A NEW FEATURE IN LIFE INSURANCE.

Lyttelton Times, Volume XXXI, Issue 2654, 24 March 1869, Page 3

A NEW FEATURE IN LIFE INSURANCE.

«, ; (From Ike Times.) It is now pretty generally known that the surrender value of an ordinary life policy is for years wortli next to nothing, and that even when the policy has acquired some value the surreuder price is totally <)isproportionate to the premiums that have been paid. It is true that the gains on .insurances from lapsed policies swell (he profits of an office, and that on the mutual principle those lives that are enabled to hold on participate in the surplus derived from such source of revenue; but the dread of the risk of forfeiture of the sum insured, and of the loss of the value of the policy, have hitherto proved great obstacles t» the extension of life insurance, for if the insured at any time should fail to pay the annual premium when due, the policy would bi forfeited, and aoy fraction which might he allowed for it would be accorded as a pure act of grace, and be uncertain in its amount. By a new system devised by Dr Farr, and adopted by an insurance company in Manchester and in London, nn : insurant can, at any time, after having paid his first premium even when the policy is only one year old, draw out, either as a loan or as a surrender policy, rather ltss than one-half of the whole amount of the premiums that have been paid. As each policy has a current realisable value it becomes a security as readily negotiate as a banknote, and can at any time be convened into cash. The only form of investment allowed by the company is Government security. Eighty per cent, of th« premiums in invested in the Funds, at compound interest, to provide for the policies j the remaining twenty per cent, being se 1 apart for expenses. The insurance premiums being thus invested in the Government funds, the risk necessarily attendant upon doubtful security is avoided. Kveu to persons of settled and certain means the loss of all control over their contributions, and the compulsion to go on paying the premiums punctually, down to death, under pain of forfeiture, are objectionable; but to the million win™ incomes are uncertain, and which mijjht perish on an interruption in health, a decline in business, or the approach of old age, the system of insurance in general use presents great hardships. Another new feature connected with the British Imperial Corporation consists in the endorsement of the surrender value, on the back of every policy issued, for the first and

for every subsequent year it may be in force. Some of the improvements which are offered to the public by Dr Parr's new system may be shown as follows:—A man, twenty-seven years of age, insures for £3OO, to be paid at his death, for which he pays £7 Is 3d per annum. Immediately £5 13s is to be invested in Government securities, and of this sum £3 is withdrawable on demand, eillier for temporary or permaneni use, on deposit of the policy. Suppose, at the age of 37, when his policy has been ten years in existence, he is overtaken by reverses of any kind, and requires temporary nssihtance, he can demand the banking account invested in Government securities, amounting to £34 Is, and thus obtain the aid he requires without prejudice to his insurance, Under these arrangements every insurer participates equally in the same solid advantages; there are no benefits given to one at the expense of the other; therefore the principle of equity has full play. Another illustration of the advantages of the new system may be shown thus:—A person accustomed to travel, aged 44 next birthday, effects a Government security life policy of £2500 on his own life. After a period of three years circumstances require him to reside abroad. The usual removal notice is forwarded, but it fails to reach the insured ; the premium is not paid, and therefore, in ordinary cases, the policy would be valueless. This can never happen under the new system. The insured dies at the end of the next seven years. His executors, on searching among the papers of the deceased, find the policy and three receipts for premiums paid. On examination of the policy they discover that it possesses an indisputable value, and that, in accordance with the banking account endorsed upon the policy opposite to the third year, they can demand the immediate payment of £l3B 15s, being the value of the policy after three premiums had been paid. Under Dr Parr's system, a polioy valuation table is published, by which each insurer can ascertain for himself the current realisable value of his policy for every premium paid. Under the title of " self-in-surance," the new system has been advantageously combined with cases where policies are made payable, at a certain specified age, during the life of the insured; in case of death before the age specified, the insurance being paid in full. Incase of endowments on the lives of children with Government security, nearly the whole of the premiums paid are returned in case of deaths before the age at which the endowment is made payable. Contrasting this plan of life insurance with that heretofore in operation, it will be found that insurers enjoy privileges of a most valuable character; and the public will do well to look : into the principles of the new system now in operation, which offers perfect security and also protects.their, rights and interests.