Letter in Brief

Dominion, Volume 25, Issue 275, 16 August 1932, Page 11

Letter in Brief

The Act dealing with the 20 per cent, interest cut appears to be as full of holes as a sieve, writes “Policy Holder,” who adds: “I have a loan on my life insurance policy,.-and had been congratulating myself that my interest would be 5 per centfrom April 1 last. I am paying 6 per cent. When paying interest recently I found that I was not entitled to the reduction. I was informed that my policv ranked as a chattel security, and that' the society had obtained legal advice that it need not make the 20 per cent, reduction. I should have imagined that a life policy was gilt edged, and anything but a chattel security. It appears as if the drafting of Acts coming before Parliament leaves much to be desired. [Legislation will be introduced next session to clear away a misunderstanding concerning the question raised by “Policj Holder.” The intention of the Government was that mortgages on life policies should be treated as mortgages under the National Expenditure Adjustment Act, which provides for interest reductions. Complaints have been made to the Government that certain insurance companies are treating mortgages of their policies as mortgages of chattels with the result that they have refused to re, duce the rate of interest on loans secured on policies below 6} per cent. It is. understood that any legislation clarifying the issue will he made retrospective.J