Better Than NISA? “Treasure Insurance” You Should Never Let Go Of and “Old Insurance Policies That Lose Money” From Before 2000

Don’t Cancel! “Treasure Policies” with an Expected Interest Rate Over 5%

The number of people reviewing their life insurance policies has been increasing for about a year. The cash value paid out by life insurance companies to policyholders upon cancellation reached a record high of 3.8 trillion yen in the October–December 2025 quarter. From January through May of this year, cash value payouts exceeded 6 trillion yen.

The growing trend of reviewing and canceling insurance policies is driven by factors such as rising long-term interest rates and proposals from life insurance companies to switch to new products.

Long-term interest rates hit 2% in December ’25 and reached the 3% mark on September 1—the first time in 30 years. In response to the rise in long-term interest rates, life insurance companies have been raising the “projected interest rate” used to calculate premiums one after another.

Premiums are lower when the assumed interest rate is higher, and higher when it is lower. Now that the assumed interest rate has been raised, consumers can purchase policies with the same coverage at lower premiums than before, and depending on the product, surrender values and maturity benefits may also increase.

However, just because the assumed interest rate has risen does not necessarily mean it is more advantageous to cancel your current policy and switch to a new product.

“ Savings-type insurance policies sold in the 1990s had high assumed interest rates and are referred to as ‘treasure policies.’ For whole life insurance policies and the like taken out back then, it is actually wiser not to cancel them, ”

This is the assertion made by Kenji Matsuura, a financial planner with experience working at an insurance company.

For example, the assumed interest rates for yen-denominated whole life insurance policies with level premiums (monthly or annual payments) are currently set in the range of 0.4% to 1.0%. In contrast, the assumed interest rates for “treasure policies” were 5.5% from April 1990 to March 1993;From April 1993 to March 1994, it was 4.75%, and from April 1994 to March 1996, it was 3.75%.

“ The ‘standard interest rate’ (introduced in 1996) set by the Financial Services Agency, which serves as the benchmark for the projected interest rate, was 2.75% from April 1996 onward, but it dropped to 2.0% in April 1999.More recently, in 2017, it fell from 1.0% to 0.25%. 

As the numbers show, ‘whole life insurance’ and ‘individual annuity insurance’ policies taken out before 1999 are undeniably ‘treasure policies.’“For people currently in their 50s or older, it’s not uncommon to have taken out a policy right after graduating from college and simply held onto it ever since. Since the interest rates were higher than they are now, the premiums were lower, and the surrender value is set high, so you absolutely must not give them up” (Mr. Matsuura; same below). 

“Dollar-Denominated Variable Life Insurance” Presents a Great Opportunity to Lock in Profits

“Foreign-currency-denominated insurance” gained significant attention after the Bank of Japan introduced its “negative interest rate policy” in 2016, prompting life insurance companies to launch these products en masse through banks and other channels. With yen-denominated products no longer offering promising investment returns, many people likely purchased dollar-denominated insurance at the time in search of higher interest rates.

“ Among dollar-denominated products, for those where the fixed rate of return (projected interest rate) is determined at the time of enrollment—such as ‘fixed-rate’ single-premium whole life insurance or single-premium individual annuities, where the premium is paid in a lump sum at the time of enrollment—the best time to enroll is when two conditions align: ‘high U.S. interest rates’ and ‘a strong yen.’ 

For example, around 2018, there was a period when the yen was strengthening—trading at around 110 yen to the dollar—and U.S. interest rates rose sharply. People who purchased dollar-denominated single-premium insurance at that time, when these favorable conditions coincided, can be said to have made an excellent choice. Since the yen has weakened considerably since then, they should have realized substantial profits from exchange rate gains alone.”

Opportunities for “high interest rates” and “yen strength” to coincide simultaneously are not very common. This is because, structurally, these two factors are inversely proportional: when interest rates rise, the dollar tends to be bought, which typically leads to a weaker yen.

However, there is a time lag between adjustments to U.S. policy interest rates and the setting of interest rates by insurance companies. This discrepancy can sometimes create a temporary, “miraculous” opportunity to purchase a policy when “high interest rates” and “yen strength” coincide.

“If you still hold a dollar-denominated insurance policy that you purchased at that perfect moment about 10 years ago, the golden rule is to absolutely never cancel it—just keep it as is—unless you plan to use the funds.”

Even those with “variable life insurance” or “variable-rate savings insurance”—where investment returns fluctuate in line with movements in investment markets such as stocks and interest rates, rather than being fixed—are currently benefiting from significant tailwinds.

“For either type of policy, if you signed up 10 years ago, you’re likely doing quite well by riding the wave of rising U.S. stock prices. Among those knowledgeable about finance, there’s a trend of cashing out when stock prices hit record highs to lock in profits, or shifting investment allocations within variable life insurance from equity-based to stable bond-based options.If you expect stock prices to continue rising, holding on is one option; however, if you’ve already realized sufficient gains, switching to a strategy that minimizes risk is a wise choice.”

“Hidden Gems” Lurking in Health and Fire Insurance

Although they have nothing to do with interest rates or investment returns, there are “hidden gem insurance policies” that would be a waste to cancel simply because of the coverage they provide. One such example is health insurance.

“Health insurance,” which pays benefits when you are hospitalized due to illness or injury or undergo a specified surgery, primarily comes in two types: “daily allowance” and “lump-sum.”With the daily benefit type, the benefit amount per day of hospitalization is paid based on the number of days hospitalized, while with the lump-sum type, you receive a predetermined fixed amount as long as you are hospitalized for even one day, regardless of the number of days.

“The lump-sum type, which appeared about five years ago, quickly gained popularity because it offered benefits to both policyholders and insurance companies. However, due to an increase in fraudulent claims, benefit caps and additional conditions have become stricter over the past year or two. 

“ For those who enrolled before these restrictions were put in place, it’s best to simply continue with their existing policy. If you cancel it, you’ll never be able to enroll under the same favorable terms again.”

In addition, there are hidden gems among “property and casualty insurance” policies designed to protect against accidental incidents and disasters. One such policy is the “long-term fire insurance” that was available until September 2015. Currently, fire insurance policies are limited to a maximum term of five years, but prior to 2015, it was possible to take out a single policy lasting up to 36 years—aligned with 35-year mortgages.

“Back then, those long-term policies not only came with long-term discounts, but since the accident rate was lower than it is now, the premiums were significantly cheaper. This is just a rough estimate, but I think the cost-performance was such that you could get 35 years of coverage for about the same amount as 10 years’ worth of premiums today.”

However, as natural disasters exceeding initial expectations have increased and it has become more difficult to predict future disaster risks, insurance payouts by property and casualty insurers have ballooned. Consequently, policy terms have been gradually shortened, and premiums themselves have continued to rise.

“People who signed up for ultra-long-term policies before September 2015 are currently protecting their homes and personal property under exceptionally favorable terms that would be impossible to obtain today. Unless you are forced to cancel the policy—such as when moving—you should not give up this right.”

Review It Now! Outdated Insurance Policies That Will Cost You Big

It’s not just about insurance policies that would be a “waste to cancel”—you also need to be aware of policies that will “cost you money” if you keep them.

Mr. Matsuura cites “term life insurance” and “income protection insurance”—that is, “term life insurance policies with no cash value”—as prime examples.

“Premiums for life insurance have become significantly cheaper compared to 10 years ago. This is because Japanese life expectancy has increased, mortality rates across all age groups have declined, and the probability of insurance companies having to pay out claims has decreased. 

In addition, over the past decade or so, there has been an increase in term life insurance policies that incorporate ‘risk-based underwriting.’ This system offers a premium discount if the insurance company recognizes you as a non-smoker—a feature that didn’t exist around the year 2000. If you used to smoke but have since quit, I believe your premiums could be reduced by about 20 percent simply by reapplying for coverage.”  

You should also review “insurance with relaxed underwriting criteria” designed for people with pre-existing conditions if you’ve held a policy since it was first introduced. When these policies first appeared 15 to 20 years ago, premiums were set high to account for the risk, but as data has accumulated and competition among insurers has intensified, these products have evolved into more affordable options with better terms.”

Similarly, “cancer insurance” policies released before 2000 have been left behind by the changing times.

“ As treatment methods have drastically changed with advances in medical technology, these policies no longer cover the outpatient treatments and new drugs that are now mainstream. Since there’s a risk you might not receive benefits, it’s best to review older cancer insurance policies.”

Mr. Matsuura further emphasizes that people in their 50s and 60s need to review the “whole life insurance policies with term insurance riders” they purchased in the 1990s. There are likely quite a few senior businesspeople who, at the time, were persuaded by insurance saleswomen to enroll through payroll deductions and are still paying premiums today without even realizing it.

“This product was a huge hit in the ’90s because it promised ‘extensive coverage at low premiums,’ but it came under heavy criticism because the premium burden increased with each renewal, and ultimately, almost no coverage remained. 

However, there are still about 4.2 million policies in force. Those who have left theirs untouched should check the coverage details and, if they aren’t satisfied, cancel the policy as soon as possible.”

Better Than NISA? A Proactive Approach to Insurance

As mentioned earlier, long-term interest rates have surpassed 3.0% for the first time in about 30 years. Among market participants and experts, the view that “rates may continue to rise” appears to be gaining strength.

Now that we have fully returned to a “world of interest rates,” simply cutting fixed costs through a review is far too passive an approach for the era of wealth building. Mr. Matsuura suggests, “We should proactively utilize insurance products as a smart savings tool.”

“With interest rates rising, there are now more ‘insurance products that let you save efficiently’ with a lower financial burden than before. 

NISA is popular as a means of building wealth, but there is a risk of losing principal if the stock market enters a bear market. For those who are uncomfortable with the risks of investing, fixed-return life insurance is an attractive option.”  

It can also be used for inheritance tax planning, and when it comes to saving for education or retirement, it’s easier to accumulate money than with regular or time deposits.”

In particular, Mr. Matsuura reveals that capital-guaranteed savings insurance—which major life insurers offer as “door-knocking products” to establish customer relationships—and individual annuity insurance, which has seen interest rates rise, can serve as excellent savings tools.

“ For example, among savings insurance policies where you make contributions for five years, let the funds sit for another five years, and then receive the payout after 10 years, there are products that return approximately 110 percent of the total amount paid in. Even if you cancel the policy early, your principal is guaranteed, and these high return rates are achieved by reducing coverage for death due to illness.”  

Another key benefit is the tax advantage. Since monthly premiums qualify for the life insurance premium deduction, they can lead to savings on income and resident taxes.  

“In particular, if you take advantage of the ‘Individual Annuity Premium Deduction’—a deduction limit that people often don’t fully utilize—that alone will effectively boost your real rate of return. 

In other words, if used correctly, insurance is a far superior savings product compared to a bank deposit.”

▼Kenji Matsuura, Financial Planner (CFP®) and part-time lecturer at Aoyama Gakuin University.Graduated from Aoyama Gakuin University. Moved from a major homebuilder to a foreign-affiliated life insurance company. Later, he participated in the founding of a consulting firm. In 2002, he became an independent financial planner. In addition to providing consultations on personal life planning, life insurance reviews, and home-buying support, he is also active as a speaker and author.