Save 200,000 yen a year by reviewing your insurance? Explaining the difference between social insurance and private insurance for beginners
Hello.
I am a 26-year-old struggling to build confidence and peace of mind after 11 years of earning 180,000 yen a month and being single.
Do you honestly know how much you are paying for insurance every month?
Do you truly understand what it covers?
I had no idea at first either.
How much social insurance and private insurance cost
What they actually protect
I couldn't grasp these things at all, and I just felt uneasy, wondering, 'Why is it so expensive?'
But as I researched, I realized something.
Social insurance alone provides quite substantial coverage
Most private insurance is often unnecessary
I want to cover what is necessary for the future, but I don't want to lose money on insurance I don't understand.
That feeling was what started me on this learning journey.
If you review your insurance without understanding it, you won't know what to change or how to change it.
So this time,
How insurance works
Private insurance that is truly necessary
I will roughly organize these two points.
■ What happens when you review your insurance
Reviewing your insurance allows you to save money that was being spent on unnecessary private insurance.
Furthermore,if you do not enroll in life or medical insurance, the average amount saved in one year is about 170,000 to 200,000 yen.
By putting that saved money into savings or investments, you can create your own sense of security for the future.
■ There are two types of insurance
Insurance can be broadly divided into
Social insurance (mandatory)
Private insurance (voluntary)
These are the two.
■ What is social insurance (mandatory)
If you are a company employee, this is deducted from your monthly salary automatically. Rather than choosing to join it yourself, it is
“insurance you are mandatorily enrolled in”.
■ Here is what it covers
Health Insurance: Partially covers medical expenses for illness and injury (generally 30% co-pay). Also includes allowances for when you take time off work due to childbirth or illness.
Employees' Pension Insurance: Provides funds for your future retirement (old-age pension), as well as benefits for survivors in the event of disability or death.
Employment Insurance: Supports workers with benefits for unemployment, childcare, and education.
Long-term Care Insurance: Enrollment starts at age 40. Provides services when long-term care is needed. Not applicable to those in their 20s and 30s.
Workers' Compensation Insurance: Fully paid by the company. Covers injuries or illnesses occurring during work or commuting. No personal payment required.
■ An important point here
This is already quite comprehensive.
Out-of-pocket medical expenses are generally 30%
There is a cap under the High-Cost Medical Expense Benefit system
👉 In other words, a certain level of risk is already covered
■ A quick tip here
Social insurance premiums are actually determined by the "average salary from April to June."
In other words...
👉 If you have a lot of overtime during this period, your insurance premiums for the following year may increase
Furthermore
👉 Commuting expenses are also calculated as salary
Therefore
The reason you might feel, "Isn't my insurance premium a bit high?" is
👉 It may be influenced by your salary from last spring
※By the way, this amount generally does not change from September to August of the following year
■ What is private insurance (voluntary)?
On the other hand, private insurance is“insurance you choose to enroll in yourself”.
Life insurance: Protects living expenses if something happens to you when you have a family
Cancer insurance: Provides lump-sum payments or outpatient cost assistance when diagnosed with cancer
Medical insurance: Covers costs such as hospitalization and surgery that health insurance alone does not cover
Fire insurance: Provides compensation when your home or household goods are damaged by fire or disaster
Auto insurance: Compensates for damage to the other party or your own car in an accident
If you enroll in private insurance even though you are already protected by social insurance, you are
👉 “in a state of adding extra coverage”
Depending on the person
👉 you may be double-insuring yourself
■ How to think about insurance
Insurance is for preparing for low-probability × catastrophic-loss events.
If you are in your 20s and single
The probability of getting a serious illness is low
You are covered to a certain extent by social insurance
If you have no family to support, the need for life insurance is also low
➡ In many cases, there is no need to force yourself to join private insurance.
Then what if something happens?
Social insurance
A certain amount of savings
In many cases, these two can handle it. For example, even in the case of cancer, there is the
High-Cost Medical Expense Benefit System so your out-of-pocket expenses can be kept to a certain extent.
■ How should you think about life insurance?
Life insurance should only be considered if you have a family to support.
Only if you have a family and need to ensure that your surviving family members will not struggle financially if you pass away
If you are single or have no dependents, there is no need to force yourself to join
In other words, life insurance is not for your own peace of mind, but insurance to protect your family.
■ However, there are exceptions
Among private insurance policies, there are some that you should join.
Fire insurance
Automobile insurance (personal/property liability)
The reason is simple:
👉 Because the loss is too great if it happens once
■ What to do first
Organize your private insurance
Check if life insurance, medical insurance, cancer insurance, etc., other than non-life insurance and fire insurance, are "necessary right now?" If they are unnecessary, consider canceling or reviewing them.Check what is covered by social insurance
Understand how much you are already protected by mandatory insurance such as health insurance, pension, and employment insurance.Put the money you save into savings or investments
The money you save by reviewing your private insurance can be used as funds to build your own sense of security for the future. It is possible to save an average of 170,000 to 200,000 yen per year.
■ Personal Experience
Since I live with my parents, I left everything regarding private insurance up to them.
When I asked, they told me they weren't enrolled in any unnecessary private insurance.
As for me, the only private insurance I have is liability insurance because I ride a motorcycle. Other than that, I only have social insurance.
I rarely get sick, and I don't smoke, so I believe the probability of me getting sick or developing cancer is low.
Furthermore, I have a certain amount of savings, so I decided that I could cover things to some extent with social insurance and my savings.
Through this study, I realized once again that I don't need to enroll in private insurance, even as I look toward living alone or going about my life in the future.
■ Summary
There are two types of insurance: "social insurance" and "private insurance"
You are protected by social insurance in many areas
You only need the bare minimum of private insurance
Life insurance is only necessary if you have a family
Fire insurance and automobile insurance (personal/property liability) are basically necessary
There is no need to enroll in unnecessary things like cancer insurance or medical insurance
It is more rational to save money than to pay for unnecessary insurance
Insurance might seem difficult, but what you need to do is simple.
👉 "Is it really necessary?"
Just think about this one by one.
You don't need to change everything at once. It's fine to start by organizing the insurance you currently have and keeping only what you need.
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