The advantages and disadvantages of small business mutual aid! Smart tax savings

✅ Benefits

1. The entire amount is deductible from your income (tax savings effect)

• The entire amount of premiums is eligible for income tax deduction as "Small Business Mutual Aid Insurance Premium Deduction".
• The burden of income tax and local resident tax will be reduced. The taxpayer's applicable tax rate (progressive tax rate 5%~45% + local resident tax 10%) x the premium amount will be the tax savings.

2. Premiums can be freely set between 1,000 and 70,000 yen per month.R

• It can be set and changed in 500 yen increments and can be adjusted according to business conditions, allowing for flexible response.

3. Preferential treatment when receiving benefits (retirement income or public pension deductions)

• If you receive the money in one lump sum, you can use the "retirement income deduction," and if you receive it in installments, you can use the "public pension deduction." The "retirement income deduction" is a very advantageous tax system, so it is very useful. *Retirement income = (retirement allowance - retirement income deduction amount) x 1/2
• If you have worked for 20 years or less:
• ➡️ 400,000 yen x years of service (minimum 800,000 yen)
• If you have worked for more than 20 years:
• ➡️ (400,000 yen x 20 years) + (700,000 yen x [years of service - 20 years])

4. Loan schemes are available

• There is a "mutual aid loan system" that allows you to borrow funds without canceling the contract. It is a convenient system that allows you to borrow 70% to 90% of the premiums you have paid at a low interest rate of about 1.51 TP3T/year.

5. Cancellation allowance available (conditions apply)

• If you terminate your insurance for legitimate reasons, you may receive an allowance that is more than the total amount of your premiums.

⚠️ Disadvantages

1. There is a risk of losing principal (in the case of voluntary cancellation)

• Contracts are forced to be cancelled shortly after opening, resulting in many cases of capital losses.
• Voluntary cancellation within 20 years will generally result in a loss of principal.

2. There are conditions for joining

• It is aimed at corporate officers and sole proprietors. Employees and part-time workers cannot join. If you are a salaried worker who has a salary income and is a sole proprietor on the side, you can assume that you cannot join.

3. It's a hassle to review midway

• Contributions can only change once a year and may not be easily adjustable.

4. There are restrictions on the reasons for receiving insurance benefits

• The full amount will not be received unless there is a valid reason, such as "discontinuance of business" or "resignation of an executive."