Life Insurance

LADIES do not take advantage of the system of
life insurance to the extent one would expect,
seeing the benefits it is capable of conferring
upon themselves and their belongings; and as
their indifference is no doubt, in many cases,
owing to a want of knowledge of the subject, a
chapter thereon may be useful.

Life insurance is an admirable system, devised,
in all its ramifications, to provide against loss or
damage through the various contingencies to
which human nature is subject.

A simple life insurance is that by which a
person may leave behind him a sum of money
for the benefit of those who, during his life, have
been dependent upon him. For example, a
husband, whose income is entirely derived from
his own exertions, desires to make some pro-
vision for his wife and children in the event of
his dying before them. At the age of thirty he
may, by paying Ł25 a year to an Insurance
Office, secure at his death, whenever it may
happen, Ł1,000, for the benefit of his wife or chil-
dren, or as he may direct by his will. In a way
insurance is a kind of savings bank, but impos-
ing an obligation on the part of the depositor to
save a certain sum every year. In the case of
the bank, the savings are optional, and cease at
death; whereas by insurance, the return of a
large sum is the result of the death of the com-
pulsory depositor. If a person put by Ł25 every
year and invested that sum in the Government
Funds at 2 1/2 per cent., or deposited the same sum
annually in a bank, at the same rate of interest,
it would take him twenty-eight years to accumu-
late Ł1,000, if he lived so long; whereas by an
insurance on his life for the same amount, if he
died a week after the first payment of Ł25 had
been made, the Ł1,000 insured would be paid to
his representatives. It might be said that if the
person lived longer than the term of twenty-
eight years and went on saving the Ł25 every
year, he would in the end accumulate more than
Ł1,000. This, however, is met by insuring in
such manner that the insurance carries "profits,"
that is, additions made by the gains of the office
from time to time. If insurance be made in this
manner, for which a slightly higher rate of pre-
mium is paid, it will be found that, however long
a person might live, more would accrue at death
by insurance than by saving.

There are in active existence so many insur-
ance companies of good repute and undoubted
stability that no difficulty need be experienced
in making a judicious selection. Of course, the
intelligent insurer would prefer an office whose
system would best suit his own requirements.
There are two kinds of Insurance Companies,
one known as a "Mutual" office, in which all the
profits which may be earned are periodically
added to the amount insured, the other in the
form of a Joint-Stock Company, in which a small
proportion of the profits are distributed amongst
the Shareholders and the remainder added to
the Insurances. The Mutual Office dividing the
whole of its profits amongst the insured would
appear to be the more advantageous of the two,
and undoubtedly it is, all other things being
equal; but insurances may be effected which do
not share in the profits, at lower rate of pre-
mium, and in that case one system is as good as
the other. The intending insurer would do well
to obtain the prospectuses of several offices,
which he can easily do by writing for them
direct to the head office or by applying to the
several agents of the companies who abound in
all towns; and carefully compare one with
another. It will be found, perhaps, that one
office charges a less annual premium for an in-
surance than another, but this may be compen-
sated for by the latter declaring larger profits, or
giving advantages in other ways. For instance,
a certain "Mutual" office charges for an insur-
ance of Ł1,000, on the death of a person begin-
ning to insure at the age of thirty, a pre-
mium of Ł26 16s. 8d. per annum, whereas a
certain Joint-Stock Company's demand is only
Ł24 14s. 3d.; but the advantages offered by the
former in the shape of larger bonuses, though
deferred, are greater, while the benefit of a less
annual payment is of course immediate. Where
the insurance is effected at the same age and
for the same amount, but with no other benefit
or profit prospectively than the bare amount,
the premium in the former case is Ł21 4s. 2d.,
and in the latter Ł21 15s. 10d. There are good
offices, however, where the premium charged is
less than this.

There is at least one office which insures upon
what is called the half-credit system. One-half
the usual premium is paid for a certain term of
years, and thereafter the full premium is
charged. This may be useful in a case where
a person wishes to insure while young and the
premiums are low, and at the same time is desir-
ous of deferring the full payment until his income
is so improved that he can better afford it.
This system is carried still further by an in-
surer only paying half the premium during his
lifetime, the other half being accumulated until
his death, and then, with interest added, de-
ducted from the amount payable in respect of
the insurance policy.

Having chosen the insurance office or com-
pany which best suits his purpose, the proposer
applies to its nearest agent and makes known
his desire to insure his life. A form containing
printed queries somewhat like the following
(though offices differ somewhat in details) will
be placed before him and the blank spaces filled
in either by the agent or himself.

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PROPOSAL FOR LIFE ASSURANCE
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Full Name
Profession or Occupation
1. Life proposed to be Assured Business Address
Residence
Married or Single
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2. Age next Birthday years. Born at
on the day of in the year 18
(Evidence to be produced.)
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3. Has he resided out of Europe?
If so, where, and for what period?
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4. Is he, and has he always been, of sober and
temperate habits?
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5. Has he had any serious illness or disease
tending to shorten life?
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6. Has any near relative died of any hereditary
disease?
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7. (1) Has a proposal to effect an Assurance on
his life ever been declined?
(2) Or accepted at more than the ordinary
rate?
(3) If so, on how many occasions, and
when, and by what office or offices?
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8. Is there any other circumstance which ought
to be communicated in order to enable the
Company to judge fairly of the risk?
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If the Name
person has 9. (1) Who is his usual Medical Attendant? Residence
never Has known him years.
required (2) When was he last in professional atten- Date of Attendance
Medical Ailment
attendance, ------------------------------------------------------------------------------------------------------------------
the fact 1st Friend. 2nd Friend.
should be (if necessary: see marginal note to
stated, and 10. Mention an intimate friend, who is not in- Question.)
reference terested in this Assurance, to be referred Name
given to to for information as to health and habits Residence
TWO friends, of life Profession or
in answer to Occupation
Question 10. Has known him years Has known him years.
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If the Name
Proposal be 11. Name, &c., of the person in whose favour Profession or Occupation
upon the the Assurance is to be effected? Business Address
person's own Residence
life these ------------------------------------------------------------------------------------------------------------------
enquiries 12. Is the pecuniary interest in the Life to be
need not be Assured, which is the object of this
answered. Assurance, to the full amount thereof?
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Sum to be Assured Ł With or without Profits?
Is the Policy to be for Life? Are the premiums to be payable Yearly?
I do hereby declare that the above statements are true, and that this Proposal and Declaration shall be the basis of
the contract for effecting the above-mentioned Assurance, which Assurance is also conditional on the accuracy, in all
respects, of the statement for the Medial Officer, made, or to be made, by the person whose life is proposed for Assurance.
Date Signature of the Person in
whose favour the Assur-
Witness ance is to be effected.
Address and Occupation
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The proposer has now to undergo one other
formality, disagreeable no doubt, but absolutely
necessary, and that is the medical examination.
This is done by the medical officer of the com-
pany who has to certify that the proposer is free
from any defect likely to shorten his natural life,
and that he is sound "in wind and limb." Defi-
ciency in the number of the latter is, however,
not considered unsoundness, as a person with
one arm, or one leg, or one eye may be just as
good a "life" and therefore equally eligible for
insurance with him who is perfect. All the en-
quiries in the form are made by the Office and
the expenses (including the doctor's fee) paid by
the Company.

If the proposal is accepted, the proposer is
informed of the fact and then pays his first pre-
mium in advance, it may be a year's, or half-a-
year's, or a quarter year's, at his own option,
and he then becomes (subject to the rules of the
particular company) the insured.

A few days subsequently a life policy will be
sent to the insured. This is a document setting
forth, in full, the terms of the agreement between
the Company and the insured, and must be care-
fully kept, in such wise that it may readily be
discovered by the person for whose benefit it is
ultimately intended. The writer once found
amongst some old papers a life policy in the
name of a man who had been dead for many
years. On enquiry at the office it was found
that the amount which was payable at his death
had, by some neglect, never been claimed.
The company of course at once paid the money,
and a needy sister was very much benefited.

Thirty days' grace are usually allowed for
subsequent payments of premium. It is custo-
mary for insurance offices to forward to each
policy holder a reminder, from one to four weeks
before the periodical payments for premium
become due, but the absence of any such notice
will not be accepted as an excuse for non-pay-
ment, and if the premium be not paid before the
thirty days' grace allowed have expired, the
policy becomes void. It may, however, be re-
vived upon paying a fine and producing a
medical certificate of health.

Should the proposal be declined the fact will
be notified to the proposer, but he will not be
informed of the reason. Proposals are rejected
because of something wrong being discovered by
the medical examiner, or because of intemperate
habits, or that the history of his near relations
in regard to health and longevity is unfavour-
able; anything in short that indicated that the
proposer will not, in all probability, live as long
as a healthy man is expected to live is enough
reason for declining to insure his life.

Insurances may be effected for a limited period,
say for one, three, or five years, at about one half
the premium charged for the whole term of life.
If the insured dies within the period, the amount
of the policy is paid, but the insurance ends with
the periods of time agreed upon. This class of
insurance is useful in many ways. For example:
A person with a certain income for life is desir-
ous of borrowing Ł500, to be repaid by annual
instalments. There would be no difficulty in
finding a lender, provided he could be sure of
repayment; and this could be secured in this
manner -- the borrower would assign to the lender
Ł100 a year of income for five years for the gra-
dual discharge of the loan; the borrower's life
would also be insured for five years and the
Policy assigned to the lender. If the borrower
lived for five years the loan would be paid out of
the income. In the event of his death, it would
be paid by means of the insurance money.

Another example: a child aged seventeen is
entitled to a fortune, large or small, at the age
of twenty-one, but meanwhile is wholly depen-
dent on its mother who has only an annuity for
her life. Should the mother die before the child
becomes of age the latter would be left without
the means of subsistence. In such a case the
prudent mother would insure her own life for the
four years which must elapse before the child
could come into the fortune, for such a sum as
would keep it from want, so that in case the
mother died the insurance money would provide
the means of living. The premium charged on
this class of insurance is moderate; about Ł2 6s.
for a person aged fifty; and the outlay by the
mother could be subsequently repaid when the
child was in a position to do so.

There are other special modes of insurance to
prevent loss or damage in cases of remote risk;
indeed almost any chance of loss through the
possibility of something improbable occurring
may be guarded against by insurance. For
instance, a lady aged forty-five has been married
for twenty years and has had no children. If she
has a son her property will descend to him; if
she dies childless it passes to a nephew. The
chance of the lady having a son is extremely
remote but still there is a possibility, and it is
against loss by this possibility happening that
the nephew takes out a policy of insurance for
any reasonable amount, the premium charged
being surprisingly small and payable in one sum
down.

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