Forces and Encourages Thrift

Forces and Encourages Thrift. Not only does life in-
surance render safe the insured's effort to accumulate a fund
through saving by hedging him against early death, or itself
furnish a profitable and safe investment, but for the great
majority of people it constitutes an excellent means of en-
couraging and even forcing thrift. There are few institutions,
if any, which have given such excellent schooling along this
line. Savings banks, of course, do their share in developing
the saving instinct among the masses and building and loan
associations have also assumed a prominent position in this
respect. But, usually, institutions of this character have the
shortcoming that they permit the depositor to withdraw all
or nearly all of the funds after giving notice of a certain num-
ber of weeks, with the result that a resolution to save over a
long period may be broken when the depositor for one reason
or another sees fit to withdraw the amount deposited.

In life insurance nearly all the types of contracts sold con-
tain a savings feature, and this is especially true of the so-
called endowment policy which, as will be explained more fully
later, promises the payment of a stipulated sum not only upon
the death of the insured during a given term of years but also
upon his survival at the end of that term. Of course, in order
to receive, say, $10,000 at the end of fifteen or twenty years the
insured is obliged to pay to the company a sufficient amount
in annual, semi-annual or quarterly premiums to enable the
company, after improving these payments at compound inter-
est, to accumulate a fund by the end of the period which will
equal the sum stipulated in the contract. Whatever the policy-
holder has accumulated to his credit cannot as a rule be
withdrawn from the company during the first two or three
years, and it is also the general practice to apply a penalty
in the form of a surrender charge in case of withdrawal dur-
ing a considerable number of years following the payment of
the third premium. Furthermore, the regular pavment of
the premium from year to year will soon be looked upon by
the insured in much the same manner as he comes to regard
interest upon a mortgage. Consequently to secure the neces-
sary funds to pay the premium his industry will be con-
siderably enhanced or his efforts to save the required premiums
out of income will be increased. In fact, it is the common
assertion of innumerable individuals who were the holders of
endowment policies that at the end of fifteen, twenty, or
twenty-five years they became the possessors of a considerable
sum of money which, under other circumstances they would
never have accumulated, or which, if they had done so, would
have been lost or dissipated. Life insurance, in other words,
tends to bring about compulsory saving, and represents the
accumulation of small sums (which in all probability would
not otherwise be accumulated) over a long period of years into
a substantial sum. In brief, life insurance generally bears
th relationship to thrift that the modern utilization of by-
products (largely wasted in former years) bears to many of
our leading manufacturing enterprises of to-day.

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