BUILDING SOCIETIES AND LIFE ASSURANCE.

Dunstan Times, Issue 560, 10 January 1873, Page 3

BUILDING SOCIETIES AND LIFE ASSURANCE.

Dunedin, December 11, 1872. 'Hie Honourable William Gisborne, Esq.. Commissioner of "annuities, Ac., Ac., Ac. Sip.—J have the honor to submit for your consideration a suggestion which, I believe, if adopted, would increase the usefulness of Building -Societies, extend the operation of at least one description of Life Assurance, and prove advantageous to a class of people who, generally of provident habits and striving independence, deserve encouragement at the bands of a Government having under its control an institution of so beneficent a character as Life Assurance and Annuities. In mv experience of the management of Building Societies, many cases have occurred of mortgagors dying during the currency of their mortgages ; thereby frequently causing grea' inconve "ience and distress to tbe survivors in consequence of tbeir inability to continue tb o payment secured by the mortgage after the decease of the head of the family. Of course I am aware that the Building .Sooielies Acts give no power to such Societies to onterinto life assurance schemes; hut I submit that there is no reason why such societies should not accept life assurance policies as part security for the repayment of moneys advanced to their members. The operations of Permanent Building Societies especially afford a suitable means for extending tbe use of short”time policies. If the Government should consider my proposition of practical value, it would be requisite to prepare tables for short time policies from one to twelve years, for monthly, quarterly, half-yearly, and yearly premiums, for the especial use of Building Societies. The following will illustrate my suggestion : The Union Permanent Building Society advances 100/. on security of freehold or leasehold property, repayable in five years by monthly instalments of 21, 4s. Say the mortgagor is aged forty next birthday ; then, for the increased payment of 21. 7s, per month being seemed ou the property, the Society would covenant to reconvey the mortgage to the heirs, Ac,, of the ■mortgagor, freed from all future repayments in case he should die during the currency of the mortgage ; and to pay to legal representatives the excess, if any, of the insur- • mice money over tne then present value, according to the redemption tables of the Society, of sueE future'repayments At the time of applying for the advance. ! the borrower would be required to make a j proposal foi the insurance in favor of the Trustees of the Society' ; and on its acceptance, the Society should see'to the payment of the premiums. ■ The following will represent the opora- ■ turn :- -Mortgage tor 100/., repayable by <lO monthly instalments, to cease in ease mortgagor ■ shall not so long live. Mortgage? aged 40 next birthday, dies after ■ mailing 24th payment. Society would re- . eeive the policy' money, 100/. and after deducting the redemption value of 30 repayments, 77/. 10s., .would pay' to the heirs, Ac., of mortgagor, 221. 10s., and grant to then a reconveyance of property mortgaged. It wilihe obvious that the operation, l while advantageous to the borrower, would I in case of death bo profitable to the Society; but not. more so than is fair and reasonable for the trouble and responsibility' of attending to the payments, and for remunerating it for the loss of interest between the death of the mortgagor and payment of the insurance money. The redemption money of such mortgage, without insurance, would ho 72/. 12s. The office asset would be CS/. ■3s. If tbe suggestion 1 have the hongjHfc’o submit should meet with your favourable consideration, I shall prepare tables for the use tf my Society, and take steps to have the matter brought before mv members with the view to enacting rules suitable for the purpose. The Society which f represent, however, is a small one, but Building Societies in the Uohmy represent an interest of great aggregate value, and T feel confident that the proposition would find favour among a large number of their borrowers.. I have another suggestion in connection with the subject of Life Assurance and the Immigration and Public Works Act, which I shall take an early opportunity of submitting to y*ou. if [ shall not be deemed intrusive for so doing.—l have, Ac., M. W. Hawkins. Government Annuities Office, Wellington, 16th December, 1872. Sir—l have the honour to acknowledge the receipt of your letter of the 11th in-Bta-t, and to thank yon for the valuable suggestions contained therein, that further facilities should be given for enabling Life Assurance policies, foi limited terms, to be taken by Building Societies as part security for the repayment of moneys advanced to their members. I quite concur in the desirability- of the nhject in view, and shall be prepared on my part to do what I can to facilitate its attainment. At present, in Table I of Government' Life Assurance, "as you will perceive in the enclosed pamphlet, there are two columns for term policies,' calculated for one year and for seven years respectively. I will at once direct the preparation of tables for term policies from ono ( 0 twelve years, for quarterly, half yearly, and yearly premimns. If Building Societies desire monthly payments, they can easily . make the necessary arrangements with thoir members for that purpose. 1 shall ho glad if you will make tho course winch I propose to take known to the Society which you rep ref cot, and to

hers, ns opportunity may offer, interested therein. • Assuring you of my earnest desire to utilise ins lunch us possible the Government Insurance Department in tho encouragement of provident habits, and to give effect to practical suggestions in that direction. —I have, Ac., W, Gisborne, Commissioner. M. W. Hawkins, Esq. Secretary -and Actuary. Union Permanent Building Society, Dunedin.