Furnishes Permanent Protection. Several advantages
may be noted as essentially associated with this plan of
insurance. In the first place it gives the insured permanent
protection at moderate cost, and this is highly important for
the average man of moderate salary or daily wage who re-
quires considerable family protection and whose limited in-
come does not enable him both to pay premiums and to ac-
cumulate a savings-bank fund. Term insurance is essentially
designed to afford protection against a temporary family or
business hazard, and can be recommended safely only when
it is definitely known that the hazard under consideration is
temporary in character. But such contracts, as we have noted,
contain elements of danger which are inseparable from tem-
porary insurance. The chief danger connected with such
insurance is that the insured may have miscalculated the
duration of the hazard confronting him and his future need
for protection, or may neglect to carry out his original pur-
pose to convert his temporary insurance into or replace it
with policies which afford protection for the whole of life.
Under ordinary life insurance all danger as to miscalculations
relative to the uncertain future need of insurance or the fail-
ure to carry out original purposes is obviated. Such insur-
ance is certain in its results in that it provides protection that
is permanent, payable in the event of death, whether that
occur early or late, and purchasable at a definite and moder-
ate premium which remains uniform throughout life.
Furnishes Permanent Protection at the Smallest Initial
Outlay. As has been aptly stated " the ordinary life policy
is of all policies the one which gives the maximum of perma-
nent protection at a minimum annual charge." This may be
illustrated by comparing the gross premium charged by com-
panies for ordinary life policies with those required under the
limited payment and endowment plans. For instance, the
annual premium charged by a certain company per $1,000
of ordinary life insurance is $19 at age 25, $21.80 at age 30,
and $25.45 at age 35. On a twenty-payment life policy at
the same ages the annual premiums charged by this company
are $26.75, $29.70, and $33.28; while on an endowment pol-
icy, maturing in twenty years, the premiums are respectively
$44.82, $45.63, and $46.70. It is therefore seen that the or-
dinary life policy furnishes permanent protection at the small-
est initial outlay, although, as will be shown later, the limited-
payment and endowment policies will, if the insured continues
to live, ultimately yield certain advantages which probably
induced the insured to prefer these forms and which will
compensate for the higher premium. In case of early death,
however, the insured would realize the same amount under
each of the aforementioned policies, yet the outlay on the
part of the insured would have been considerably greater
under the limited-payment and endowment plans than under
the ordinary life policy.
Owing to its moderate annual cost, an ordinary life policy
tends to bring adequate protection within the reach of nearly
all. It is particularly well adapted to those whose income is
small and who find desirable a considerable amount of perma-
nent protection. To the rich man, on the other hand, the
policy affords ample protection and enables him to use any
surplus money to better advantage probably than if allowed
to accumulate with an insurance company. The policy is also
well adapted to persons who, although having passed middle
life, may still desire the largest amount of permanent pro-
tection at the lowest cost. Even at ages 45 and 50 the an-
nual premiums charged by the aforementioned company are,
respectively, only $36.50 and $45.10; while for a twenty-pay-
ment life policy at the same ages the premiums are $43.46
and $51.26, and for an endowment policy, maturing in twenty
years, $51.45 and $56.55.
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