The Structure and Pricing of Savings-Type Policies in Japan

Savings-type policies are one of the most popular non-life insurance products in Japan, but virtually unknown in other countries. They are long-term policies where the premium includes a substantial deposit in addition to the pure insurance premium; at maturity, if there have been no major losses, the deposit is refunded, with interest and dividends. In this paper, we describe the development and basic structure of savings- type policies in Japan. We also show how the premium and reserves are calculated. We compare these policies to products available in the U.S. market, such as endowment life insurance and retrospective rating plans. Finally, we discuss the prospects for this type of policy in Japan and in the U.S.