Disadvantage of Continuous Premium Payments. The
chief objection usually advanced against ordinary life insur-
ance is the continued payment of the premium throughout life.
This objection, however, is more apparent than real, and may
at the option of the insured be obviated to some extent by
allowing the annual dividends to accumulate with the com-
pany with the view of either shortening the premium-paying
period or hastening the maturity of the contract. Under the
first option the contract becomes a paid-up policy for the full
amount after a period of years thus requiring no further
premium payments the insurance, however, being still pay-
able at death only. Under the second option the dividend
accumulations on the policy cause it to mature as an endow-
ment at an earlier age, thus enabling the insured to realize the
proceeds before death occurs.
The cash surrender and other options allowed under an
ordinary life policy may also, under certain circumstances,
make desirable a discontinuance of premium payments.
Changing circumstances may cause the insured to desire the
taking of any one of three important options customarily al-
lowed by the companies. If the policy has served its pro-
tective purpose and the insured is satisfied that the change
in his circumstances is such as no longer to require insur-
ance protection and does not wish the full face value of
the policy for legacies or bequests, he may surrender the
policy to the company for its cash value. Or, instead of tak-
ing the cash value, the insured may choose the option of stop-
ping premium payments and taking a paid-up policy, payable
upon death to his estate or designated beneficiary. The
amount of paid-up insurance which the companies grant after
the policy has been in force a specified number of years is
indicated in column three of the preceding table, and repre-
sents the amount of insurance that can be purchased at the
then attained age with a net single premium equal to the sur-
render value. The amounts, it will be observed, are very con-
siderable in the later years, the face value of the paid-up insur-
ance granted on the $10,000 policy, after the same has been
in force twenty-five years, being $6,380.
Lastly, it may happen that the policyholder contracts some
fatal disease or meets with some accident which incapacitates
him for the earning of future premiums. Under such cir-
cumstances the necessity for insurance is greater than ever,
and the policyholder is allowed to avail himself of the option
of " extended insurance," which means that he can without
further premium payments enjoy the full benefit of his orig-
inal policy for a designated number of years and days. This
option may also be chosen, even though the ability to pay
premiums continues, when the insured is satisfied that his
physical condition is such as to prove fatal before the expira-
tion of the term during which extended insurance is granted.
The duration of the term of extended insurance as allowed by
the companies will again depend upon the cash value of the
policy, which is used as a single premium to purchase insur-
ance at the then attained age. The respective amounts on the
$10,000 policy, used for purposes of illustration, are shown
in the fourth and fifth columns of the preceding table. Thus,
it will be observed, for example, that after this policy has
been in force nineteen years it may be extended for its full
face value, without further premium payments, for a term of
fifteen years and two hundred and sixty-one days.
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