9. Suicide.—If committed within one year from the time the policy is issued, suicide voids the policy, but after that time the policy is incontestable. In connection with the question of suicide it may be of interest to note that the attempt to issue policies with out a restriction as to suicide, say one year, has proved to be unwise, and it is not often done at the present day.
10. Premiums.—Advance payment according to the time arranged, as annual, semi-annual or quarterly is the rule for premiums. They are payable at the home office of the company or to any designated agent. A period of grace of thirty-one days subject to an in terest charge is usually granted after the first pre mium has been paid. Should the insured die within this period, then the premium due would be deducted from the payment to the beneficiary. The policy im mediately ceases if the payment is not made on or before the end of the period of grace.
H. Dividend distribution.—There are several methods of distributing dividends. They may be paid in cash, they may be used toward paying the premium on the policy, or they may purchase more insurance or be left to accumulate. Usually, if the insured has not manifested any expressed wish in regard to the matter, the company will apply the dividends in a certain man ner as set forth in the policy.
The average policy today is free from any restric tion as to residence or travel. The same is true in re gard to occupation one were engaged in em ployments which are admittedly hazardous, including warfare. Naturally if one should enter upon such an employment the proper thing to do would be to notify the company in order that an additional premium may be arranged, should the company care to continue the insurance.
12. Assignment.—If the policy is assigned due no tice thereof should be given to the company.
13. Reinstatement.—Provisions are made for rein statement of the policy within a certain number of years. Having insured a life, the company desires to continue the policy in force, and that is the reason for the provision of grace and the reinstatement privilege.
Usually there are various options which the insured may exercise after the policy has been in force for a certain number of years, generally three. It is con sidered that that period is necessary before the cost of securing the insured life has been overcome, and the reserve set aside is of some value to the assured life.
In Canada, the clauses used by all companies after January 1, 1911, with four exceptions, require evi dence of insurability as a condition precedent to rein statement. The clauses of the four excepted com
panies require merely evidence of good health. The policies of fourteen companies permitted reinstate ment at any time; the others within two, three or five years from date of lapse.
In interpreting the term "evidence of insurability" in cases of reinstatement, most companies have ap plied the same test to military service as in accept ing applications for new insurance, and this practice in the opinion of the Canadian department of insur ance conforms with the provisions of the act.
Twenty-four companies in 1915 granted reinstate ment on being satisfied that the applicant did not intend to enlist. The other companies incorporated the war clause in use for new companies' policies in policies reinstated.
14. Loans.—It was Elizur Wright of Massachu setts, probably as able a life insurance man as this country has ever produced, who secured for the in sured the right to an interest in the reserve. Before his time one who allowed his policy to lapse, altho it may have been in force many years, lost all that he had put into it. Wright established the fact that against the assured's policy there was held a certain reserve which grew larger and larger as the time of expiration approached, and that, to deprive the insured of all this when lie was in many cases compelled to abandon his insurance was unjust. This, of course, is now an accepted principle in the insurance world. Now, in stead of abandoning the policy, there has grown up the feature of loaning againSt this reserve. Loans did not assume large proportions until the panic of 1907 in the United States. Apparently then the knowledge became quite prevalent that most of those carrying life insurance had a substantial asset in the form of this reserve, and as the company was obliged to loan them on demand they promptly proceeded to borrow from the company. It is evident that as the policy has been taken out for the beneficiary's use, this borrowing privilege defeats the very purpose for which the insurance was taken out, which was to pro tect the beneficiary. These loans are moreover rarely repaid. This is surely one of the most undesirable practices in the field of insurance, as it very often leads to a complete surrender of the policy., A great many remedies have been suggested from time to time but no effective method of meeting this evil has been devised. It is possible that state law will even tually require at least, the reduction of the loan by certain annual payments thru a series of years.