“Health Insurance Is Better the Younger You Are” Is a Complete Lie! The “Three Traps” Life Insurance Saleswomen Hide and the New Art of Health Insurance

“It’s better to sign up while you’re young”—this is a common sales pitch that everyone has heard at least once, but taking it at face value could put you at risk of losing millions of yen.  

In fact, based on “three key reasons”—namely, “inflation will render future coverage worthless,” “investing the saved premiums in the New NISA account would be more profitable,” and “Japan’s high-cost medical care support system means you can manage with cash on hand”—locking in insurance early lacks rationality.  

We spoke with Kenji Matsuura, a financial planner and former insurance company employee, about the real cost-benefit analysis the industry keeps hidden and the “New Medical Insurance Strategy” for avoiding unnecessary premiums.〉  

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Health insurance is the best-selling product among life insurance offerings. Precisely because it sells so well, there are numerous voices—some saying they’re glad they signed up, and others claiming it was a waste of money. Should you get health insurance? Are there ways to make it more cost-effective? Let’s explore the reality of health insurance.

First, let’s look at the number of health insurance policies sold across the entire life insurance industry. “New policy count” refers to the number of new policies acquired by 41 life insurance companies over a one-year period (April ’25 to March ’26), while “in-force policy count” refers to the number of valid policies held by those 41 companies.

For health insurance, the number of new policies in FY ’25 was 2.87 million, and the number of policies in force was 46 million—both of which represent the highest figures among all products handled by life insurance companies. With such a large number of policyholders, there is no doubt that these are popular products.However, a popular product is not necessarily a good product. Depending on an individual’s financial situation and the times, it can be considered either a good or a poor product. Here, we’ll discuss three points that suggest it might not be a good choice.

1. Could Inflation Turn Your Coverage Into Worthless Paper?

Japan has returned to an era of interest rates, with interest rates on savings and loans rising, and prices also on the rise. In a rising interest rate environment, it is advisable to keep savings terms short and lock in long-term fixed-rate loans before rates rise further. So, how should we approach insurance products?

Insurance products come in two types: those with a fixed interest rate built into their design and those with a variable interest rate. While variable-rate products can keep pace with inflation, fixed-rate products cannot. Although they were a good choice during periods of deflation, the value of the coverage will steadily erode in times of inflation.

Since health insurance policies sold in Japan fall into the fixed-rate category, a daily hospitalization benefit of 10,000 yen—which may be sufficient coverage now—might be worth only 5,000 yen in 10 years.In 50 years, it might be worth only about 1,000 yen in today’s terms. If that happens, the policy will become as good as worthless scrap paper, and all the effort you put into paying the premiums will feel like a waste.

2. Is it better to invest through the New NISA?

You never know when or where you might get sick or injured. When treatment becomes necessary, you don’t want to be in a position where you have to choose not to seek treatment simply because you lack the funds. You can prepare financially without taking out health insurance. The idea is to save the money you would have spent on premiums by not purchasing health insurance, invest those savings, and use them to cover medical expenses and other costs in case of an emergency.

According to statistics from the Ministry of Health, Labor and Welfare (see graph below), the rate of hospitalization and outpatient visits is very low among young people but increases sharply in older age (especially from the age of 70 onward), and the burden of medical expenses also rises. If you consider the time you have to invest until then, someone in their 20s has more than 40 years to invest.If you continue to contribute even just 5,000 yen per month, you should be able to accumulate several million yen.

Achieving results through investing requires a certain level of financial literacy, so it’s not something everyone can do, but young people have the advantage of having a much longer investment horizon.

Recently, driven by a major push to shift from savings to investments, more and more people are using NISA accounts to manage their assets. It is entirely possible to efficiently set aside funds through investments rather than relying on insurance.

3. Is Cash and the High-Cost Medical Expense System Enough?

Japan’s public health insurance system includes a high-cost medical care benefit program, which sets a cap on monthly out-of-pocket medical expenses. Therefore, unless you opt for private medical care, you won’t face unlimited out-of-pocket costs.

The cap varies depending on income, but for an average income, it’s around 100,000 yen per month. Depending on your health insurance plan, supplementary benefits may further reduce your out-of-pocket medical expenses.

In addition to medical fees, you’ll incur costs such as the difference in bed charges during hospitalization and transportation expenses to medical facilities, but unless something extraordinary happens, shouldn’t 1 million yen be enough? If you have about 1 to 2 million yen in savings on hand, you’ll rarely face any problems even without medical insurance.

The Psychology and Inside Story of Life Insurance Saleswomen

Only life insurance agents are authorized to sell life insurance products. Those holding agent qualifications include sales staff at life insurance companies (such as “life insurance ladies”), employees of insurance agencies, and staff working at the customer service counters of banks and securities firms.

Since this is their job, agents naturally seek to maximize their company’s profits and their own income. While most agents strive to offer the best possible recommendations for their clients, unfortunately, there are some who put their own interests first. Therefore, the insurance policies they recommend aren’t necessarily the best options.

It’s important to have a reasonable understanding of insurance yourself and to compare and evaluate the recommended policies on your own. If handling this on your own is too difficult, it’s a good idea to consult a financial planner (FP) or similar professional for a second opinion.

The New Art of Medical Insurance: How to Avoid Losing Money

All insurance products are approved and based on the principle of balance between revenue and expenses; therefore, at the time of launch, there are no products that are “gold mines” or “money-losers” for the insurance company. Nor are there any particular advantages for younger people. However, if society undergoes significant changes after a product is launched, the balance between revenue and expenses may be disrupted, potentially resulting in products that become “gold mines” or “money-losers.”

For example, due to Japan’s aging population, policyholders did not pass away as frequently as insurance companies had anticipated. As a result, insurance payouts were lower than expected, leading to increased profits for the companies. This created room for insurance companies to lower premiums, which they did when products were revised.

In the area of health insurance, at the onset of the COVID-19 pandemic in 2020, insurers began paying hospitalization benefits even to policyholders who were not admitted to medical facilities. However, as the pandemic subsequently escalated, the resulting payout amounts became enormous, plunging insurance companies into massive losses.

Furthermore, while lump-sum hospitalization benefits have been increasing in recent years to accommodate the trend toward shorter hospital stays, a rise in fraudulent claims has led to significantly stricter enrollment restrictions than originally intended.

What I want to convey is this: if you want to get good value from your insurance, don’t just blindly follow what an insurance agent tells you. Instead, anticipate changes in the healthcare and insurance landscape—such as the declining birthrate and aging population, the financial status of public health insurance, shorter hospital stays, and advances in medical technology—find a policy you believe is right for you, and make sure to keep it active.When the world changes in the future, that policy will surely become a real gem.

Young People: Don’t Rush to Pay Premiums

When you take out health insurance, you’re obligated to pay premiums. If you’re hospitalized or undergo surgery for treatment due to illness or injury, you’re entitled to receive benefits.

If inflation persists, the value of money will steadily erode; however, if both the premiums you pay and the benefits you receive diminish at the same rate, there is, in a sense, no net gain or loss. For policyholders, the problem is that only the benefits they receive will decrease, so to avoid this, you should not strain yourself to pay off the premiums in a short period.

One thing to watch out for in particular is when young people enter into contracts to pay off their whole-life medical insurance premiums over a short period (such as a 10-year payment plan or a plan that ends at age 60).Paying off the policy in a short period means each premium payment is higher, placing a heavy burden on the household budget and potentially leaving you “insurance-poor.” While you’ll feel a weight lifted off your shoulders once you’ve finished paying, I’d rather young people prioritize investing in themselves for the future.

A Financial Planner Explains the True Role of Insurance

While everyone wants to gain and avoid losses, it’s important to emphasize that insurance shouldn’t be viewed solely in terms of profit and loss.

For example, a certain number of people do not have collision coverage on their auto insurance (which pays out when your vehicle is damaged and needs repairs). There are various reasons for this, such as “If it breaks, I’ll just scrap it instead of repairing it,” “It’s inconvenient to use insurance because it lowers my rating and raises my premiums,” or “I never get into accidents.”

However, even if you don’t get into an accident, your car could be submerged in a flood caused by heavy rain. Even though the car won’t run and is unusable, if you bought it on a loan, you’ll still have to keep making payments. If you try to buy a new car, you’ll end up paying for both.

I want you to imagine how terrified you’d be if you didn’t have insurance. The same applies to your home if you don’t have fire or earthquake insurance. Especially if you’re faced with paying high compensation to others, not having insurance could financially ruin your life.

While health insurance offers less coverage than fire or auto insurance, if you don’t have the money to pay for treatment when you get sick or injured, your life could effectively end. Therefore, if you don’t have sufficient savings, it’s best to have appropriate insurance coverage. Even if nothing ever happens and you end up simply paying premiums without receiving any benefits, that’s just part of life in modern society.