“PROTECTED” LIFE INSURANCE.

Hawke's Bay Tribune, Volume XXV, Issue 161, 24 June 1935, Page 6

“PROTECTED” LIFE INSURANCE.

Our last Friday's article on “Protected” Life Insurance has to-day drawn a letter from a correspondent who does not agree with our presentation of the ease. In the first place, we may say that our writing proceeded on the assumption that statutory protection of a strictly limited amount of life insurance had been so long in vogue—over fifty years now—-that it was to be accepted as firmly established. Our correspondent attacks the principle at the root of this provision, claiming broadly that the whole of a man’s assets, life insurance included, should be available for the satisfaction of his debts, and then going on to suggest that like protection might just as well be extended to savings bank deposits. There is, in fact, a very vast difference between the two, for, while such deposits are entirely at the disposal of the depositor at any time, the capital sum of an insurance such as is contemplated by the statute is available only at death or at a fairly advanced age. Much more closely may such an insurance be compared with a family settlement made in order to guard against the exigencies of life, and more particularly, those arising from death. It is solely with this object in view that many thousands, probably the great majority, of policies are taken out, thus creating for a special purpose an asset that would not otherwise come into existence. In any event, as we have said, the “principle” at stake did not enter into what we previously had to'say. What was urged was that the law regarding protected insurance should be clarified so that folk taking out insurances on the strength of such protect ion should know exactly where they stood—and. for that matter, their creditors also. As to the responsibility of the insuring offices to see that this is done we would say that they must be cognisant of the fact that a very large proportion of their business is due to the statutory protection extended to their clients. Those clients are in no way organised to bring pressure to bear upon the Government

to effect the necessary amendments in the law. On the other hand, it would be quite an easy thing for the insurance offices to make the necessary representations in a concert that could scarcely but have the desired effect. Having regard to the frequent litigation that has arisen out of the law as it now stands and to the expressions about it that have from time to time fallen from the bench, we think it a distinct reproach to the life offices as a body that they have not moved to secure its amendment long ere this. That feeling is only emphasised by what the present Chief Justice had to say with respect to the ease now before the Appeal Court. As to our correspondent’s incidental question whether the passing of the protective clauses of the Life Insurance Act

synchronised approximately with the establishment of the Government Life Insurance Office, it would seem that there was somewhere about ten years between them, the latter having apparently taken place in 1874.