A NEW FEATURE IN LIFE INSURANCE.

Southland Times, Issue 1136, 5 April 1869, Page 3

A NEW FEATURE IN LIFE INSURANCE.

(From the ♦Times.') It isnow pretty generally known that the , surrender value of an ordinary life policy . is for years worth next to nothing, and . that even when the policy has acquired some value the surrender price is totally disproportionate to the premiums that have been paid. It is true that the gains on insurances from lapsed policies swell the profits of an office, and that on the mutual principle those lives that are enabled to hold on participate in the surplus derived from such source of revenue ; but the dread of the risk of forfeiture of the sum insured, and of the loss of the value of the policy, have hitherto proved great obstacles to the extension of life insurance, 'for if the insured at any time should fail to pay the annual premium when due, the policy would be forfeited, and any fraction which might be allowed for it would be accorded as a pure act of grace, and be uncertain in its amount. By a new system devised by Dr Farr, and adopted by an insurance company in Manchester and in London, an insurant can, at any time, after having paid his first premium even when the policy is one year old, draw out, either as a loan or as a surrender policy, rather less than one-half of the whole amount of the premiums that have been paid. As each policy has a current realisable value it becomes a security as readily negotiable as a bank-note, and can at any time be converted into cash. The only form of investment allowed by the company is Government security. Eighty per cent of the premiums is invested in the Funds, at compound interest, to provide for the policies; the remaining twenty percent being set apart for expenses. The insurance premiums being thu» {invested in the Q-overnment^unds, the risk necessarily attendant upon doubtful security is avoided. Even to persons of settled and certain means the loss of all control over their contributions, and the compulsion to go on paying the premiums punctually down to deatb, under pain of forfeiture, are objectionable, but to the million whose incomes are uncertain, and which might perish on an interruption in health, a decline in business, or the approach of old age, the system of insurance in general use presents great hardships. Another new feature connected with the British Imperial Corporation consists in the endorsement of the surrender value on the back of every policy issued, for the first and for every subsequent year it may be in force. Some of the im provements which are offered to the public by Dr Farr's new system may be shown as follows -. — A man, twenty-seven years of age, insures for £300, to be paid at his death, for which he pays £7 Is 3d per annum. Immediately £5 14s is to be invested in Government securities, and of this sum £3 is withdrawable on demand, either for temporary or permanent use, on deposit of the policy. Suppose, at the age of 37, when his policy has been ten years in existence, he is overtaken by reverses of any kind, and requires temporary assistance, he can demand the banking account invested in Government securities, amounting to £34 Is, and thus obtain the aid he requires -without prejudice to his insurance. Under these arrangements every insurer participates equally in the same solid advantages; there are no benefits given to one at the expense of the other; therefore the principle of equity has full play. Another illustration of the advantages of the new system may be shown thus : — A person accustomed to travel, aged 44 next birthday, effects a Government security life policy of £2500 on his own life. After a period of three years circumstances require him to reside abroad. The usual removal notice is forwarded, but it fails to reach the insured ; the premium is not paid, and therefore, in ordinary cases, the policy would be valueless. This can never happen under the new system. The insured dies at the end of the next seven years. His Executors, on searching among the papers of the deceased, find the policy and three receipts for premiums paid. On examination of the policy they discover that it possesses an indisputable value, and that, in accordance with the banking account endorsed upon the policy opposite to the third year, they can demand the immediate payment of £138 15s, being the value of the policy after three premiums had been paid. Under I)r Fair's system, a policy valuation table is published, by which each insurer can ascertain for himself the current realisable value of his policy for every premium paid. Under the title of " self-insurance," the new system has been advantageously combined with cases where polices are made payable, at a certain specified age, during the life of the insured ; in case of death before the age specified, the insurance being paid in full. In case of endowments on the lives of children with the Government security, nearly the whole of the premiums paid are returned in case of deaths before the age at which the endowment is made payable. Contrasting this plan of life insurance with that heretofore in operation, it will be found that insurers enjoy priviliges of a most valuable character ; and the public will do well to look into the principles of the new system now in operation, which offers perfect security and also protects their rights and interest.

b WHAT OTAG-0 THINKS OF ANNEXATION 8 (From the ' Otago Daily Times,' March 30.) A little State in the immediate neigh- > borhood of a big one ia certain to b€ • dissatisfied. Its inhabitants view with r jealousy the greater enterprise and prosperity of their neighbors, and long for annexation as a certain means oi raising themselves to the envied level. They believe that the moment a political union is accomplished, capital will ani--5 mate their fields and workshops, labor - will become cheaper and more abundant, [ and wealth will accumulate in all directions. Thus among the people of . Tasmania has for some time past been ; heard a cry for annexation to Victoria ; , and thus among the people of Southland we now hear a cry for annexation to Ofcago. In each of these cases, the , smaller State is discontented with its comparative insignificance. The blessing of political independence is scoffed at by some as a poor compensation for commercial depression ; and the argument suggested is that by cancelling the political independence, the commercial depression will be removed. It is a curious circum* stance that the advocates of annexation advance precisely similar arguments in both the cases referred to. What has been said over and over again in Tasmania, has lately — mutatis mutandis — been said in the neighboring Province of Southland. The leading argument for annexation, is the unnecessary expenditure involved in the maintenance of separate Governments. The Ta&manians say that there is no need to maintain a Governor and a Parliament for their colony, inasmuch as the Governor and Parliament of Victoria might legislate for them without any additional expense. The large sums that might be annually saved in this manner would then be devoted to public works ; the result of which would be seen in a greater demand for labor and greater general prosperity. So the mover of the resolution in the Southland Council that ' annexation to Otago is desirable,' pointed ' out that ' the large sums paid away at present as departmental expenditure might be all saved,' and that if they were saved, ' they could be expended on the construction of roads and other public works, by which the working population would receire a direct benefit.' A supporter of this resolution urged that one 1 result of annexation would be • the introduction of capitalists from Otago, who I would materially aid in developing our resources.' So the Tasmanian annexationists predict that Victorian capital and enterprise would make their appearance in Tasmania immediately after the establishment of their policy. It is not easy to see, in either of these cases, how the mere act of annexation can lead to a rush of capitalists from one colony or province to another. Capital is not much influenced in its movements by political circumstances. The natural resources of a country, so far at least as British colonies are concerned, are the sole magnet that can attract capital to it. More or less liberality in the matter of the Land Laws will of course affect the progress of settlement ; but in the case before us, it is not pretended that Otago posesses any greater attraction in that respect than Southland. ' The Land Laws of Otago,' said one member of the Council during this debate, ' are bad for all classes. They afforded no security for the squatters, who were in various ways threatened with extinction. The small settlers were deceived, and the Hundreds sold. He had the opinion of a highly respectable settler on the Molyneux, that under the system now in operation, the Hundreds must be ruined. How the capitalists of Otago, if they are so minded, are prevented from developing the resources of Southland under the present system of government, was not explained by any of the annexationists. We are not aware of any obstacles in their way. If Southland is in want of capital, it has only to point out the requisite natural resources in order to obtain it. Let it point to undeveloped mines of coal and gold, and capital will seek them out without any assistance from the law. The Southland annexationists have certainly much less ground to stand upon than the annexationists of Tasmania. The commercial progress of Southland is not obstructed by a hostile tariff on the part of Otago. Its exports are not loaded with oppressive duties at our ports. The Tasmanians have a reasonable complaint to urge in this respect ; for there can be no doubt that if the Victorian ports "were thrown open to their jams and. timber, the producers of those articles would greatly benefit by the change. Eecollecting the recent demonstration at Westport in favor of independent Government, the motion for annexation in the Southland Council is a curious counterblast of public opinion. But the motion does not- seem to have met with much support, as it was withdrawn after a short discussion. A majority of the Council are strongly in favor of local self-government. One member felt so warmly on this subject as to declare that annexation would be the utter ruin of Southland ; while another asserted that annexation would place the Province at the mercy of Otago, and the necks of the people under the foot of a corrupt Executive. Others again concurred in thinking that Provincialism would be endangered by such a procedure, although the mover of the resolution professed himself a Provincialist, and dwelt upon the progress of Otago under the Provincial system as a conclusive argument in its favor. The fear of the General Government did not weigh heavily on the spirits of the Council. The annexation scheme indeed was supported in one instance on the ground thatitwas the only alternative before them, if the Province wished to avoid falling into the hands of the General Government. If that were the caße, the motion would have been much more warmly snpported than it appears to have been ; for there is evidently no love of centralisation in the Council of Southland.