INSURANCE AND BUILDING LOANS
One of the defects of the building and loan societies, long recognized in some quarters, has been the probable loss of the home to the family of the member who dies before payment has been completed. At the time when the widow most needs the home for her children, the payments cannot be met and the association is reluctantly obliged to foreclose the mortgage.
A plan to meet this situation, frequent in the aggregate, has been devised and practised in New England, by requiring the borrower to take out an insurance policy on the least expensive straight-life plan, to an amount equal to the mortgage. The insurance premium is payable monthly with the payment on the loan, the association turning it over to the insurance company, and undertaking to adjust the payments if the latter's premium periods do not coincide. The face of the policy is made payable to the loan association which, in case of death, takes from the insurance money the amount remaining unpaid on the mortgage, and gives the widow the balance with a deed for an unencumbered home. In the great majority of cases where the borrower lives to complete his payments, the policy is surrendered to him when his mortgage is cancelled, to be continued or dropped as he pleases.
The plan was described at the annual banquet of the Metropolitan League of Co-operative Savings and Loan Associations, New York, by J. Q. A. Brackett, former governor of Massachusetts, who is urging it on a national scale as a necessary adjunct to what, in his native state, is termed the co-operative bank.
More than two hundred men attended the banquet, representing ninety-five constituent companies with 35,129 depositors, and controlling assets of sixteen million dollars. One who attended could not fail to be impressed with the evident feeling of these men that their paramount duty is not to make money for their particular organizations, but to help the average member buy a home. Ninety per cent of them are unsalaried. One association, it was reported, has reduced its interest rate without request of its borrowers. In the words of the president, the main desire of building loan associations should be "the encouragement of the habit of saving without irritating penalties and restrictions and with equitable provision for the mishaps possible to those undertaking a contract for specific saving extending over a long period of years."