LIFE ASSURANCES POLICIES BILL.

Globe, Volume XXIV, Issue 2559, 21 June 1882, Page 4

LIFE ASSURANCES POLICIES BILL.

1 FEOM TUB “ PBES3.”I WELLINGTON, June 20. Tho following is the official nummary of the Lite Assurances Policies Bill, introduced by Major Atkinson. This Bill repeals those portions of the Life Assurance Companies Act of 1873 and of the Government Inauranoe Act Annuities Act of 1874, specified in tho 46th section. Its provisions are applicable to policies issued by the Government Insurance Department or by private companies. Tho Government Insurance and Annuities Act of 1874 provides that policies issued under that Act should only be transferable by a short form endorsed on the policy. It did not, however, make any distinction between an absolute resignment and a conditional one, such as a mortgage. In practice tho want of this distinction has been found inconvenient. A mortgagee always required tho policy to bo absolutely asiignod to him, and in the event of an unscrupulous mortgagee taking advantage or this, to insist upon retoining the title to the policy, even after his claims as mortgagee had been satisfied, a mortgagor could only have established his right to a re-assignment at tho cost of a lawsuit. The leading private companies, as well as the Government department, desire to have simple statutory form* provided for dealing with policies so as to obviate the necessity of lengthy documents, which can only be prepared at considerable expense. These are the reasons which have led to the preparation of the first portion of this Bill. It is framed on tho principles of tho Land Transfer Act. The registration of any dealing with a policy is made essential to the validity of such dealing, and if this part of the Bill becomes law, a poljoy will at all times disclose on the face of it the name of the person in whom it is legally vested, and to what claims, if any, it is subject. Simpie forms of absolute transfer are provided, which will bo useful for either transfer to purchasers, for surrenders to the company, or for transfers to trustees, who will, as under the Land Transfer Act, have to execute a separate declaration of trust, which will not be registered with tho company. A form of mortgage is also provided suitable either for mortgages to the company or to outsiders, which can be adapted either to ordinary loans of money or to mortgages to secure the performance of contracts, &3. The Bill declares that certain covenants and power* which are similar to those generally inserted in mortgages shall hereinafter be implied in mortgages of policies, though the parties to any mortgage may vary or add to them in any way necessary to suit the circumstances of the particular transaction, The 6;h schedule relates to mortgages to the company issuing the policy, and the sth schedule to all other mortgages. A registration is effected by a memorandum on the policy signed by the secretary of the company, which is made conclusive as to the effect of the dealing as far as regards the company or any recent purchaser for value. An important part of the Bill is that headed “protection of policies” (sections 32 and 33). The protection of policies from liability for debts given by the present law is specified in tho 14th section of the Government Insurance Aot of 1874 as to Government policies, which is almost the same as the 46th section of the Life Assurance Company’s Act of 1873. A* regards tho policies of private companies, one alteration made by this Bill is that the policies which could bo protected in bankruptcies are not allowed to pass to the trustee under a deed of assignment by a general assignment of a debtor’s property,or to become liable for debts after the insured’s death by a general direction in a will to pay the testator’s debts. At the present the debtors or their families sometimes lose their policies by not being aware that under a general assignment of their property or a general direction in their will, their policies become liable for their debts, thus losing through the mere ignorance of a technical distinction. Another change is that the present sliding scale of protection is abandoned, and a policy coming within the conditions presently to be stated is absolutely protected at once, and for any amount up to £2009, unless as set forth in the 6th subsection of section 33, it be madeolear to the satisfaction of a judge that the policy was taken out with intent to defraud the insured’s creditors. The conditions are these :—l. As the main object of giving protection is to allow of a safe provision being made for a man’s family in the case of his own death, a policy to be protected must bo a policy on his own life, that is to say, if a debtor has purchased or effected an insurance on another man’s life, then tho value of suofa insurance is not protected from the debtor’s creditors. 2. The policy must either have been seven years in force or it must be a policy the payment of the premiums for which srespreal over the life time of tho assured, or by the terms of the contract for a period at least ten years. Though these conditions are liberal enough to enable a debtor in ordinary cases to preserve his policy for the benefit of his family, yet it is believed that they will hardly operate to any appreciable extent to the detriment of his creditors. A person who is getting into financial difficulties, if he has a policy of any great value, has generally so mortgaged or pledged it before bankruptcy that its value at the time of bankruptcy is but small, and in cases whore tho policy has been taken out shortly before bankruptcy, the creditors cannot thereby have been deprived of much of the debtor’s estate, inasmuch as the policy will prootically have no value. As it is under the present Acts, if a person wishes to make a provision by life assurance for his family, he can up to £2OOO make it absolutely safe from his creditors at once, by taking out what is called a settlement policy, and as for reasons about to be stated it is intended to do away with those policies, it will be only fair to provide the same protection from debts in another form. The clause in the repealed Acts, which exempted surrender values from protection if the policy be surrendered, is not inserted in this Bill, but in lieu thereof the 6lh and 7th subsections of section 33 prevent a bankrupt for three years after his bankruptcy from selling his policy at all, or from surrendering it exoept for a paid up policy for the amount of the surrender value, or from mortgaging it except for the purpose of paying tho premiums on it. This plan will more completely effect tho object for which protection is given, viz,, the keeping in force a contract which will after a man’s death make a provision for his family and prevent their becoming a burden on the State. Section 34 gives to married women all such powers of effecting insurances and dealing with policies, as unmarried women possess, with a proviso making it clear that their right to insure their husbands’ lives without having any peouniary interest therein is not infringed. Section 35 enables small insurances on the lives of children under years of age to be effected by their parents. They are limited to amounts which do little more than pay the expenses of burial, and this section is the same as the 29th section of tho Friendly Societies Aot, 1877, which is supposed to extend to ordinary Life Assurance Companies, though it was thought better to re-enact it here in order to remove all doubt as to its applicability. Section 38 legalizes the taking out of policies by children over ton years of age, and gives to them full power of dealing with policies as if they were already of age, but to prevent young children being induced to insure their lives for undue amounts, the sum for which children over ten and under fifteen can insure their lives is limited to £2O, and the protective provisions as to insurances of the lives of children under ten are made applicable to those of children under fifteen. As before mentioned, tho Bill does not renew the provision of the former Acts as to settlement policies. The private companies doing business in New Zealand have not, there is reason to believe, issued any policies under these Acts. The Government department have issued a considerable number, but these have proved a frequent source of annoyance and misunderstanding to policy holders. Persons when proposing for such a jpolioy do not always fully understand the effect of the settlement under it, and when afterwards they wish to deal with it, and find themselves sometimes, to the detriment of the family for whose benefit tho policy is intended, hampered by statutory trusts, there is much dis-

satisfaction, which has frequently led to the policy being allowed to lapse. It will, therefore he much more satis factory to the department and the public to leave all settlement of policies to be effected pri ratoly by the policy holder himself, according in all respect* to his own wishes and circumstances. This can readily he effected under the Bill by assigning the policy m the statutory form to a trustee or trustees, svho will then execute a declaration of trust ombjdying'tho terms of the settlement, which, like a settlement under the land transfer system, though not binding on the company, will be enforcible like other trusts in the Courts. Existing vested right* under the former Acts are respected by this Bill, but to remove some of the chief troubles connected with settlement policies under the former Acts a number of provisions regarding them are inserted in section 45 of the_ Bill, the most important of which is that if the insured is unable to pay further premium he may mortgage for the necessary amount to pay premium, stringent provision being made for insuring that the mortgage monies are so applied. Section 44 contains provisions such as were in the Government L’fe Insurance Act of 1874, enabling claim* under £2OO to be paid to near relations for distribution among the persons entitled without patting the claimant to the expense of probate or letter* of administration*. Sections 37 to 43 contain a number of provisions as to insurance monies payable to or for minors, &o. To save the expense of obtaining the appointment of a trustee, monies payable to minors and other persons legally incapable of giving a discharge, may be paid to the Public Trustee without any appointment, and he has full powers of applying such monies for the benefit of the minor or other person. This, of course, does not prevent the appointment of private inuividuals as trustees, if so desired.