The Pamphlet Collection of Sir Robert Stout: Volume 54
Conditions of Assurance
Conditions of Assurance.
In the long run, I believe that the conditions of assurance will have a material effect in determining the success of an office, but the operation of this will be gradual and slow. When a man proposes to insure his life, it is, I believe, rare for him to scrutinize page 16 carefully the conditions of assurance. For example, he would very rarely think of asking, "What surrender value will you return to me if I wish to withdraw after a certain number of years?" or, "How will you deal with me if I wish to go abroad, or if I omit to pay my premium within the stipulated time?" But when one of these cases has happened, he will form a favourable opinion (or the contrary) of his company, according as he believes himself to have been fairly or harshly treated. Again, if a man whose life has been insured for thirty years commits suicide under the pressure of money or other troubles, the public sentiment will approve of the payment of the policy money to his innocent family; and if the company declares the policy void, the opinion will be held that, although they may have been within their legal rights, they have acted very harshly, and in this way a favourable or unfavourable opinion, as the case may be, will get abroad about the company, which cannot fail to have some influence upon its prosperity. It seems to me the object of the manager should be to ascertain what conditions public sentiment will generally approve as just and fair, and I believe that foremost among these may be placed the non-forfeiture regulations which are now being adopted by so many offices. The public will rightly hold that it is very harsh and inequitable that a policy which has been in force for many years, and has acquired a large surrender value, should be altogether forfeited by failure to pay the stipulated premium within the days of grace; and the managers of offices, therefore, in my opinion, act wisely in devising methods that will, to a greater or less extent, remove this hardship. Some of our friends are, perhaps, going too far, as when they virtually give a full year's insurance for a quarter of a year's premium, or when they charge no fine on the revival of a policy, so that the office gets no equivalent for the additional correspondence and trouble that is occasioned by the default of the assured; but the general move in the direction of liberalising the conditions of insurance is one upon which, I think, both the offices and the public are to be congratulated, and I do not doubt that it will have the effect of rendering, life insurance more popular, and increasing the business of the offices. As an instance of the manner in which the conditions of assurance have an effect on the business of an office, I may mention the early payment of claims. When a young man comes to receive the sum payable under his father's policy, this should be a very suitable opportunity for endeavouring to obtain an insurance proposal from him. If, however, the son finds that his father had policies in several offices, that one pays immediately after the claim certificates have been sent in, that another delays for three months, while a third, perhaps, does not pay until six months after the death has occurred, he is very unlikely, if he effects an insurance on his own life, to give it to the office which delays the payment so long.