Non forfeitable conditions. — The principle of non-forfeiture would lie applied to a policy upon which sufficient premiums have been paid to give it a surrender value. The application of this principle meets one of the objections most com monly urged against life assurance, namely, that the money paid to a company is to a great extent lost in the event of the assured being unable to continue the pay ment of the premiums, and that assurance offices make very large profits At of the surrender and lapsing of policies. In some companies the procedure is to issue a paid-up policy in the place of the one lapsed. Generally a company requires a special application to be made by the policy holder before such a paid-up policy is issued; but a few offices make the system automatic as soon as the days of grace have expired, the assured being nevertheless allowed to revive the original policy within a year from the date upon which the omitted premium should have been paid. In other offices, when a policy which possesses a surrender value is about to lapse through non-payment of the premium, they do not issue a paid-up policy but apply the surrender value until it is exhausted, to payment of the premiums in arrear, and those which may subsequently become clue. A company whose credit is good, and whose business has not been inflated by extravagant expenditure does not, as a rule, seek to increase its profits by the comparatively feeble aid of lapsed policies. It would rather act upon the belief that it is both equitable and for its permanent benefit to give as muchassistance all protection as possible to policy holders who are unable to continue their periodical pay ments. One out of the two regulations of the Guardian Assurance Cotnpany relating to paid-up and non-forfeiture policies may be quoted as illustrating the above principle in actual practice. In this company, after three years premiums have been paid, the assured may discontinue payment of the premium on surrendering to the company an equivalent part of the sum assured, the policy becoming a paid-up policy—that is, a policy on which no further premium is payable, except such as may become due in consequence of the life assured going beyond the limits of free residence. This rule applies to all that company's Whole Term Policies, with the premiums payable equally throughout the duration of the risk, but not to policies effected by increasing premiums, short or long period, or survivorship assurances. The following table gives a few examples, for various ages of entry and duration, of the amount of the paid-up policy which will be granted so long as the company continues to make its valuations on the basis at present in use, for an ordinary Whole Term Policy for .£100, with profits. The policy does not continue to participate in the profits as a paid-up policy, but, in addition to the amount given in the table, it carries with it any vested rever sionary bonuses existing at the time of the change, less 10 per cent.
Disconfinued policies.—Quite apart from the above provision for the substitution of paid-up for lapsed policies, the general practice of a.ssurance offices is now comparatively liberal in the matter of discontinued policies generally. Surrender values are now almost invariably incident to policies of life assurance, the assured being thus enabled to obtain a price or consideration, in cash or otherwise, for the disicontinuance or surrender of his policy. In most cases, however, a larger price for a policy can be obtained by selling it to a private buyer than by sur rendering it to its own company. But before so selling it the a.ssured should inquire its surrender value from the company. In any ease it should be valued by some assurance expert or by some competent and independent broker. A surrender value accrues, as a rule, only after the policy has been in force for several years, but smile companies give a surrender value for certain whole-life and endowment assurances when only one year's premium has been paid, and for other assurances when three years' premiums have been paid. Some policies, such as Ordinary Term Policies which just cover a risk of death within a specified time at the end of which the assurance absolutely expires, do not carry surrender values ; but in these cases the premiums are generally much smaller than those for the whole of life. Surrender values always depend on the age at entry and the duration of the particular policy ; and a slip is attached to certain policies issued by some companies which enables a policy holder to calculate for himself what the ALL-render value of hii particular policy. vviil be at any point of time. The
following may be taken as a fair basis for estimating a particular surrender value: 35 to 40 per cent. of the premiums after 5 years; 40 to 45 per cent. after 10 yea's; 45 to 50 per cent. after 9,0 years ; and 50 to 60 per cent. after 30 years. The days of grace for payment of a premium are generally extended, if application is made before their expiration, on some such terms as that the assured pays in advance 5 per cent. interest on the unpaid premium. By this means the lapse of a policy may be prevented. And, as a general rule, a policy which has lapsed—but not fin. more than some reasonable period—may be revived upon speciol terms being arranged with the company ; a fresh medical examination is usually included in these terins.
Payment qf clainu.—In this regard there has been a great improvement in favour of the assured in the practice of the assurance companies. At first sis months, and subsequently three months, were always required to elapse from the death of the assured before a company would pay the claim. This delay was no doubt at one thne reasonable from the point of view of assurance companies— it afforded time for production of evidence of birth and death of the assured, and for the investigation of the circumstances of the particular case. Fifty years ago things moved more slowly than they do now, and the necessary evidence was not so easily and quickly obtained ; and, moreover, frauds were then very frequently attempted. But these reasons have now no validity, and even apart from that, the stress of competition has forced on a system of speedy settlement. Delay is generally caused by the claimants themselves. All that a claimant actually need do, in the case of a whole life assurance, is to prove four things to the company:— (1) The death of the assured ; (2) That the policy was in force at the thne of the death ; (:3) The age of the assured ; and (4) His title to make the claim. Having proved these things, the receipt of the cheque for the assurance money will follow forthwith. Number one is proved by the death certificate, a certifi cate of burial, and a certificate of the medical attendant of the assured showing the cause of death and the duration of the fatal illness. The certificate of burial may in some cases be dispensed with, but in every case a sp'ecial form of claim, supplied by the company, must be filled up by the claimant to accom pany the certificates. Number two is proved by the receipt for the last premium. Number three is usually proved by the assured during his own life, and an acknowledgment of the proof obtained from the company. But if this has not been done the claimant must produce a certificate of birth of the assured, or, in case the birth has not been registered, a baptismal certificate or a copy of an entry in a family Bible authenticated by a statutory declaration. Nuniber four requires careful attention. If the assured died without having inade a will— intestate, the only person who can claim the insurance money is the one tb whom letters of administration of his estate have been granted by the Probate Court. The person entitled to administration is indicated, according to the circumstances of any particular case, in the article on INTESTACY. If the assured has made a will and appointed an executor, the latter should prove the will, and then, having obtained probate, will be entitled to claim payment from the company. In both these cases it is assumed that the assured had not, during his life, assigned the policy. He might, for example, have assigned it absolutely to a purchaser, or by way of mortgage to a mortgagee ; in either of these circum stances the assignee, having already given notice of the assignment to the company during the assured's life, will be the person alone entitled to receive payment of the assurance money and give a valid receipt therefor. Where the policy specifies any particular person, such as a trustee or the a.ssured's wife (see page 28), then the money can only be paid to that person. In the case of matured children's endowments or endowment assurances, where ais a rule no such proofs as any of the foregoing are necessary, it is frequently the case that claims are settled on the very day upon which they become payable according to the provisions of the policy.