A very large variety of special contracts,
differing materially from those already mentioned,
might be described; but special attention will be
directed to the following three main classes:
1. Return-premium policies. Such policies differ
from the usual forms of life insurance in that they promise
upon death to pay not only the face of the policy, but in addition
thereto a sum equal to all or to a portion of the premiums
paid. The premiums returned may comprise the entire
amount paid during the existence of the contract, but usually
such return is limited to the premiums paid during a limited
p'eriod, such as ten, fifteen, or twenty years. A promise of
this kind should cause no surprise since the policy merely
represents increasing life insurance under a level premium
plan. In other words, the face value of the policy increases
as the number of premium payments increases, but this increasing
amount of insurance must be paid for by an extra
charge, i.e. the premium on a policy allowing a return of all
or a portion of the premiums, is higher than the premium for
the same kind of policy when not containing a return premium
privilege. It may be added that pure-endowment contracts
sometimes provide for the return of premiums paid in
the event of death before the expiration of the pure-endowment
period.
2. Policies which involve more than one life. In
addition to the various types of continuous-installment policies,
which it will be remembered involve the lives of the insured
and one or more beneficiaries, there are three other
types of policies under this heading that deserve special mention.
One type goes under the name of " ordinary joint-life
insurance." Joint-life policies may be taken out on two or
more lives, and sometimes prove advantageous to several business
partners who may wish to utilize the same for the protection
of their partnership against the withdrawal of capital or
other financial embarrassment occasioned by the death of any
one of them. The policy promises the payment of the principal
in the event of the first death amongst the two or more
persons covered by the contract. This joint-life principle may
be applied to any of the ordinary forms of life insurance, such
as whole-life policies, limited-payment policies, term insurance,
endowment insurance, etc.
" Last-survivor " and " contingent " or " survivorship " insurance
should also be referred to briefly, although policies
of this kind are used to only a limited extent. The last-survivor
policy differs from the ordinary joint-life policy in
that the principal is payable in the event of the last death
instead of the first death. Contingent or survivorship policies,
on the other hand, "insure one life against another"
and provide for the payment of the face value in the event
of the death of a certain person, but only on the condition
that some other person designated in the policy is still alive.
In his discussion of these two forms of policies, Mr. Henry
Moir indicates their purpose in the following words :
Last-survivor policies are seldom, required, although sometimes
when two persons have an income which will be continued to
the survivor, and they desire to borrow money on
their joint interest, a policy of tbis nature may enable them
to effect their purpose on reasonable terms. . . . Contingent or
survivorship policies will be understood more readily if the
circumstances under which they are generally issued be explained.
It is common in the will of a wealthy man to provide
that tbe entire income from his property be paid to his widow,
and tbat the property be divided on her death amongst certain
heirs or legatees who may then be living. In such circumstances
it is evident that tbe share of the property would be
lost by any heir or legatee who might die during the lifetime
of the widow. The cheapest form of protecting tbis share from
absolute loss is the survivorship assurance, providing the sum
assured at bis death in event of its occurring in the lifetime
of tbe widow. Assurance companies occasionally grant loans
secured by contingent interests in estates to be divided at some
future time, called reversions, and any such loans should be
protected by a survivorship policy. 2
3. Policies containing total disability features.
Since a separate chapter is devoted to a discussion of total
disability benefits 3 in life insurance, it will suffice to indicate
here merely the nature of the special benefits offered. Without
special provision a life-insurance policy may not fully
protect where the holder becomes totally disabled and is not
in a position to keep his insurance alive by further premium
payments. Moreover, even granting that the policy can be
maintained, no part of the face value can be realized under the
contract until death actually occurs, although such payments
may be sadly needed at the time. Considerations like these
have induced a very large number of American companies to
assist the policyholder in various ways in the event of total
disability. Such assistance has usually taken one or more of
the following forms in the event of total disability : ( 1 ) the
premiums will cease and the policy will be considered fully
paid during the time of disability; (2) the policyholder may
select either this option or may choose to have the value of his
policy converted into an annuity, the first payment to begin at
once; and (3) the policy either matures for a stated sum or
becomes payable in ten or twenty annual installments, such
payment stopping whenever the disability ceases.
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