What I Learned from My Foreign-Currency Savings Insurance: My Surrender Value Was 'Half of What I Paid In'

Good morning. まさきん here.

Back when I was single, I took out a foreign-currency savings-type insurance policy. When I finally sat down to give my finances a proper overall review, I converted it to a paid-up policy. In this post, I’ll share the actual numbers from that point, along with what I came away feeling about how to approach insurance.

It started with reviewing my finances as a whole

Once you start managing your household finances and assets in one place, contracts you’d been quietly ignoring start showing up. For me, this foreign-currency policy was exactly that kind of contract.

I knew there was a monthly payment coming out of my account. What I’d never actually sat down and calculated, though, was how much I was paying in total, or how much I’d get back if I cancelled.

The policy details, and what the actual numbers looked like

What I’d signed up for was a so-called “retirement income” type of endowment insurance: it matured at age 65, with a fixed monthly amount paid in and accumulated in US dollars.

After paying into it for a little over four years, the surrender value came out to roughly half of what I’d paid in. I did have the option of switching it to a paid-up policy and receiving the payout as an annuity instead, but the monthly amount would have been tiny, and the math said it would take a huge number of years just to break even.

In other words, as an investment product, it had lost a huge chunk of its value. It felt closer to the truth to reframe it not as savings insurance, but as something more like “term coverage I’d effectively been paying for a few years without realizing it.”

There’s one lesson I took from this mistake: the bigger the contract, the more important it is to review it regularly instead of leaving it alone. The same is probably true of smaller fixed costs too, like your monthly phone bill. If you’re not on Rakuten Mobile yet, it might be worth trying their fee simulator.

Looking back on why I signed up in the first place

At the time, I was single, and my company’s benefits weren’t especially generous. So the basic idea of “preparing through insurance” did have some logic to it back then.

That said, what actually got me to sign up was an enthusiastic pitch from an acquaintance. I’ll admit I was swayed, at least in part, by the line “I’ll be there with you as your life planner.” After I signed the contract, though, I barely heard from them again, and when I called to cancel, the reaction was pretty offhand.

Maybe it’s better to keep the value you place on a relationship separate from your judgment on financial products. If I could tell my past self one thing, that would be it.

My approach now: insurance for coverage, something else for building assets

After going through this, here’s how I think about it now:

• Treat insurance strictly as term coverage, sized to whatever amount would keep you afloat if the worst happened
• For savings meant to grow your assets, prioritize something like the new NISA system over insurance
• Check what coverage your employer already provides, and don’t take out insurance that duplicates it

When you try to handle insurance and asset-building through the same product, I’ve found both tend to end up half-baked. Splitting products by purpose ended up making my household finances simpler and easier to follow.

What I did with the money I freed up

Cancelling the policy freed up money I could put toward monthly investing instead. I now split those funds between paying down remaining debt and ongoing investment contributions. As for savings vehicles besides insurance, something like a corporate defined contribution (DC) pension is also worth considering.

Just like reviewing fixed costs, I think noticing “money you assumed wasn’t going anywhere” is the first step toward improving your household finances. Insurance might deserve the same kind of regular review as your phone bill.

Postscript: I cancelled during a weak yen, and it turned out positive

After the review I described in this post, I ended up cancelling the rest of the contract entirely. That happened to coincide with a period when the yen was weakening, and thanks to the resulting currency gain, I ultimately came out ahead of what I’d paid in.

That wasn’t a result I engineered, though. The timing of my cancellation just happened to line up with a weak yen. It drove home, once again, how much the outcome of a foreign-currency product depends on the exchange rate at the exact moment you cancel. In fact, Japan’s National Consumer Affairs Center has warned about a rise in complaints related to foreign-currency life insurance, and it seems to be a well-known risk that the payout on these products can end up far from what you originally expected, purely because of currency swings.

Sure, things can work out well if the exchange rate happens to move in your favor, but that comes down to market timing, not the quality of your own judgment. I still find myself wondering whether piling the entire currency risk onto a long-term insurance contract was ever really the right way to take on that risk in the first place.

Who this is for

• Anyone who has never properly checked the details of an insurance policy they signed up for in the past
• Anyone who’s been lumping insurance and asset management together into the same product
• Anyone who wants to check the timing of a cancellation, or the actual gain or loss, against real numbers

Wrap-up

When I reviewed my foreign-currency savings insurance, I ran straight into the reality that its surrender value came out to only about half of what I’d paid in. It eventually landed in positive territory thanks to a weak yen, but I think that could just as easily have gone the other way, depending on the exchange rate. This experience is exactly why I now think of insurance as coverage, and asset-building as a separate matter, handled with separate tools.

The judgment that made sense when you signed a contract for a fixed cost or an insurance premium isn’t guaranteed to still be right today. Making time for a regular review feels like the real key to keeping your household finances healthy.

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