Sometimes a man, without real estate or other personal assets, desires to raise a loan on his life insurance, which, it should be said, is a form of personal property. In this case he may assign his life policy, or his endowment policy, as security for the loan.
Again, if he is not insured and has no shadow of an asset, he may have his life insured for the benefit of another, in consideration for a loan.
LAPSES
When there is a failure to meet premiums, the policy is said to "lapse" or default.
Even in this case the insured has an equity.
Every policy, depending on the amount paid, has what is known as a "surrender value," and by proper process this may be collected from the company.
In some states, if the insured fails to meet his premiums, the company is compelled to pay on the policy at his death a sum equivalent to that which he paid before default.
Some insurance policies have a clause stating that the contract will be void in the event of the suicide of the holder. The highest courts have set this clause aside. The ruling is that a suicide is an insane man, and that his heirs should not be made to suffer for his misfortune.
PROPRIETARY AND MUTUAL COMPANIES
The larger insurance companies may be either proprietary or mutual, some are a combination of both.