BUILDING SOCIETIES AND LIFE ASSURANCE.

Tuapeka Times, Volume V, Issue 260, 23 January 1873, Page 6

BUILDING SOCIETIES AND LIFE ASSURANCE.

. We have been requested to publish the'following correspondence : — Dunedin, 12fch -December, 1872. The Honorable William Giisborue, Esq., Commissioner of Annuities, &c, &c* Sir,— 1 ! 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, being generally of provident habits and striving iifde* pendence, deserve encouragement at the hands of a Government haviug under its control an institution of so beneficent a character as life assurance aud annuities. In my experience ofthe mauayemdnt of building societies, many cases have concurred of mortgagors dying during the currency of then" mortgages ; thereby frequently causing great inconvenience and distress to the survivors in consequence of their inability to continne the payment secured by the mortgage after the decease of the head of the family. Of course I am aware that the Building Societies Acts give no power to such societies to enter into life assurance schemes ; but 1 submit that there is no reason who such societies should nob 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 the 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, fur the the especial use of Building Societies. Tjie following will illustrate my suggestion :—: — The Union Permanent- Building Society advances LIOO on security or freehold or leasehold property, repayable in live years, by monthly instalments of L 2 2s. Say- the mortgagor is aged 40 next birthday ; then, for the increased payment of L 2 7s per month being secured on the property, tiie society would cove^ want to reconvey the mortgage .to the heirs, &c, of the mortgagor, freed from all future repayments in case he should die during the currency of tue mortgage ; and to pay to his legal representatives the excess, ii: any, of the insurance money over the then present value, according to the redemption tables of the (Society, of such future repayments. At the time of applying for the advance^ the borrower would be required to make a proposal for the insurance in favor of fclie trustees of the society ; and on its acceptance, the society should se9 to the payment of the premiums. The following will represent the operation : — Mortgage for LliiO, repayable by 60 monthly instalments, to cease in case the mortgagor shall not so long live. Mortgagor aged 40 next birthday. Dies after making 24th .payment. -Society would receive the policy money, Lloo> and after deducting the redemption value of 36 payments, L 77 10s., would pay to the heirs, &c, of mortgagor, L 22 10s., and grant to them a reconveyance of the property mortgaged. It will be obvious that the operation, while- advantageous to the borrower, would in case of death be 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, with insurance, would bo L 72 12s. The office asset would be L6S 3s. If the suggestion I have the honor to submit should meet with your favorableconsideration, I shall prepare tables for the use of the society, and take steps to have the matter brought before my members with the yew to enacting rules suitable for the purpose. The society which I represent, however, is a small one, but building societies in. the colony represent an interest of great" aggregate value, and I feel contidenfc that the proposition would find favour among alarje number of their borrowers". I have another suggestion in connection with the subject of life assurance and the Immigration and Public Works Act, which 1 shall take an early opportunity of submitting to you, it I shall not be deemed intrusive for so doing. — I have, &c, M. W. Hawkins.

Government Annuities Office, Wellington, 16th December, 1872. Sir, — I have the honor to acknowledge the receipt of your letter of the llthinsb., and to thank you for the valuable suggestions contained therein, that further facilities should be given for enabling Life Assurance policies, for limited terms, to be taken by Building Socities as part security for the repaymtnt of moneys advanced to their members. I quite concur in the desirability of the object in view, and shall be prepared on my part to do what I can to facilitata 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 fot one year and for seveu years respectively. 1 will at onco direct the preparation of tables for term policies from one to twelve years, for quarterly, half-yearly, and yearly premiums. If Building Societies desire monthly payments, they can easily make tha necessary arrangements with their members for that purpose. I shall be glad if you will make the course which I propose to taka known to the Society which you represent, and to"others, as opportunity may offer, interested therein-. Assuring you of lay earnest desire to utilise as much' as possible the Government -Insurance Department iv the encouragement of provident habits, aud to give effect ro practical snggesiions in that direction. — I have, &c, W.'Gisbokne, Commissioner. "31. W. Hawkins, Esq., - - Secretary add Actuary,' Union Permanent Building SocaeSy^ •Dtu&dftH -