NEW ZEALAND GOVERNMENT LIFE INSURANCE.

Clutha Leader, Volume II, Issue 105, 14 July 1876, Page 2

NEW ZEALAND GOVERNMENT LIFE INSURANCE.

(To the Editor of the Clutha Leader. ) Sir,— As a rule lectures on lifo insurance are -nqt sufficiently attractive fco tho genoral public to draw a fair attendance of people from, their homes, especially afc this season of tho year, to attend the lectures. J therefore beg to ava.il myself of the medium of your columns in addressing a few words to the people of .this town and surroundmgdistricfcs on the above subject. The question of life insurance has been prominently brought before fche New Zealand public oi late years by representatives of private insurance companies, and more recently by myself and other agents appointed under "the Government Insurance and Aunuities Act. Bub I think you will agree wifch me that the Government scheme has not received tbat amount, of attention ancl support from the inhabitants of tlrs district^ which its importance demands, and the liberal inducements offered warrant. Liberal in its bye-laws, in its low rate of premiums, in its division of profita to its policy holders every five years, ancl above all in tho absolute security offered to the assured. Reasons for Insuring.— Because time is money. Brain and muscle are jusfc as much value as houses and merchandise; they are alike perish-able-the latter by fire ancl the perils of the ocean, the former by accident and disease. What good reason, then, can be given for insuring for the one that may not be urged with equal force for insuring the other ? Obligation to provide for wife and children.— Because in tbe economy of existence every true man, however far removed from sentimantaliam, is impressed with a solemn obligation to provide for his wife and children. This may be the result of education and custom, or a development of a higher phase of fche selfish principle, or ifc maybe love; and this fact is tho most general stimulus to toil — whether mental or physical— wifch which we meet. We may put it down, therefore, as a universal truth thafc man's primary object in life is to provide for his family. Now, think of a dozen acquaintances who have died between the ages of 25 and 50, and count on your fingers the number wlio have attained this object, ifc will be small ; each of them would .have reached ifc hacl thoy understood and accepted life insurance. If a man is, earning £300 a year, whether as a mechanic, a farmer, a book-keeper, a trader, a physician, a banker, or a lawyer, he can better afford to live on £280, and invest the remainder in a life policy, than his widow and orphans can to live on nothing. This is self-evident, and yefc it is constantly ignored. The uncertain duration of riches.— Because the duration of riches is as uncertain as the duration of life. There are few business mon who do not fail 'at one time or another. Take afc random a score of men whom you have known in the hey- ' clay of business, life, and prosperity, and trace them to thesere and yellow leaf, and how manydo you find in independent circumstances ? It is sad truth that even among tho earnest and faithful class of merchants few secure for themselves a comfortable living in the declining years of life. Nor is the application of this remark limited to business men alone ; lawyers, physicians, clergymen, mechanics, and even farmers, are subject to corresponding vicissitudes, .and are overtaken by corresponding eventualities. Surely, in the' light of such experience, common-sense would suggestthemakingof some provision of an inalienable character for old age. The form of insurance known as Endowment enables us to do this in the easiest ancl surest manner, while, at the same time, it affords all fche protection of i life policy during the active part of our career. Eor example, fche annual premium on £500 pure insurance is, at the ago of 30, £10 2s 6. The policy is paid at cleftth only. But for an additional annual premium of £6 5s the Government stipulate to pay the assurance when fche assured reaches the age of 55 ; or for an additional annual premium of £3 lis, on attaining the age of GO ; and, of course, previously, in the event of death. Such a policy is not only a profcectiou to one's family during the busy part of life, bufc also j provides for one's old age. I Life Insurance not au expense bufc a Saving.— The money paid for fire and marine insurance may properly be classified an expense ; that paid for life insurance cannot. In tho former cases, the contract is for a limited period, within which the loss must occur, otherwise the insured receives .nothing ; but, in the other -rase, fche contract is for life, or, if an endowment policy, until the attainment of a specified age. The sums paid as premiums aro really deposits, and nofc payments. Eor example, a person aged 30 insures up to the age of 55, and ho receives, on attaining thafc age, £100 for eyery £82 ls 8d paid into fche office, in annual premiums of £3 5s 8d for 25 years, the full amount; being paid at death should it happen sooner, with an addition of all accrued profits. Failureof Privato Offices.— Of late years serious loss aud much misery have been occasioned by the failure of insurance companies. Many homes have beeu loft desolate. The provision which the heads of families had made, wifch foresight and prudence, as they fondly imagined, by insuring their lives for the benefit of their children, was swept away in a moment, too late to repair the evil. How many mon died in despair in consequence of the failure of these insurance companies it would be impossible to say.' That they may be counted by thousands is certain ; and 1 might excite your sympathy by many wellauthenfcicated cases, where the failure of life insurance companies overwhelmed families with misery, accelerating the death of kind parents, and plunging helpless and tenderly nurtured children into hopeless indigence. Government Insurance. — So great was the evil consequent upon, the default of insurance companies, thafc the British Government felfc bound to interfere, and Mr Gladstone carried the Government Life Insurance Acfc, a few years since, under which the State becomes the assurer. There is a State guarantee against failure and loss. The insured passesses' the guarantee of fche revenue of- the- United. Kingdom, in addition to the accumulated capital of fche entire population, for national obligations involve private as well as public property, the latter as direct, the former as collateral security. And when I state, on the authority of Mr Gladstone, who adduced the figures, that during the preceding 25 years of a total of 378 life insurance companies founded iv England, no less than 328 had failed, or 14 annually, the necessity for the establishment of a Statelifaassurauce officewill be obvious. Still more so, when the immense sums involved in life assurance business is :fcaken into account, £12,000,000 being paid in claims last year in Great; Britain to the widow ancl orphans of deceased lives. Now New Zealand did not pass scatheless through the recent defaults of private insurance offices. Losses were incurred here, and ifc is to the credit of the Government- that they anticipated the wants of the country, and founded life assurance and annuities aa apermamenfc department of the State, in connection with the Post Office Savings Banks. I will with your permission quote a few remarks from the speech of Mr Lowe, Chancellor of.the Exchequer, on Ythe motion, of the second reading of Mr Cave's bill in the House of Commons, to provide a system of auditing life insurance companies : : — . „ "A*? 1 ? nwil i"*»g to 'eit down without saying that I desire most earnestly that something may be done whereby we may take away what is a reproach to our laws— thafc there are no means by which an Englishman can assure his life in such a way as to be perfectly certain thafc on his death the benefit which he designs for those whom he may leave behind may corns to them. There is at present no such thing asthafc in this country. We are, I suppose, all insured somewhere or other, bufc ifc is a mere probability, liiero are no means -by which a man can avoid the most painful position in which ifc is possible to be placed—that of dying in doubt and anxiefcy whether his family will receive tho provision he has made for them. ... It has occurred to me as being worthy of consideration- and I have given a good deal of consideration to fche subject' —whether it might nofc be fche duty of the Government to come forward themselves andoffer to tlie public the absolute security which fche Government have alone the power to give -to insurers. ' ...... .x- . o . ■ N , ow > 3 s a hfe office may, or may .not, according to its. experience, be self -supporting,— a fact only discoverable after a number, of. years (usually from 30 t0 .37), and dependent on its .management, risk from epidemic and perhaps excessive mortality, m its career, depreciations of its in-

; — — yf/ vestments, and rates of interest, etct-the.all-important advantage of having a ' ' backbone and spinal marrow" in the shape of • Government se-».. curiky becomes apparent. * %. Professor de Morgan says, as the claim . for ft ■ lifo insurance may not become due for 20, 30, 40, even 50 years, it particularly behoves the insurer not to .be satisfied with the present flourishing state of the society, but with the prospects -of its pormanency and future solvency. He shows still further grouud for caution. " A life office, " he says, "may be in reality insolvent many years before the symptoms of bankruptcy comd on." Mr M'Glashan, M.H.R., in the course of a debate in fche New Zealand Parliament, said :-— " He should like to mako a few remarks with regard to the New Zealand Government Assurance scheme. He thought it was a capital one, and he should be glad to see all the insurances effected upon lives in the Colony made under that scheme, bocauso the Australian Mutual Provident Society insured all over the Colonies. He affirmed thafc tbe contingent risks were much. greater in the other Colonies than in the delightful climate of Now. Zealand, and hence, of a necessity, those who insured their lives in this ' Colony must pay to a great extent for fche shorter lives of those resident in the neighboring Colo;. nies, such as Queensland, New South Wales, and South Australia." Conditions of Policy. — And here the Government is much Juiore liberal to insurers than private companies : — 1. The Government Life Insurance Departsment issues all desirable forms of policies. The payment of every polio j\ is guaranteed by thd Colony. 2. Premium rate 3 are lower than those of private companies, which reduction is equivalent. to cash bonus in advance of from 15 to 25 per cent. For example, a person aged 40 wishes ta itisurA his life for £1000, . and instead . of paying -'pr«-> miuras for the wholo term of his life he elects*™ pay them off, say, in ten years (as is frequently dono by professional and business men). His annual premium in the Australian Mutual Provi* dent Society would be £64 10s. 10<l, and in fche Government Office only £51 16s 8d ; showing a clear saving to the assured of £12 14s 2d p«r annum for ten years, amounting in all to £127 la Sd, nofc including interest thereon. Let it be understood that in both cases the policy 'holder would be entitled to full participation in,>profits. 3. These rates are under the participating scale, and have been adjusted and endorsed :by M. A. Black, Esq., actuary, as being upon a safe and equitable basis. ,-;.=.:'' I 4. No policy or medical fee charged/ v 5. All policies are indisputable, and "free;froni all conditions as to travelling and residence after five years' duration. . • . ■ -.: ,-V . 6. Policies are protected from the laws of bankruptcy to the amount of £2000. ' S y ■ 7. Premiums may be paid on duo dates at any Money Order office in Great Britain, Ireland, or any of.the Australian Colonies. 8. Cash surrender value of from 40 to 60 pei? cent, of amount of premiums paid. 9. Probate, etc., dispensed with on all policies not exceeding £200, thus saving great expense to, the representatives of the insured. LO. And, lastly, no life or endowment policy- -. is forfeited, by non-payment of premiums after the completion of the first year, as long as its surrender value will insure the amount of the V policy. Eor example, a person aged 40, insured under; a policy on wliich five annual payments had been .y made, would not forfeit it. on account of non* payment of premiums until -the expiration of ■ five years from date > of default, and ifc could be renewed afc any time within, such term, on paying iup arrears with interest ; or if it became a s claim; [ within that time, the policy would be paid, less arrears wifch interest; or, in other words,., a, year's credit for every year the policy is in existence. No policy need, therefore, be sacrificed in consequence of the pressure of any temporary loss of employment or other monetary embarrass menfc. In tho event of tho assured, after the expira* tion of three years from fche date of his policy, being unable from any cause to continue hV^t&yments, the Commissioner will, if required, grant him a "free or paid-up" policy, — that is, a policy exempted from any future payments, for such a, sum payable at death as the surrender value oif such policy would assure. Thus, suppose- the ■ insured to be 30 years of age, assured for £500 at death, after having paid, say, ten years, or about - £75, for premiums, is unable longer to continue his premiums, and wishes fco exchange his' present policy for Of free or paid-up policy, the Commissioner would grant .him one fpr such, a sum as - . a single premium of £37 (which; would be about the surrender valu'e^ *of the old policy) would assure afc death, ndmely'i about £107. I trust I havo mMe ,fT the superiority of the Gavernment Office over private companies apparent. There is absolve security, premiums afc the minimum rate, full share' in all profits,, and no vexatious conditions in the policy. The conditions are such thafc rich and poor alike can insure with advautage. In conclusion, I would say to the man, who, if taken suddenly from his family, would nofc leave those dependent on hira unprovided for, insure on the first opportunity. Witness the rafce of mortality at Invercargill, a short, time, when fifteen men in the prime of life were taken .sud-. denly away from their families.-; - To the youngman I would say, insure now, while your premium is low, and you ai-e in goodSiealth. Your policy will advance in value as you grow old, and may be of considerable value in assisting you itt your business. To the rich man, 1 can only say, ifc is.a prudent and good investment. And lastly, I would say to wives, do-not pr-evenfc your husbands from making provision for yourselves and your children. I am sure, if you "Would only reflect and see fche injustice you are doing, not only to yourselves, but to your little ones, you would nofc set your face against insurance, aB I am sorry to say many of you now do, when, ou the contrary, you should be the right arm of the insurance agent, T. F. M'DONOGH, . Chief Agent for Otago, ■Government Life Insurance.