Shall I Insure My Life ?

New Zealand Graphic, Volume XXXVI, Issue 17, 28 April 1906, Page 8

Shall I Insure My Life ?

THAT IS THE QUESTION PEOPLE SO OFTEN ASK THEMSELVES, AND THE PROS AND CONS OF THE MATTER ARE SO NUMEROUS THAT THE ANSWER IS HARD TO FIND. BOTH SIDES OF THE QUESTION ARE CONCISELY DEALT WITH IN THIS ARTICLE. FOR. The people of this country pay nearly thirty-live millions a year in life insurance, almost a pound a head for the whole population. Is this in itself not a strong argument in favour of life insurance. Remember, this is a purely voluntary payment! There is no compulsion about it. Surely nothing can be a more prudent proceeding than for any man to take out a life insurance policy. If he be a wage-earner on a salary, and not a capitalist, it is a method of saving money so that his family at his death will not be left destitute. Even if he be a man with property if he be possessed of considerable capital, it is very difficult or costly to realise in a hurry. But the policy being paid at once, on proof of death, provides a lump sum for funeral and other expenses, and for the widow or family to go on. WHY INSURANCE PAYS. Again, a man who is .working for his living may suddenly see a chance of purchasing a business, or of making some extremely profitable investment. But he has no capital. What is he to do? If he has no insurance policy he may, and probably will, be forced to see the golden chance pass by, perhaps never to return. If, on the other hand, he holds a policy, he possesses an asset upon which he can borrow almost to the full extent of its value. There is no better security in its way than an insurance policy, and the best of it is that its value does not depend upon the state of the owner’s health, as do such assets as the goodwill of a business, or a man’s earning capacity. THE RISKS WE RUN. You may say, why not invest a certain sum each year in some good sound security? .Mounting up at compound interest, it will in the long run be worth more than the matured policy. Quite so, but it must be taken into consideraion that life is desperately uncertain. The very strongest and healthiest may be struck down in a moment, either by accident or by some contagious disease. The element of chance is always present in life, and it is only the assurance policy which eliminates it. If the man of twenty could be certain of living fifty years it would be foolish for him to insure. But he cannot be certain. Therefore, assurance is wise.

An additional point in favour of life insurance is the safety of the investment. Any of the greater companies are practically as safe as the Bank of England. The premiums paid are skilfully invested in bulk by skilled investors, and the company getting good interest on all the money can well afford all pulls upon its resources. AGAINST. Is life insurance a good investment or not? What is life insurance brought down to its simplest form? Al erely the payment of certain small sums of money in the hope of eventually receiving a much larger one. The assuree, in fact, stakes his chances of life, and a small yearly payment against a promise, if he dies, to pay- a much larger sum to his heirs. Here is an element of gambling pure and simple, for no one in his senses supposes that anyone would insure at all unless the company engaged to pay the amount insured even in case he died the next week. IS IT A GOOD INVESTMENT? You will say the company can well afford to take the risk, and that the man acts (wisely in making provision for family or relatives against the day of his death. Well and good. No one can quarrel with his provident purpose. The principle of life insurance is in the main a good one. But the writer -contends that, under present circumstances, the man who takes out a policy on his life is not making a good investment. Everything is in favour of the companies. It very often happens that a man who has taken out a policy finds himself, for various reasons, unable to continue his yearly payments. The companies will argue that any policy on which two or three years’ premiums have been paid has a surrender value. Y'es, but how many policy-holders ever receive that surrender payment? They are nearly always persuaded to leave this money with the company to meet further premiums as they become due. When the sura is exhausted, the unfortunate policy-holder has either to pay up a large sum or let his policy lapse, and lose his money. Under the modern system of weekly and monthly payments the number of policies which lapse in this way is very largely increased. WHERE WE LOSE BY IT. Again, do the companies treat the assuree fairly in the amount of premiums payable. A glance at their profits shows that they do not. They pay their shareholders enormous profits, hardly any less than ten per cent., many twenty, some fifty per cent., and one over ninety per cent. From the advertisement of the average life insurance company the reader would gather that it was a purely philanthropic concern. But this is, of course, not the case. It is there to make money, and it does so. It makes it out of lapsed policies, out of long-lived assurees, who often pay in premius considerably more than the sum insured.

All men agree in the abstract that "punctuality is the soul of business,” but few act up to the maxim with the strictness of the King of the Belgians. Wherever or however he may travel, whether the visit he of business, pleasure, or ceremony he is punctual, not only to the hour, but to the minute —it might almost be said to the second. And yet His Majesty is never seen to consult a watch. But his familiars know that his habit of passing his hand along his flowing beard is only a device for glancing at a small watch which he wears fastened to his wrist.