Disability insurance in Japan
05 Jan 2026 | #japan | #moneyI wrote about life insurance a while back and getting ready to purchase one. When I asked about it at r/JapanFinance, multiple people recommended also getting disability insurance so I started a new thread about that, took a look into it in detail, and will be sharing what I found here.
The reason for disability insurance
One might get into an accident or fall ill, and become unable to work for an extended period of time. No work generally means no income, which could risk the livelihood of the entire family, if it happens to a breadwinner. The likelihood of this is generally low, but the end result is catastrophic, so it is a perfect case to get insurance for.
There are three main worries around this:
- being out of work for months while recovering
- never fully recovering, and living the rest of one’s life with a disability affecting one’s ability to work
- dying
While all seem related, the insurance offerings are different for these three. I already covered the various life insurance options, so this post focuses on the other two.
The ideal solution
Most professionals have talent and experience in what they are doing, so their income would be much lower if they need to switch to a different profession. So if one can’t continue doing their current job, it can be a major issue, even if they can perform some other work. Thus ideally you would want to get an insurance that pays out if you are unable to continue doing your current job, however (as I will cover next) this type of coverage is not available in Japan.
Default short-term option: Accident and sickness allowance (傷病手当金)
In Japan, salaried workers can receive this if they are out of work for 4 days or more due to a non-work injury. The amount is 2/3 of your average salary (excluding bonus) of the last year (source1, source2). It has a cap of 930,000 yen on payout, affecting monthly salaries of over 1.39 million yen (the payout amount is actually based on 標準報酬月額 which has the cap).
This can pay up to 18 months.
The main benefit of this is that it is provided by default to salaried workers. The downside is that this doesn’t apply to freelancers, that the amount is 2/3rd of salary and has a cap, and that it ends after 18 months.
Default long-term option: Disability pension (障害年金)
If one gets disabled permanently, they can start receiving their pension immediately. The criteria is pretty severe and has 3 categories:
- level 1 e.g. missing both hands or both feet
- level 2 e.g. missing one hand or one leg
- level 3 e.g. multiple fingers missing
The payout is similar to the regular pension which is pretty low, like 60,000 yen per month for national pension.
Additional short-term option: Disability Insurance (就業不能保険)
Disability Insurance (就業不能保険) (like this one from SBI) is targeting to help with the short-term problem: if you are out of work for months, they will pay. The criteria is that your doctor says that you are unable to work. Staying in hospital fulfills this, or being ordered to rest at home too. But e.g. a carpenter with broker legs might get told that they could work as a call center agent remotely, so they don’t qualify. It is up to the insurance company to decide if you qualify, which is a bit concerning for me.
Also it only starts paying out after being out of work for a set amount of days (支払対象外期間), in the case of SBI for 60 days. On average people leave the hospital after 33 days, so this means the insurance only pays out for unusually serious cases.
Overall since there is already the Accident and sickness allowance (傷病手当金), I don’t see a major point for this type of insurance. It is useful for freelancers or other non-salaried workers (as they don’t have the accident and sickness allowance) or people worried about being in hospital for more than 18 months. Even this insurance company’s website says that they only recommend it to freelancers or people with no savings (although it seems they don’t offer this type of insurance, so they might be talking against the competition a bit).
Additional long-term option: disability rider on the life insurance / income protection insurance
Many life insurance / income protection insurance allows adding an add-on to receive the benefits when once gets disabled (e.g. Sony term life, Sony income). It is usually pretty expensive (same or more than the life insurance alone), while the criteria is the same as the disability pension so pretty severe.
Overall this seems like a good option, although it leaves a big gap between not being able to do your main job and being officially disabled. But it should supplement the disability pension to the level where one can have a good life.
Employer-provided Group Long Term Disability (GLTD) plans
This was also recommended on Reddit, but it seems like a combination of the above two with an added discount due to working for a specific company. Also it might make it easier for people with existing health conditions to sign up.
My company does offer this, but I don’t like the fact that it gets cancelled if I leave the company. I want to have a life insurance / disability insurance until my kids are adults, but I don’t intend to work for the same company that long. However if I get some disease it might be difficult to get a new insurance, which could force me to stay with the same employer even if better opportunities arise. Thus I prefer to keep my insurance separate from my employer.
Insurance from abroad
None of the above covers what the ideal solution should be, so some people recommend looking for an insurance in your home country, and ensuring it has world-wide coverage.
While this can probably solve the problem, I have a major issue with it: knowing how much insurance companies like to reject claims, I’d be worried about the paperwork requirements to claim from abroad (e.g. the documents they would require from a Japanese hospital). Also if I’m in this situation, I’m probably not in the state to travel halfway across to work just to get myself diagnosed again in my home country in the hopes that those papers will be accepted by the insurance company.
Conclusion
After considering all of this, I decided against having a disability insurance. Part of this comes from the default coverage (18 months of 2/3rd salary), the affordable healthcare, and part from personal circumstances: my wife works, and we both have healthy and working parents and siblings, so if something truly terrible would to happen, I know they would help out.