Victorian London - Publications - Etiquette and Household Advice Manuals - Cassells Household Guide, New and Revised Edition (4 Vol.) c.1880s [no date] - (1) Life Assurance - (2) - (3) - (4)

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Volume 1

[-74-]

LIFE ASSURANCE.-I.

FOLLOWING up the remarks contained in the article on "Ways and Means," in a previous number (page 39), we now proceed to explain the principles upon which life insurance, or more strictly life assurance, depends. It is usual to speak of the insurance of any doubtful event, such as fire or loss at sea, and of the assurance of an event certain to happen, as death.
    The theory of life assurance depends upon calculations based upon the uniform mortality which has been observed to prevail among large numbers of individuals, and upon the increase of money at compound interest.
    From the death registers, mortality tables are constructed which tell us how many persons out of a certain number living at each age, die annually. From these tables the actuary computes what money payment - usually a sum or premium paid annually in advance throughout life - is sufficient to provide for the payment of a fixed sum, say 100, at death. Several tables are in use for this purpose, of which the principal are the Northampton, the Carlisle, and the English life tables.
    The following is a simple illustration of the manner in which the premium for a life assurance is deduced.
    Supposing, according to any table of mortality, that out of 500 persons, all aged forty years, five die in the year, and that it is required to provide 500 for the families of those who die, the contribution of each of the 500 will clearly be a five-hundredth part of 500, or 1. In practice, however, the premiums being invested at compound interest, a less sum than 1 would be required, viz., such a sum as invested at interest for the year would produce 1 at the end of the year. An addition to the net premium thus deduced is then made by the office for the expenses of management, and to provide for the bonuses, the nature of which will be hereafter explained.
    Upon these two simple principles of mortality and interest, the whole theory of life assurance depends, and upon them contracts have been undertaken by the different companies in the United Kingdom alone amounting probably to 400,000,000 sterling.
    Life assurance is an institution which has now been in operation for 170 years, the first company dating from 1706, and, notwithstanding the large amount of business transacted, it has not been, we may say, until 1869 that discredit has been cast upon life assurance companies.
    It is almost essential for us to make a passing allusion to this matter, as a temporary panic appears to have then taken possession of the public in consequence of certain appeals to the Court of Chancery, which resulted in the compulsory winding-up of one large company.
    It cannot, accordingly, be too clearly understood that the collapse in that case arose mainly from numerous ill-considered amalgamations with unsuccessful companies, [-75-] whose business was acquired at an excessive cost, and from reckless disregard of the well-known fundamental principles of life assurance, which are based upon unchangeable and mathematical laws, that cannot be ignored with impunity.
    The public were very much indebted, in this matter, to the intelligence of the writers in the daily papers, by whom this great question, one of the gravest importance to a large portion of the community, was very generally taken up. Of their widely-expressed opinions on this point, these remarks are an echo.
    The writer of this article long before pointed out the mischief that must arise, if the unsatisfactory methods of business pursued by a particular class of life assurance companies were persevered in. The result proved that his view was correct.
    The absolute necessity of life assurance in the case of persons whose incomes are dependent upon their lives - and this is so with the far greater portion of the population of this country - we assume to be admitted by everyone.
    There can be no doubt of the fact that no other method exists by which a provision can be so well made for a dependent family, as by a policy of life assurance, for the moment the contract is executed, no matter whether death take place the next day or twenty years after, a capital sum is provided, which can be invested for the benefit of the family of the assured, or applied in any way for their advantage, according to the circumstances and requirements of the case.
    No investment, in either a savings bank or a friendly society, will answer the same purpose-the essential peculiarity of a life policy being that the amount contracted for is paid at death, whenever that event shall happen, and, from the uncertainty of life, it does occur, over and over again, that claims become payable and are honourably met, very shortly after the policy is effected. So that a young man with a fixed income derived from a profession or other source, need not be deterred from marriage on account of it being impossible for him to make a due provision for his wife and family-indeed, we may safely say that by means of life assurance, many marriages take place which otherwise prudence must have prevented altogether.
    The first thing to be done by a person who has made up his mind to effect an assurance on his life, is to fix upon an office. There are two descriptions of companies, viz., proprietary and mutual, the former being joint-stock or trading companies, and the latter private partnerships on a large scale - all the profits of the business belonging strictly to themselves, while, in the proprietary companies, only a certain proportion of the profits are divided in the shape of bonuses among the policy-holders, the remainder belonging to the shareholders.
    There are numerous good companies of both classes to be found. We feel a difficulty in pointing out how a selection should be made, and can only suggest that the applicant should make choice of an office which, above all things, regularly publishes full and intelligible accounts, showing clearly the amount of the liability and the sum in hand to meet it, and particularly how that sum is invested. Probably, one of the best tests will be the fact that the statements of the office fixed upon can be readily understood by the intending applicant ; for the accounts of many companies are so mystified as to be unintelligible to the general public.
    The prospectus of the company should next be thoroughly studied. The date of establishment, though no guarantee in itself, still affords evidence of whether the company has stood the test of time. The names of the directors should be scrutinised, to see if they are men of business and of good standing in the commercial world. The rates of premium should then be consulted. These vary according as the Northampton, Carlisle, or other tables are adopted as a basis. The Northampton table gives an unfavourable view of life at the younger ages - say, up to forty-five - and the premiums deduced from it are consequently higher than those that are based on the Carlisle mortality; while, on the other hand, the Northampton rates are decidedly favourable at ages above forty-five - the exact reverse being the case with the Carlisle table.
    The applicant would accordingly do well to select his office according to his age, provided always that the office charging the higher rate of premium does not offer, which it very possibly may, some compensating advantage; for it must be borne in mind that the rate of premium is not the only point to be considered in the choice of an office-the amount of bonus addition likely to be allotted to the policy, and the character of the company for liberal conduct and honourable dealing being important elements to be taken into account.
    The bonus system will be explained hereafter. 
    The annual premium per 100 for a life of thirty varies in the different companies from 2 1s. 8d. to 2 19s. 3d.; at sixty, from 6 1s. 9d. to 7 15s. The rates without participation in profits are of course less.
    Life premiums are usually paid annually in advance. Some companies receive half-yearly or even quarterly payments.
    Assurances may also be effected by the payment of a fixed number of premiums, which are of course much higher than those quoted. Some companies grant endowment assurances, by which the sum assured becomes payable at death, or on the life assured attaining a certain age, and indeed, generally, contracts can be entered into with the large companies for the issue of policies to meet almost every conceivable requirement.
    The applicant, if at all likely to go abroad, should ascertain the regulations of the company with which he is in treaty as to foreign residence, for which an extra premium is charged, according to the healthiness or otherwise of the locality. The conditions in this respect of some companies are much more liberal than those of others. It is now very usual to allow free residence in any part of the world distant more than 33 north or south of the equator, as well as in certain other healthy places within the excluded limits.
    Policies become void if the person assured die by his own hand, by duelling, or by the hands of justice, or if the premium be not paid annually within the thirty days of grace which are allowed from the date of the same becoming due.
    Tables showing the amount of bonuses declared will be found in the prospectuses of most of the offices, and though the past bonuses afford no just criterion of what the future results may be, still they are the best guides the public can have as to the prospects of bonus additions to their policies. It often happens that the assured, from unforeseen circumstances, are unable to continue their annual payments. When this is the case, a return of some portion of the premium paid is made, such return being called the surrender value of the policy. And here it may be desirable to point out that in such cases a return of only a small proportion of the premium paid (usually about a third, without interest) can be looked for, for though in the individual case no claim for payment of the sum assured has been made upon the company, still other policies effected at the same period having become claims, the excess of premium paid on the policy to be surrendered must be retained by the company to meet the losses occasioned by premature deaths.
    Loans, also, for amounts varying with the value of the policies, are advanced upon their security. usually at five per cent, interest. We propose to continue our remarks on life assurance in a future number.

[-134-] 

LIFE ASSURANCE.-II.

WE will now assume that, after a careful examination of the various published statements of the Assurance Companies, an office has been selected by the applicant, and that he has been provided with the form of declaration which is the basis of the contract between himself and the company. In this document he is called upon to set forth his name, description, and age next birthday-evidence of which should be furnished by the registrar's certificate of birth, by an extract from a family Bible, or otherwise, when the age is admitted by the company, and no question can thereafter arise with reference thereto. He is required, also, to state whether he has suffered from gout, spitting of blood, or from any disorder tending to shorten life ; and he has to give the names of two persons, to be referred to as to his health and habits of life, and generally to reply to the questions as to his health and family history that may be asked him by the medical officer of the company, before whom he has to appear for examination as to his health. Persons in decidedly bad health are not eligible for life assurance; but for any trifling deviation from the usual standard, an extra premium may, perhaps, be required, varying, with the circumstances of the case, according to the report of the medical examiner of the company.
    This ordeal having been gone through, and the life having been "passed" by the doctor, the risk is accepted by the directors, the premium is fixed, and the amount thereof announced to the applicant, which he has to pay in the course of a month from the date of acceptance. On the premium being paid, the policy is prepared, and in due course issued. It is a legal document, signed by three directors of the company, and impressed with the necessary government stamp, at the expense of the office, and hinds the company, in consideration of the regular payment to them of the annual premium, to pay to the legal representative of the policy-holder the sum contracted for, at the expiration of three months from the death of the person assured.
    The policy recites the conditions as to foreign residence, death by suicide, duelling, or the hands of justice, &c.; and declares the contract to be void if the declaration upon which the policy is based be untrue. Too great care, therefore, cannot be exercised in filling up the necessary forms, and in replying fully and honestly to the inquiries of the medical examiner. The policy must be carefully preserved for production to the office by the legal representative of the assured upon the claim arising Formal notice of the annual premiums becoming due is regularly given by the office in writing; and they must be paid within a month of their becoming due, otherwise the policy becomes void - or "lapses," as it is termed - and all advantage from the previous payments is lost to the holder.
    After the expiration of five, or, in some offices, seven years, the policy, if effected on the participating scale of [-135-] premiums, will become entitled to a bonus, or addition to the sum assured, arising from the profits of the concern, and payable at death with the amount of the policy.    
    The bonuses periodically allotted by life assurance companies owe their origin to the impossibility of assessing in anticipation the exact amount of premium required for each particular risk undertaken. To be on the safe side, therefore, it is usual to charge a larger premium than may ultimately be found to be necessary, so that due provision may be made for excessive mortality, and for other fluctuations in the business. A periodical return of profit is, therefore, made, which may be received as an addition to the sum assured at death, in a present cash payment, or in the shape of a corresponding annual reduction of the premium throughout life. The profits of a life assurance company depend upon the careful selection of lives (all bad lives admitted to participation in the benefits of the company naturally tending to reduce the rate of profit by their premature death), moderation in the expenditure, and the careful investment of the premiums at an adequate but safe rate of interest.
    In the mutual societies, the whole of the profits belong to and are divided among the policy-holders. In the proprietary companies, the proportion allotted may be two-thirds, three-quarters, or four-fifths, or in other words sixty-six, seventy-five, or eighty per cent. ; but it may easily be seen that two-thirds of a large amount of surplus may exceed three-quarters, four-fifths, or even the whole of a lesser amount.
    The bonus system has the advantage of benefiting the families of the assured, at the expense of the larger out lay made by the policy-holder during his life. Most companies have, however, a non-participating scale of premiums, by which an additional sum can be assured in the first instance. For example:- Supposing the participating rate at the age of forty to be 3  7s. 11d. and the corresponding non-participating rate 2  17s. 11d. for every 100 assured. The difference between these rates, viz., 10s., would assure an additional 18. So that an immediate reversionary bonus of that amount would be secured to the policy-holder, payable whenever death might occur. This is not, however, a favourite method of assurance with the public, who do not avail themselves of the plan to any great extent, and probably for these two reasons, one being the fact that the non-profit rates are not generally as low as they should be, if they were equitably adjusted, as compared with those on the participating scale, and the other because the element of uncertainty and speculation is lost, which to so many persons has a great charm.
    So valuable, indeed, have the bonuses on old policies of large amounts become, that a system of assuring the bonus itself has arisen in the practice of assurance companies. In order to participate in each successive division of profits, it is required that the life assured should be living on a certain fixed day, and the failure of the life before that day - at any time, in fact, between two bonus periods - would involve the loss of the bonus to the family of the policy-holder. An assurance on his life for the amount of the anticipated bonus for the term of years required to be survived is accordingly frequently effected the premium for which is often very high, as it is usually only in cases of extremely advanced age that this system is had recourse to. The older the life assured, the greater the risk of his losing the bonus, and the greater also his reluctance to run any risk in the matter. He therefore makes a sacrifice of a portion of the expected bonus to secure the balance, as men do in some other precarious transactions.
    What the principles are which are involved in the computations by which profits are estimated and assessed, although somewhat complicated, we shall endeavour to explain in our next.

[-179-] 

LIFE ASSURANCE.-III.

IT will be rather difficult to explain, in a popular manner, the principles involved in the computations by which the profits of a life assurance company are assessed, and from which are derived the large bonuses referred to in our last paper. Let us, however, see what we can do.
    By certain methods of calculation known to actuaries, an estimate is periodically made, usually every five or seven years, of the present value, at the time of the investigation, of all the sums assured and bonus additions to the policies for which the company have made themselves liable, as well as of all annuities and other liabilities. Against this is set the value, also computed in present money, at the same date, of all the assets or funds in hand to meet such liabilities. The difference between these two amounts - both, observe, estimated in present money - is the surplus or profit of the company; and supposing the estimates to have been made upon true principles of valuation, this surplus should be the sum that has been actually realised during the preceding five or seven years.
    It would be quite out of place here to attempt any investigation or even explanation of what these true principles are. Indeed, even well-informed actuaries are far from being agreed on the subject, and a great variety of practice necessarily prevails among the different companies in connection with the periodical valuations.
    We shall confine ourselves to stating generally that as regards the liabilities, the estimate should be made upon a table that may fairly be considered to represent the mortality of the company under investigation and the rate of interest should be less, probably by 1 per cent., than the interest actually realised on the investments. The method of dealing with the "loading," or per centage for profit added to the net rate of premium, should be indicated, to show that the valuation has not been made upon an erroneous and dangerous principle, by which the future profit is anticipated, instead of the actually realised profit during the preceding quinquennial or septennial term being shown. It is most important to bear in mind that if in the valuation of the future premiums the "loading" be included, the effect will be to treat as a present asset, available for division, what is; in fact, the reserve for future expenses of management, to provide for bonuses which, as we have before pointed out, the assured public will have, and to guard against possible fluctuations in the rate of interest and mortality; for it will easily be seen that the one may diminish and the other increase from financial and sanitary conditions over which the most prudent company can have no control. And as regards the assets, it should be made apparent that their present value is set down at such a sum only as they might reasonably be expected to realise if they had to be sold at the date of the estimate. To deal with this important subject, and with others bearing upon it in connection with the affairs of life assurance companies, in which so many thousands of persons arc vitally interested, is admitted to be one of the most difficult of the social problems of the day.
    The surplus or profit being arrived at by one or other of the methods adopted by actuaries, is, in the case of a mutual company, divided among the policy-holders by an addition to the sum assured payable at death, which is termed a reversionary bonus, by a cash payment, Or by an equivalent reduction in the annual premium payable, according to the arrangements of the society.
    In a proprietary company a certain proportion only - which may be two-thirds, three-quarters, or four-fifths - is divided among the recipients entitled to share therein, according to the provisions of the deed of settlement, while the remaining one-third, one-quarter, or one-fifth, as the case may be, goes to the proprietors or shareholders, to remunerate them for the use of their capital, which is an important security to the assured body.
    Another very difficult and much-discussed question relates to the principles of division as regards the relative rights of the different recipients. Each office will probably be prepared to show that its own method of distribution is the only correct and equitable one. As, however, scarcely two offices adopt the same plan of division of the surplus among individual policy-holders, and as they cannot all be right, we can only counsel our readers, as they cannot alter the matter, to assure their lives in a good office, to take all they can get in the way of a bonus, and to hope that, to some extent at least, they will participate in the profits of the business in proportion to their several contributions to those profits, remembering that the chief thing to be considered on their parts is the security offered by the office of their choice, and the certainty that the sum contracted for, and :the bonus, whatever it may amount to, will be duly paid upon a claim arising.
    And now we shall probably be expected to define what we mean by the expression a "good office." We can only reply briefly, that in our opinion an office that merits this appellation is one that will be able to give satisfactory information on the following points, viz.
    1. Publication of Accounts, comprising annual balance- sheets and valuation returns, stating the principles of valuation, and showing clearly the amount at risk, and the present or cash value of assets in hand to meet it, how invested, and at what rate of interest.
[-180-]  2. Expenditure.- It should be shown that the value of the "loading," or of the proportion thereof, whatever it may be that is reserved, is sufficient to cover expenses of management, and to provide for the bonuses which in the present day the assured insist upon having. If the expenditure exceeds the "loading," the office cannot be solvent. The working expenses in twelve first-class offices vary from seven and a half to ten and three-quarters per cent. on the premium income of the year.
    3. Amalgamations.- It would be satisfactory, as a rule, to find that there had been none, though cases may arise in which an amalgamation between two companies might have taken place to the advantage of both, provided no undue amount were paid for the business.
    4. Caution in the Acceptance of Risks, so that the assumed rate of mortality is not exceeded. This requires very careful watching, as will be apparent when we state that the mortality experience recently collected and published by the Institute of Actuaries (which embodies the experience of twenty important assurance companies, ranging over 160,426 lives), shows that the duration of life, even among the selected lives upon which assurances have been effected, differs very little, at all events, from that shown by the Carlisle table of mortality, a table in very general use among life assurance companies. The reason why the benefit of selection (from which at first sight it would appear that the office must derive great advantage, all the lives being subjected to a strict medical examination) is not greater than it appears in fact by these tables to be, is probably that there is always a contrary influence at work against the company to induce the acceptance of lives known to be doubtful, if not altogether diseased, and the unsoundness of which the company's medical examiner cannot always detect.
    5 . Safe Investment of the assets, at a remunerative rate of interest.
    6. Careful Management generally, by an efficient actuary.

[-198-] 

LIFE ASSURANCE.-IV.

IN continuation of the suggestions in our last article on this subject, as to the means to be adopted by an intending applicant to a life assurance company; to ascertain the position of the office, we ought perhaps to point out the danger of trusting to any empirical tests of soundness, such, for instance, that the accumulated fund of a life assurance society should be at least eight times the amount of the annual premiums, or one-fourth of the sum assured. If such a requirement were to be made an inflexible condition, how, we would ask, could any company commence business at all?
    The fact is, the widely varying circumstances which tend to modify the conditions of the numerous totally differently constituted companies, render it impossible to lay down any general test of solvency of this kind, and all attempts at generalising upon results-which, as actuaries well know, can only be deduced by laborious computations, based upon well-defined mathematical processes, to which there is no royal road-are, as a rule, mischievous, as tending very much to mislead the public, though at the same time, it is at once the duty and the interest of every assurance office to give every possible facility to persons anxious to insure, for ascertaining the actual position of their affairs, and the system on which their business is conducted.
    We have hitherto referred only to life assurance as a means of family provision; the system is, however, equally adapted to securing debts, by assurances effected by creditors on the lives of their debtors, as well as by partners in mercantile firms, who, by taking out policies on the lives of each other, may prevent the frequently inconvenient necessity of withdrawing capital from the firm, in the event of the death of one or other of its members.
    It is usual in some parts of the country, particularly in Devon and Cornwall, for leases of property to be granted depending on the duration of one or more lives, subject to certain fines for the substitution of a new life as an old one fails. These fines may be advantageously provided for by [-199-]  assurance, and when the lease is dependent upon the joint life and the life of the survivor of two, three, or more lives, the annual premium is comparatively very small; and generally it may be said that recourse may be had to life assurance in the numerous legal complications that arise in connection with commercial affairs.
    No assurance is allowed by law to be effected by one person on the life of another, unless the person proposing the assurance has a pecuniary interest in the life of the assured. This enactment was instituted by the legislature during the reign of George III., with the view to prevent gaming or wagering assurances, which had become very prevalent at that period, and it is manifestly highly unwise to place the temptation in the hands of any one of having a direct money interest in the death of another.
    We may here mention that in order to encourage life assurance by all legitimate means, it is provided by the Income Tax Acts that any person who has effected an assurance on his own life, or on the life of his wife, is entitled to deduct from any profits or gains in respect of which he may be liable to be assessed, under Schedules D and E of the said Acts, the amount of annual premiums paid by him for such assurance, to the extent of one-sixth part of the whole amount of his profits or gains. The amount of premiums, however, must be paid to the office in full, and the return claimed from the Government.
    Policies of life assurance are exempted from payment under the Succession Duty Act, which duty can be conveniently provided for by assurance.
    If the information on the points referred to in our last paper be clearly furnished by the printed returns of the office, an intelligent person should have no great difficulty - we will not go so far as to say, in satisfying himself as to the financial stability of the company, but at least in forming a tolerably safe estimate as to its position and standing; and if he mistrust his own judgment in a matter which may be of so much ultimate importance to his future interests, he would do well to consult some friend who has made himself acquainted with matters connected with the business of life assurance, instead of being induced, probably by an interested agent, blindly to entrust his savings to a society which may not merit his confidence.
    However little satisfactory our advice in this matter may appear to be, it is, we fear, all we can suggest for the protection of the interests of an intending applicant for assurance, until the Government shall have been induced to take steps to assist him in the matter by some stringent legislation on the subject ; and as it is a matter of such general interest and vital importance to the public, it is earnestly to be hoped that some such alteration in the law may be effected at a not very distant period, which will have the effect not only of giving security and confidence to intending assurers, but also of improving the position of all honestly conducted insurance offices.
    Some companies supplement their ordinary business by the grant of Endowments to Children and of Life Annuities.
    Endowments to children are sums payable on a child attaining a certain age, as may be agreed upon, and are useful for educational purposes, for providing marriage settlement for girls, and fees for the apprenticeship of boys, as well as the premiums required for young men who intend to enter the legal or medical profession ; also to provide business capital, sums for the purchase of commissions in the army, and for a variety of purposes of a like nature.
    Endowments may be contracted for to be paid in a single sum, or by an annual premium payable up to the specified age and it is sometimes arranged that the premiums shall be returned if the child die before attaining the age fixed upon. This is not, however, a favourite species of business with Life Assurance Companies, and probably for this reason, that the chance of death among the young lives with which this class of business usually has to deal is very small, and the company is almost certain to have to pay the amount at the date fixed upon. The profits of the company accordingly must depend almost entirely upon the interest realised on the payments received, and to make it worth while, therefore, to enter into these transactions, a company must not only assume a sufficiently remunerative rate of interest, but must make a considerable addition for profit to the net rate, so that an intelligent purchaser would be able easily to see that he might accordingly do better with his money by investing it himself, and hence the disinclination of many offices to quote terms for this description of contract, which, however, some companies do nevertheless enter into.
    In a table of rates for Endowments now before us, we find that the consideration required for an endowment of 100, payable on a child aged one year attaining twenty- one, would be a single sum of 42 11s 11d., or an annual premium of 3 5s. 10d. Upon reference to a table of compound interest, the force of our remarks will be at once apparent, and the intending purchaser of the endowment in question will see that he has to pay very dearly for his bargain.
    Life annuities are not now granted by many life assurance companies, as they have not been usually found to be profitable, owing to the fact of the annuitants exceeding the expectation of life according to the tables, due possibly to the benefit of selection by the purchaser of the annuity against the company. Instances are known in which speculators have selected healthy lives of advanced age belonging to families remarkable for longevity, on which large amounts of annuities have been purchased from the Government to the manifest detriment of the public purse, and possibly the same influence may have been at work in the case of assurance companies, which, moreover, cannot attempt to compete with the Government, whose rates are computed entirely without view to profit, and with the object only of converting permanent annuities-namely, those derivable from the public funds - into terminable annuities depending upon life, and so to some small extent diminishing the National Debt of the country. Attempts have been made by the Government to check this system of speculation by declining to grant any annuity on the life of a nominee above the age of sixty-five, unless the nominee shall have bon fide beneficial interest in such annuity.
    Government annuities for amounts not exceeding 50 may be advantageously purchased through the Post-office Savings Banks, and life assurances for sums of not less than 20 or more than 100 may be effected through the same medium. (See British Postal Guide.)
    The effect of this benefit of selection against the company has been that the grant of life annuities by joint-stock companies has proved for the most part a losing financial speculation, and has accordingly been, in a very great measure, confined to a class of companies in need of ready money to carry on and extend their more legitimate business, which the sums paid for the purchase of these annuities very satisfactorily supply. That there is this anxiety to add to their resources is apparent from the fact that the rates quoted for annuities by some of these companies are not only temptingly high, but are in excess of those offered by the Government, and for the reason just given it is highly improbable that any trading company can fairly compete with the Government in the sale of life annuities.
    The principal object of all life assurance being for the purpose of a family provision, it becomes important that as soon as a policy is effected, the proper legal steps should be taken to secure the proceeds to the widow of the assured. or to trustees for the benefit of the children, or otherwise, according to the circumstances of the case.
    A policy of assurance may either be bequeathed by [-200-] will, which in that case, if not already made, should at once be executed- and a marriage, it should be observed, renders a new will necessary, a fact often lost sight of - or the policy can be assigned to trustees, to be received by them and applied for the benefit of the widow and children according to the wishes and intentions of the assured. The advantage of this course over the other is that a duly executed legal settlement by a person in perfectly solvent circumstances would be good against creditors in case of bankruptcy.
    The great importance of having wills and marriage settlements, and indeed all documents of a like nature, drawn out in a strictly legal manner, makes it our duty to counsel our readers-bearing in mind the old adage, that "he that is his own lawyer, has a fool for his client" - to apply to a respectable solicitor in all matters of this kind, and to act entirely under his advice. A few pounds expended in securing good legal advice may save much expense, anxiety, and even litigation at a future period. (See article on the law of will-making at page 90 of the HOUSEHOLD GUIDE.)
    Policies of assurance can be mortgaged, like other property, for securing temporary advances of money, or can be made the subject of absolute sale; in both cases by proper legal deeds. In case of any such dealing with policies, it is necessary for the protection of the interests of the parties concerned, that due notice in writing should be given to the office of the charge affecting the security. Upon a claim arising under a life policy, it is usual to require evidence of age to be furnished, if not previously admitted on the policy, which it is now very usual to do when that document is issued; also a certificate of burial, or the registrar's certificate of death. Upon receipt of these documents at the office, the claim is allowed, and is payable generally three months thereafter. In the meantime, the title to the policy has to be established.
    The claim may be made under probate of will, or letters of administration, if the assured die intestate, or by mortgage deed, or by deed of absolute assignment, one or other of which documents has to be left at the office for inspection, and if found satisfactory, a form of receipt, to be endorsed on the policy, is furnished ready for execution by the holder thereof, on the day the claim becomes payable.
    Having now done our best to explain some of the more prominent features of life assurance, it only remains for us to add a few words of earnest recommendation to our readers not to delay taking advantage of the benefits which are offered by the many highly respectable and prosperous companies of the day, to all persons in possession of incomes ceasing with their lives. We must repeat that there is no other possible method by which those so circumstanced - and such form the great bulk of the population of this country - can make a similar provision for those who are dear to them, and who, in the course of nature, they may pre-decease. Although it is very true that we act, many of us, as if we really did believe that "all men think all men mortal but themselves," we must in our hearts know that the day of reckoning must come for us all. The first annual premium once paid, remember, the sum assured is secured at death, whenever that event may happen.
    The earlier our assurance and testamentary arrangements are made, the better for those we leave behind us - and we die no sooner for duly settling our affairs-the premium increasing so much with the age, to say nothing of the fact that the health of the strongest may fail, and the advantages of life assurance are reserved, for the most part, for the healthy, or, at all events, for those who are not seriously out of health.
    It is often objected by those who wish to find excuses for deferring what is so obviously an undoubted high moral duty, that they can do better by investing their savings in a bank, friendly society, or building club. Undoubtedly, all provident investments of this class are highly commendable and advantageous in their way, but they do not, cannot, compare with the system we have been advocating, which provides a constantly increasing sum, payable on the death of a strong man, if he be struck down by disease or accident at any moment.
    We greatly doubt if any better investment can be made, even if the life assured survive to extreme old age, for he obtains his compensation in the operation of the bonus system, by which large sums are certain to be allotted to a policy in any first-class office, and no individual can so well invest from year to year the small amounts which are paid as premiums of assurance, at a high rate of compound interest, as life assurance companies are enabled to do for them. Besides, in all ordinary investment the temptation is constantly likely to arise to defer setting the money aside for some reason or other, which may appear a good one at the time, owing to the pressure of some temporary pecuniary difficulty or otherwise, while the payment of a life assurance premium is about the last thing a man is likely to defer, knowing that if he does so he relinquishes all benefit from his policy, and he knows that the anticipated provision for his family is gone for ever, and the whole of his payments - except the comparatively small proportion thereof that he may receive back as the surrender value of his policy - are altogether sacrificed. He will accordingly make the greatest effort to keep up his payments, and the feeling of satisfaction in having made due provision for his widow and orphans will sustain him in what may be often a severe effort of self-denial, arid will be a constant source of gratification to a man who feels - and who should not? - that it is no less his moral duty to provide for those of his own house after his death than during his life.
    It may, perhaps, hardly be considered part of our work to criticise the existing machinery of any assurance offices, that being a matter rather for the offices themselves than for the public outside. Still, when an office becomes embarrassed, people very naturally call in question arrangements, the advisability of which, if the office had remained in a satisfactory state, would never have been disputed. It is too often found on examination that the working expenses are enormously high, and that a large proportion of the expense is owing to the practice of maintaining agents at high salaries in different parts of the country, and giving them a large percentage on any business they may bring in. It would be well if assurance offices, instead of inducing people to seek for information from am interested agent, would publish, as clearly as possible, through the various channels of communication with the public, such information as may enable the ordinary reader, with the aid of such remarks as we have made upon this subject, to form some reliable judgment for himself on their stability. That they should be able to do this for themselves is, of course, most important, and the more intelligible and straightforward the accounts given by assurance offices of their position and method of working, either in their own circulars or in their advertisements in the widely circulated newspapers and magazines, the more ready will intending assurers be to have recourse to this method of acquainting themselves with the representations made. Considering the important benefit of life assurance to the public at large, it is most desirable that the clearest possible understanding should exist upon the subject.
    It will be observed that in the papers which we have now brought to a conclusion we have only dealt with life assurance. Insurance against fire and other risks can be provided for in a similar manner, and on similar principles; and we trust no argument will be needed to impress the advisability of making such provision on the readers of the HOUSEHOLD GUIDE.

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