The group credit life insurance market in Japan is experiencing fierce competition among insurance companies, driven by more aggressive initiatives from both banks that sell these policies and insurers that underwrite them, according to a report by The Toa Reinsurance Company’s (Toa Re) Life Planning Department.
Banks are enhancing their efforts to differentiate the features of group credit life insurance as their ability to compete by reducing mortgage interest rates has reached its limit. Meanwhile, insurance companies, especially those new to the market, are positioning group credit life insurance as a product that will generate stable earnings over the medium-to-long term.
To grow their group credit life insurance portfolios, insurers are increasing products and services based on bank and market needs to strengthen their relationships with banks.
More Flexible Insurance Products
Insurance companies are promoting more flexible policies, raising upper limits on the amount of coverage an applicant can apply for with a declaration (non-medical), and providing additional services to better suit customers’ lifestyles. This includes products with broad coverage for customers not eligible for group credit life insurance through normal declaration procedures due to their health condition, as well as joint group credit life insurance policies for couples that exempt one partner from loan repayments if the other partner dies or becomes severely disabled.
Another reason for raising upper limits on applications without medical examinations is to address the pronounced increase in housing prices.
Additional Services
Insurance companies are offering additional services beyond the insurance policies themselves, such as:
Supplementary living benefits that guarantee a portion of the loan balance if the policyholder contracts cancer or another major illness, without additional interest or premiums
Extending repayment periods, which can be attractive to young customers as it reduces premium installment payments with guaranteed repayment periods of up to 50 years
Specialized agencies staffed by mortgage loan experts who provide financial planning and consulting services
24/7 health consultation services over the phone
Services that provide second opinions through interviews with general practitioners
In Japan, people taking on large loans for purchases such as housing are often required to take out group credit life insurance, which reduces the loan balance to zero if the policyholder dies or becomes severely disabled while repaying the loan. Banks often require these policies when structuring loans, making bank counters a primary channel for acquiring customers.
Competition among insurers in this market is expected to continue in the future as they strive to offer more attractive and flexible products to both banks and policyholders.
