A simple life insurance is that by which a person may leave behind him a sum of money for the benefit of those who, during his life, have been dependent upon him. For example, a husband, whose income is entirely derived from his own exertions, desires to make some pro- vision for his wife and children in the event of his dying before them. At the age of thirty he may, by paying £25 a year to an Insurance Office, secure at his death, whenever it may happen, £1,000, for the benefit of his wife or chil- dren, or as he may direct by his will. In a way insurance is a kind of savings bank, but impos- ing an obligation on the part of the depositor to save a certain sum every year. In the case of the bank, the savings are optional, and cease at death; whereas by insurance, the return of a large sum is the result of the death of the com- pulsory depositor. If a person put by £25 every year and invested that sum in the Government Funds at 2 1/2 per cent., or deposited the same sum annually in a bank, at the same rate of interest, it would take him twenty-eight years to accumu- late £1,000, if he lived so long; whereas by an insurance on his life for the same amount, if he died a week after the first payment of £25 had been made, the £1,000 insured would be paid to his representatives. It might be said that if the person lived longer than the term of twenty- eight years and went on saving the £25 every year, he would in the end accumulate more than £1,000. This, however, is met by insuring in such manner that the insurance carries "profits," that is, additions made by the gains of the office from time to time. If insurance be made in this manner, for which a slightly higher rate of pre- mium is paid, it will be found that, however long a person might live, more would accrue at death by insurance than by saving.
There are in active existence so many insur- ance companies of good repute and undoubted stability that no difficulty need be experienced in making a judicious selection. Of course, the intelligent insurer would prefer an office whose system would best suit his own requirements. There are two kinds of Insurance Companies, one known as a "Mutual" office, in which all the profits which may be earned are periodically added to the amount insured, the other in the form of a Joint-Stock Company, in which a small proportion of the profits are distributed amongst the Shareholders and the remainder added to the Insurances. The Mutual Office dividing the whole of its profits amongst the insured would appear to be the more advantageous of the two, and undoubtedly it is, all other things being equal; but insurances may be effected which do not share in the profits, at lower rate of pre- mium, and in that case one system is as good as the other. The intending insurer would do well to obtain the prospectuses of several offices, which he can easily do by writing for them direct to the head office or by applying to the several agents of the companies who abound in all towns; and carefully compare one with another. It will be found, perhaps, that one office charges a less annual premium for an in- surance than another, but this may be compen- sated for by the latter declaring larger profits, or giving advantages in other ways. For instance, a certain "Mutual" office charges for an insur- ance of £1,000, on the death of a person begin- ning to insure at the age of thirty, a pre- mium of £26 16s. 8d. per annum, whereas a certain Joint-Stock Company's demand is only £24 14s. 3d.; but the advantages offered by the former in the shape of larger bonuses, though deferred, are greater, while the benefit of a less annual payment is of course immediate. Where the insurance is effected at the same age and for the same amount, but with no other benefit or profit prospectively than the bare amount, the premium in the former case is £21 4s. 2d., and in the latter £21 15s. 10d. There are good offices, however, where the premium charged is less than this.
There is at least one office which insures upon what is called the half-credit system. One-half the usual premium is paid for a certain term of years, and thereafter the full premium is charged. This may be useful in a case where a person wishes to insure while young and the premiums are low, and at the same time is desir- ous of deferring the full payment until his income is so improved that he can better afford it. This system is carried still further by an in- surer only paying half the premium during his lifetime, the other half being accumulated until his death, and then, with interest added, de- ducted from the amount payable in respect of the insurance policy.
Having chosen the insurance office or com- pany which best suits his purpose, the proposer applies to its nearest agent and makes known his desire to insure his life. A form containing printed queries somewhat like the following (though offices differ somewhat in details) will be placed before him and the blank spaces filled in either by the agent or himself.
————————————————————————————————————————————————————————————————- | PROPOSAL FOR LIFE ASSURANCE | |———————————————————————————————————————————————————————————————-| | | Full Name _____________________________________________________ | | | Profession or Occupation ______________________________________ | | 1. Life proposed to be Assured | Business Address ______________________________________________ | | | Residence _____________________________________________________ | | | Married or Single _____________________________________________ | | —————————————————————————————————————————————————————————| | 2. Age next Birthday ________ years. Born at _________________________________________________________ | | on the ___________________________ day of _______________ in the year 18_________ | | (Evidence to be produced.) | | —————————————————————————————————————————————————————————| | 3. Has he resided out of Europe? | | | If so, where, and for what period? | | | —————————————————————————————————————————————————————————| | 4. Is he, and has he always been, of sober and | | | temperate habits? | | | —————————————————————————————————————————————————————————| | 5. Has he had any serious illness or disease | | | tending to shorten life? | | | —————————————————————————————————————————————————————————| | 6. Has any near relative died of any hereditary| | | disease? | | | —————————————————————————————————————————————————————————| | 7. (1) Has a proposal to effect an Assurance on| | | his life ever been declined? |_________________________________________________________________| | (2) Or accepted at more than the ordinary | | | rate? |_________________________________________________________________| | (3) If so, on how many occasions, and | | | when, and by what office or offices? | | | —————————————————————————————————————————————————————————| | 8. Is there any other circumstance which ought | | | to be communicated in order to enable the | | | Company to judge fairly of the risk? | | | —————————————————————————————————————————————————————————| |If the | Name __________________________________________________________ | |person has 9. (1) Who is his usual Medical Attendant? | Residence _____________________________________________________ | |never | Has known him ________________ years. | |required (2) When was he last in professional atten- | Date of Attendance ____________________________________________ | |Medical | Ailment _______________________________________________________ | |attendance, —————————————————————————————————————————————————————————| |the fact | 1st Friend. | 2nd Friend. | |should be | | (if necessary: see marginal note to | |stated, and 10. Mention an intimate friend, who is not in- | | Question.) | |reference terested in this Assurance, to be referred | Name ____________________ | ___________________________________ | |given to to for information as to health and habits | Residence _______________ | ___________________________________ | |TWO friends, of life | Profession or | | |in answer to | Occupation ____________ | ___________________________________ | |Question 10. | Has known him _____ years | Has known him _____ years. | | —————————————————————————————————————————————————————————| |If the | Name __________________________________________________________ | |Proposal be 11. Name, &c., of the person in whose favour | Profession or Occupation ______________________________________ | |upon the the Assurance is to be effected? | Business Address ______________________________________________ | |person's own | Residence _____________________________________________________ | |life these —————————————————————————————————————————————————————————| |enquiries 12. Is the pecuniary interest in the Life to be | | |need not be Assured, which is the object of this | | |answered. Assurance, to the full amount thereof? | | |———————————————————————————————————————————————————————————————-| | Sum to be Assured £_____________________________ With or without Profits? _____________________________________ | | Is the Policy to be for Life? __________________ Are the premiums to be payable Yearly? _______________________ | | I do hereby declare that the above statements are true, and that this Proposal and Declaration shall be the basis of | | the contract for effecting the above-mentioned Assurance, which Assurance is also conditional on the accuracy, in all | | respects, of the statement for the Medial Officer, made, or to be made, by the person whose life is proposed for Assurance. | | Date __________________________________ Signature of the Person in | | whose favour the Assur- _________________________________________________ | | Witness _______________________________ ance is to be effected. | | Address and Occupation ______________________________________ | ————————————————————————————————————————————————————————————————-
The proposer has now to undergo one other formality, disagreeable no doubt, but absolutely necessary, and that is the medical examination. This is done by the medical officer of the com- pany who has to certify that the proposer is free from any defect likely to shorten his natural life, and that he is sound "in wind and limb." Defi- ciency in the number of the latter is, however, not considered unsoundness, as a person with one arm, or one leg, or one eye may be just as good a "life" and therefore equally eligible for insurance with him who is perfect. All the en- quiries in the form are made by the Office and the expenses (including the doctor's fee) paid by the Company.
If the proposal is accepted, the proposer is informed of the fact and then pays his first pre- mium in advance, it may be a year's, or half-a- year's, or a quarter year's, at his own option, and he then becomes (subject to the rules of the particular company) the insured.
A few days subsequently a life policy will be sent to the insured. This is a document setting forth, in full, the terms of the agreement between the Company and the insured, and must be care- fully kept, in such wise that it may readily be discovered by the person for whose benefit it is ultimately intended. The writer once found amongst some old papers a life policy in the name of a man who had been dead for many years. On enquiry at the office it was found that the amount which was payable at his death had, by some neglect, never been claimed. The company of course at once paid the money, and a needy sister was very much benefited.
Thirty days' grace are usually allowed for subsequent payments of premium. It is custo- mary for insurance offices to forward to each policy holder a reminder, from one to four weeks before the periodical payments for premium become due, but the absence of any such notice will not be accepted as an excuse for non-pay- ment, and if the premium be not paid before the thirty days' grace allowed have expired, the policy becomes void. It may, however, be re- vived upon paying a fine and producing a medical certificate of health.
Should the proposal be declined the fact will be notified to the proposer, but he will not be informed of the reason. Proposals are rejected because of something wrong being discovered by the medical examiner, or because of intemperate habits, or that the history of his near relations in regard to health and longevity is unfavour- able; anything in short that indicated that the proposer will not, in all probability, live as long as a healthy man is expected to live is enough reason for declining to insure his life.