The Pamphlet Collection of Sir Robert Stout: Volume 37
The Benefits and Principles of Life Assurance being now widely known and appreciated, the design of this Prospectus is chiefly to point out the special advantages offered by the Mutual System in general, and by this Office in particular.
Proprietary Companies are established by Shareholders under whose direction their business is carried on, and for whose benefit a considerable portion of the Profits is reserved.
Mutual Societies have no Shareholders; each and every Member has a voice in the management, shares in the whole of the profits, and yet incurs no personal liability whatever. It needs no argument to prove the superiority of this system, and it is a fact that very few Proprietary Life Companies have been started of late years, while offices purely Mutual are almost daily springing up all over the world.
So much being said for the system, the following are the chief points with regard to the Mutual Life Association of Australasia upon which intending members are likely to seek information.
Establishment dates from the 1st July, 1869, and special care was taken by the founders (all members, and many page 4 of them still Directors of the Association), to profit by the previous experience of Life Companies in these Colonies, and to adopt the best features of the leading British Offices.
Incorporation. The progress of the Association soon became such as to require a special Act of Incorporation, which was granted by the Parliament of New South Wales, and became law in January, 1873. It secures to all members the fullest possible participation in the benefits of the Mutual system, and at the same time protects them from any personal liability. The whole of the Profits belong to the members, and will be allotted at Quinquennial Intervals to each according to his or her interest in the Association.
Indefeasible Assurance was the chief object for which the Association was established. Previously the Assured in other Companies were harassed by conditions more or less stringent as to Habits of Life, Residence, Travelling, Change of Occupation, Cause of Death, &c., as a breach of any of the rules on these points would invalidate the Policies. It is especially important in these Colonies, where residence and occupation are so frequently changed, that a Policy-holder should not at every step have to consult the Directors of his Company. All these hampering restrictions were swept away by the founders of this Office declaring the Policies "Indefeasible, except on the ground of wilful misstatements in the original documents." That this was a wise step is proved by the fact that the old conditions of Assurance are now almost obsolete, having been abolished partly by some and wholly by other Societies. But it is to be specially noted that the Mutual Life Association of Australasia was the first office in the Australian Colonies to adopt the liberal principles by which the assuring public are now profiting. This alone gives it a good claim to support.
Rates of Premium. The low scale on which these are calculated is another leading advantage of this Association. The Tables, quoted and explained hereinafter, speak for themselves, and bear favorable comparison with those of other Offices.page 5
Payment of Premiums. An important modification of the usual practice was introduced early in the history of this Office, and has proved itself most suitable to the convenience of the members. All Instalments fall due on the First day of January, April, July, and (or) October. Premiums are due Annually in advance, but are made payable half-yearly or quarterly, as the Assured may prefer, as per Examples quoted in the Tables of Rates.
Thirty Days Grace are allowed after above dates for payment of premiums, and should death occur within that time the claim would be paid. After the thirty days the Policy will not during the life of the Assured become absolutely void for one year, but may be reinstated, if the Directors approve, upon compliance with usual conditions.
The property and interest of every member or of his personal representatives in any policy or contract made or entered into bona fide for the benefit of such number or his personal representatives or in the moneys payable under or in respect of such policy or contract (including every sum payable by way of bonus or profit) shall be exempt from liability to any law now or hereafter in force relating to Bankruptcy or Insolvency or to be seized or levied upon by the process of any Court whatever. Provided that no policy or contract for a life assurance or endowment shall be so protected nor any contributions made towards the same until it shall have endured for at least two years but that after an endurance of two years such protection shall be afforded to the extent of £200 of assurance or endowment and to the contributions made towards the same and after an endurance of five years to the extent of £500 and after an endurance of seven years to the extent of £1000 and after an endurance of ten years to the extent of £2000.
Minors, (with the consent of their parents, masters, or guardians) and married women are by this Act permitted to become members of the Association, and their Policies also are protected as above. Somewhat similar protection is afforded by the laws of most of the other Colonies.
Assignment of Policies. The Association supplies forms for giving Notice of Assignments, whether conditional or absolute, but for the protection of all concerned, the Deed of Assignment should, as a rule, be prepared by a Solicitor.page 6
Claims under Policies are, as already stated, payable no matter where or from what cause death may happen. The amount already paid will be found quoted on another page of this book, and it is a curious fact that a very large proportion of this was handed to the widows of members who had met with death from violent causes, some of which would in many Offices have invalidated their Assurances and thereby left their families unprovided for, as in nearly all these cases the amount Assured was their only provision.
Promptitude in Settlement has always been a distinguishing characteristic of this Office. In terms of the contract, claims are payable Thirty days after proof of death, but as a rule the papers are submitted to the Directors immediately on receipt, and if in order the amount is paid at once without discount.
The Management of the Association is practically in the hands of the Members themselves, as they elect the six Directors from their own number.
They also choose two Auditors, who examine the Books, Accounts, Vouchers, and Securities at periodical intervals, and report thereon to the Board.
The Directors meet twice a week for despatch of business.
A General Meeting of the Members is held within sixty days after the 30th June in each year, when the Annual Report, Revenue Account, and Balance Sheet are submitted, and printed copies issued to every Member. It is requested that any Member not receiving these by the end of August at latest, will at once write to the local Agent or to the Principal Office.
Investment of Funds is a point upon which intending Assurers do not bestow sufficient attention. They are too often satisfied with a plausible statement of "business obtained," forgetting that this is the "Liabilities" side of the account, and if not balanced by sufficient "Assets," will prove a source of weakness rather than of strength. The aim of the page 7 Directors of the Mutual Life Association of Australasia in disposing of its funds is first Security, then A Good Rate of Interest. The last published Balance Sheet is given on another page, and it is worthy of note that no other office in these colonies shows so small an amount of "Outstanding Premiums," "Agents' Balances," and such like items not bearing interest; while it is claimed that all the Investments are, as a Life Company's always should be, "of a fairly realizable and available nature," and the rate of interest on the whole amount averaging a highly remunerative per centage.
Loans on Policies are granted to Members on favorable terms. The proportion of premiums paid which will be so lent varies of course according to age at entry, table, amount of policy, &c., but in some cases a duration of one year will be sufficient to constitute a policy an eligible security, while in most Offices no loans are granted on any Assurance less than two or three years in force.
Agencies are established at most of the principal towns in the Colonies, as per annexed list. At these, all necessary forms, and full information on any points not mentioned herein can be obtained; and as Medical Officers have been appointed at each Agency, persons wishing to assure their lives can join this Association with the least possible trouble to themselves, and without any expense whatever until first payment of premium.
Explanation of the Tables. The various forms of Assurance provided for by the published Tables are as follows:—
Table A.—Premiums to be paid during Life to secure a sum payable at death. This is the cheapest and best form for the head of a family wishing to provide for those dependent on him, and who by his death would otherwise be left without support.
Under this Table, at age 35, the cost of every hundred pounds payable at death is only about one shilling per week.page 8
Table B.—The same, but provided for by one premium, or by 3, 7, 14, or 21 payments; or by payments ceasing at 50, 55, 60, or 65 years of age.
This table is intended for persons who can afford somewhat higher premiums, with the advantage of only continuing them for a limited number of years. It compares with above as follows:—under Table A, at age 40, the Assured pays for £1000, rather more than £30 per annum during life: under B, by increasing the Premium to £45, he will cease to pay in 14 years, or by making it £56, will be relieved of all expense on reaching the age of 50.
A popular writer says—"A policy of Assurance costs little out of a good annual income, but how valuable such a policy becomes (when settled for the benefit of wife and children) at a time of wholesale losses; much more is this the case where the policy is fully paid up, having been taken out on the system of limited number of premiums. The fortune is gone, or there is little of it left, but here in the policy bought in the palmy days, protected from all claims, is the ample provision which is required for survivors, and which cannot be diverted from that use."
Table E.—Premiums to provide a sum payable to the member on attaining a certain age, or to his heirs in event of earlier death.
This form, ordinarily known as Endowment Assurance, is advantageous for young men who beginning life have none dependent on them, and desire, therefore, to lay up money for themselves.
It unites the advantages of both a Savings' Bank and Life Company, as the first payment of premium secures the sum Assured, in event of the member's death; while if he lives, it will be a provision for himself.
He can at age 23, by paying about thirteen pounds a year, be legally entitled to £500, payable to himself at 55, while in event of earlier death this would be a legacy, which he could dispose of by will as so much actual cash.
Table F is the same as Table A, but without profits, and is intended chiefly for policies taken out as collateral security.page 9
Tables G and Gr are convenient forms for securing a sum to provide for the education of children, for a daughter's marriage portion, or for capital to start a son in business.
Should death occur before the stipulated age, the whole of the premiums are under Gr returned without any deduction, but under G they are forfeited to the Association.
Say a child is a little under 2 years old, by paying about Three Guineas per annum its father can secure;£100, payable at 21, and be entitled to a refund of all premiums should the child not reach that age. If he is willing to forfeit these, in event of death, to the Association the annual payments would be reduced to £2 17s. 10d. each.
Table K is well suited for partners in business, when a sum would have to be withdrawn from the joint capital on the death of either; or it may be chosen by husband and wife to secure an amount payable to the survivor.
To assure two persons of ages 30 and 40, under Table A, would cost £5 7s. 6d. per £100, but under K £3 19s. 1d. will entitle the survivor to that amount.
The author before quoted observes with regard to "Partnership Policies" that, "As a question of cheapness it will always be found more economical to pay the life premium necessary to provide capital in the event of the moneyed partner's death, than to give a share of the profits to a new incoming partner, or to pay interest and find security for capital lent. There is not likely to be any loss by a partnership assurance, and there may be a great gain. The money is taken in comparatively small sums from the earnings of each year, and is improved at compound interest. It is only in instances of very prolonged life that the payments will exceed the receipts, and in that case the excess may be fairly said to be a very cheap consideration for the protection afforded by the assurance."
These are the most popular forms, but all other classes of Life business, including Annuities (Immediate and Deferred) are page 10 undertaken by this Office, the rates for which, and for any ages not mentioned in the Tables can be ascertained on application.
It must be remembered that the published rates are the minimum quotations for lives which are in every way first class, as regards Health, Occupation, and Family History. Where there is a flaw in any of these, but the case is not wholly ineligible, it will be accepted at such an addition as the Directors, with the advice of their Medical Officer, consider fairly meets the extra risk involved.
Co-operation of Members is a point upon the necessity for which it is impossible to lay too much stress. It is one of the chief causes of the pre-eminent success of mutual institutions. It has often been the Directors' pleasant duty to acknowledge the valuable assistance rendered by some policy holders, and they would again remind all the members that if each, year by year, induces one friend to assure in the Mutual Life Association of Australasia, success greater than ever yet recorded will speedily be attained.
J. C. Remington, Secretary. Sydney,