Chapter XIX - Life Insurance Page 02
MUTUAL INSURANCE SOCIETIES
Seeing the vast sums accumulated by what are known as "the old line companies," despite their high salaries and great expenses, working men throughout the world, but more particularly in the United States, have banded together and formed mutual insurance companies.
These companies, there are many of them, are known as societies, and their local branches are called "lodges," "councils" or a similar name.
Properly conducted, these mutual societies should be able to furnish insurance at about actual cost, for the expenses of management and collections are small.
It can be said that some of them have been and are being well managed, but others, like their predecessors, the old line companies, have unfortunately been conducted for the enrichment of their promoters.
The mutual insurance companies, like their more pretentious prototypes, are now placed under the supervision of inspectors in nearly all the states.
AMOUNTS OF POLICIES
In the society companies, there is a limit to the amount, usually $3,000, for which one can be insured, but the regular companies have no such limitation.
In the mutual insurance companies, the insured cannot leave his insurance to his creditors, or to any one not within a certain degree of kinship.
In the regular companies a man may insure for any amount he thinks he can carry, and he can insure in the same way in any number of companies, and he can leave the money to any one he may select, or for any purpose he may choose.
Sometimes the policy is made payable to unnamed executors. These may be named in a will made after he has taken out his policy.
POLICIES AS SECURITY
Sometimes a man, without real estate or other personal assets, desires to raise a loan on his life insurance, which, it should be said, is a form of personal property. In this case he may assign his life policy, or his endowment policy, as security for the loan.
Again, if he is not insured and has no shadow of an asset, he may have his life insured for the benefit of another, in consideration for a loan.
LAPSES
When there is a failure to meet premiums, the policy is said to "lapse" or default.
Even in this case the insured has an equity.
Every policy, depending on the amount paid, has what is known as a "surrender value," and by proper process this may be collected from the company.
In some states, if the insured fails to meet his premiums, the company is compelled to pay on the policy at his death a sum equivalent to that which he paid before default.
Some insurance policies have a clause stating that the contract will be void in the event of the suicide of the holder. The highest courts have set this clause aside. The ruling is that a suicide is an insane man, and that his heirs should not be made to suffer for his misfortune.
PROPRIETARY AND MUTUAL COMPANIES
The larger insurance companies may be either proprietary or mutual, some are a combination of both.
The proprietary companies are corporations organized by a number of men to conduct life insurance as a business enterprise.
Such a company must be regularly chartered, and is under the supervision of the state department of insurance.
Mutual companies, as the name implies, are organized and are meant to be managed for the benefit of the policy holders, who are also regarded as stock holders, with the right to vote in the election of officers and other company affairs.
Aiming to create a strong reserve fund to secure the policy holders, the mutual life insurance companies usually charge a little more in the way of premiums.
Many rich men have their lives insured for great amounts. This is done that their heirs may not be forced to break up the estate, at death, in order to settle the ordinary liabilities.
If it can be afforded, it is always well to carry some life insurance.