THE LIFE ASSURANCE CAMPANIES BILL.

Otago Daily Times, Issue 3282, 13 August 1872, Page 3

THE LIFE ASSURANCE CAMPANIES BILL.

TO THE EDITOR. Srn—Tn a previous letter I called attention to certain provisions of this Bill, intended to afford additional security to insurers. I now wish to notice brioHy the proposed changes in | the law affecting policies in the event of execn--1 tion upon the property of the insurer, or of j his becoming bankrupt. I have not yet had | an opportunity of inspecting the draft Bill; but from Mr Vogcl's npeech on the second reading I gather that its provisions are to be similar to those of the Government Insurance and Annuities Act, 1870. The scheme of that Act is as follows :—Policies of assurance made houdjnle upon a man's o\yn life, or for a future endowment for his wife or children, are to be made exempt from the operation of thja bankruptcy laws, and from execution, provided the policy has endured for two years. After the lapse.of this lime it is to be protected to the extent of £200, after an endurance of five 3'tars to the ex. tent of £500, after an endurance «f seven years to the extent of £1000, and after an. endurance of ten \ears to the extent of £2000. Against the proposed change will be urg<d the inexorable rule that the whole of a man|s property must be held miswerabl for his debts. To this it may be replied that in tho majority of cases little or ho injustice -would, be done the creditor ; funds upon which the debtor'had been tiading, and upon which he had gained credit, would not thereby be withdrawn from the estate, and cases would be rare indeed in which the payment of the

annual premium would have any, except the most infinitesimal, effect in deranging the affairs of, the debtor^ Again, which is the greater evil, to reduce a widow and children to penory —wresting from them that on which all their br-pes had been rested, or'to deprive creditors, who had nfcver dreamt of finch a fund, of the paltry dividend which its realisation would probably afford to them.

The whole weight of this argument rests upon the assumed fact tbui the policy was not employed by the insurer to raiae his credit. The protection ought only to be afforded to those policies which are inalienably set aside for the l>enef)t of the wife and children; to whatever exteut the.creditor retains a marketable interest in the policy, to the same degree it ought to be subject to the claims of his creditors. It may he uaid that the example put is an exceptional one. and that the justice of the case frequently lien the other way ; the universality of the practice of life iiuturance ami the great security of which this practice ib the outcome, prove the contrary. The only faults I am iuclined to find with Mr Vogel's measure are—first, that it is too artificial; and secondly, 1 hat it hardly goes far enough. It i« evidently based npon the principle that, the longer a policy has been ni force, the lews likely it is to be fraudulent. The principle is, I think, a sound one, nnd I am inc'ined to prefer Mr Vogel'u plan of having fixed rules by which the policy must stand or fall, to merely protecting the policy if not fraudulent; but leaving the question of fraud open to dfccttnston in each individual instance.

Instead of the'finely graduated system above mentioned, I would suggest that nil [K'lkieH after they had been kept up for five y«irß, should i.c protected ; thin period would; affrrd a fair averajre test of the hnnAfdPchAra':t<;r of the policy. As to policies that have existed for ahorfw perio*l«, I think the h'n*t provirlon of Mr Vogel's ])lan might be adopted by affording them immunity to the extent of'£2oo after an endurance of two years. Of course the limit is arbitrary ; lint, m T Imve already suggested, fixed rules of this kind are calculated to be of greater practical usefulness than attempts to sqnare the law with the ever-varying .contingencies of human life. I think Mr Vogel is to be congratulated upon the introduction of so beneficent a meamum; ; by the jmblic I am imro that it will be accepted as a boon.—l am, &c. . . • ' • •• , - ; A. Z.