currency-denominated but rather a yen-denominated savings type, I have summarized how to tell the difference in another installment)

4. When your parents’ documents appear: Please read the numbers like this

When pamphlets or insurance policies appear from your parents’ home, or when you are handed documents at a counter. There are three things to look at.

No. 1: The ‘3.5% projected interest rate’ is not the interest rate applied to the entire amount paid.

This is the number written largest on the cover of the pamphlet. And it is also a number that I probably did not understand at the time.

Meiji Yasuda Life Insurance writes this itself on its official page explaining the projected interest rates for foreign currency-denominated insurance.

Because the accumulated amount is the amount after deducting initial contract fees and insurance contract-related expenses, the insurance premium (yen) and accumulated funds are not managed at the projected interest rate as compound interest as they are

It is applied to the remainder after expenses are deducted.

Since the company selling it states this clearly on its own official website, this is not my interpretation.

You must not simply multiply the number on the cover by your own 1 million yen.

No. 2: If you cancel midway, it may be deducted in two stages.

One is Market Value Adjustment (MVA).

According to the Life Insurance Culture Center, if market interest rates at the time of cancellation are higher than at the time of the contract, the surrender value will decrease.

The center writes, “Due to fluctuations in market interest rates, the surrender value may fall below the total amount of insurance premiums paid, and there is a risk of incurring a loss.”

Another is Surrender Charges.

The center’s essay states that for some insurance policies, if you cancel early, a surrender charge based on the number of years in the contract is applied, and when combined with other fees, it is not uncommon for the principal to be lost (there are also products with only initial costs and no surrender charges).

Part 3: Exchange costs are incurred twice, once on the way out and once on the way back.

If you pay in yen and receive in yen, it goes from yen to dollars, and from dollars to yen.

The center also writes that you should confirm not only the exchange fees, but also what other fees exist, how much they are, and when they occur.

Signing a contract without being shown how it compares to similar products.

That was the point made in the third Financial Services Agency document I cited.

If they aren’t comparing them, you have to compare them yourself.

“Is there a way to do the same thing as this, but cheaper?”

I think this is the most effective phrase you can ask at the counter.

5. The person who wrote “I look forward to a long relationship” disappeared immediately

Finally, I will write one thing that I remember.

A while after signing the contract, I received a handwritten letter from that representative.

The gist of it was that they looked forward to a long relationship so they could continue to provide good proposals in the future.

I have already disposed of the letter itself.

That person disappeared immediately.

I don’t know if it was a transfer or a resignation. I don’t think they were a bad person either. I thought at the time, “That’s just how it is.”

I feel like that letter was telling me something different from what I had thought.

The representative will change. The contract will not.

If it is a 10-year maturity product, it is 10 years.

If your parents’ generation signed a contract for around 10 million yen, it could end up being a lifelong commitment.

During that time, the people at the counter will be replaced many times over.

In the end, what remains on this side is not a person, but only paper.

The one who takes on the ‘long-term’ commitment is not the person who sold it. It is the person who bought it and their family.

What kind of person recommends it, and under what circumstances? I wrote about that in another installment.

One thing to do today

Please ask your parents this.

‘Do we have any dollar-denominated or foreign currency-denominated insurance?’

That is all. A phone call or even a single message is fine.

You are only asking to confirm the inventory.

Do not say they should stop it, or that they might be losing money.

That way, you won’t cause any friction.

If they reply ‘yes,’ you can take it slow from there.

Have them show you one insurance policy document, and look at the three things I wrote about in the fourth installment together.

That is enough.

If they reply ‘no,’ please add just one more thing while you are at it.

“Even if you are recommended something at the counter, don’t decide on the spot.”

Even if you are there for other business, you may be recommended investment trusts or insurance at the counter.

Among the consultation cases cited by the National Consumer Affairs Center of Japan, there are cases where financial institution staff visited homes repeatedly.

It is far easier to take the information home than to cancel after signing a contract.

For those who are not in a position to ask their parents, or for those who are being recommended products at the counter themselves, please take out one of the insurance policies you have on hand and check if the words “dollar-denominated,” “US dollar-denominated,” or “foreign currency-denominated” appear in the product name.

The National Consumer Affairs Center of Japan also writes in its advice to consumers to “check documents such as insurance policies sent after signing a contract immediately.”

I did not look at that paper. That is why, even now, more than a decade later, I cannot explain what I bought.

The paper remains. Whether or not to look at it is the only freedom we have on our side.

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(The systems and figures in this article were confirmed as of August 2026. Sources include: National Consumer Affairs Center of Japan, “Consultations regarding foreign currency-denominated life insurance are increasing!” (published February 20, 2020); The Life Insurance Culture Center (Life Insurance Q&A “What is life insurance using Market Value Adjustment (MVA)?” and the essay “Foreign currency-denominated insurance: Here are the points to watch out for!!”); Meiji Yasuda Life Insurance, “Assumed interest rates applied to foreign currency-denominated insurance”; and Financial Services Agency, Financial System Council, Customer-Oriented Task Force, 1st Secretariat Explanatory Materials (September 26, 2022). Since the existence and conditions of fees, surrender charges, and market value adjustments vary by product, please check your own contract with your policy, terms and conditions, or the contracting company.)

※ This article is written based on information gathered and organized from publicly available sources, as well as my own experience (as a company employee in my 40s).

Because I do not have the documents remaining for the policy I signed when I was 30, I have not written about the amounts or whether it was a gain or loss.

All descriptions regarding the contents of the products are based on publicly released materials from public institutions and insurance companies.

This does not recommend the purchase or cancellation of any specific financial product or financial institution.

Ultimately, please make your decision based on your own and your family’s circumstances.