The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1877-04-09
SURRENDERED POLICIES.

FURTHER OPINIONS REGARDING THIS FEATURE
OF THE LIFE INSURANCE BUSINESS.
To THE EDITOR THE HERALD:-
Mr. w. W. Byington in to-day's HERALD points out
correctly what In the practice OF life insurance from
tho point OF view OF quitting patron, il grlevous
injustice to him-viz, the policy holder docs
know what his proper share in tho assets and tho
company puts him in the position Of iteratc per-
son who deposits money in bank from time to time
and keeps no Of It Tho policy holder cannot
know what belongs to him. nor can any ascertain,
without knowing several items OF expenditure which
depend on the companys management That is. no.
body but tho companys own actuary tell the policy
holder what is lett OF mis- money.
A policy holder quits generally either because he
wants money has lost confidence his company.
In either he is too glad TO get anything to
useless questions 10 the amount OF what Is offered
him. Tho result is that companies pay short and
make large gains. II is an old fact that many compa-
live loreitures and surrendered policies. The
system 10 tolerated because II increases sdvIdends'
II attracts business for the gain is esteemed
tain and the loss supposed 70 come only TO those
who quit.
The inequty OF the practice is bad enough but its
worst features are these:-
l. 1t creates indcnnitc fund for extravaganza,
agement ana corrupton-a secret service fund
Only what IS LETT goes into surplus
2. The handling Of such fund unmatched is the
strongest stimulus 10 dishonest men TO attain the
aging Official positions in lite insurance.
destroying lilo insurance itself
Tho governing body in lie insurance Is nomnalIy
either policy holders or the stockholders; tact
IL is one or Two officers No remedy Tor this detect
has discovered SO far as know II exists in
other bodies notabiysi In savings banks without Inn
dering confluence in them The difference In the two
Cases this- In savings bank you deposit certain
sum and draw certain sum when you want 10 lose
confidence. In life insurance you deposit q certain
sum- and when you must draw you take what offered
ana receipt in lull II when life company lost conn-
dcnce IL were exposed 10 run there would be fewer
secrets and fewer scandals. Tho management would
bear gaton or give place to othes. There might
be deaatons but there would not be chronic misman-
ugement and the reply 10 criticism, "What are you
gong to 90 about t?'
surrender values should be prescribed by law They
cannot be exact IL is proper thai they should be
btrariiy liked. Such law would take away The fund
out vi which spring the must serious dangers and
abuses thai afict lilo Insurance. IL o
not cncumbcred with these unnecessary burdens it
would be rcsortcd TO about freely other provision
Tor iamilics. The policy holder does not gov
crn ouly TO get away With his money II the govern
mept does SUIT him. II he had that liberty II would
nofequirc forty or ntty per cent commission agent
to persuade HIM IN the first place. Expenses would be
less and everybody would insure. Iueed there would
be u smaller margin Tor expenses. Companies would
stl ia they ought, II tcy 90 not promptly change
cssary when company could not comply with law
us to surrender values.
left life insurance ten years ago. With this reform
would DC willing TO return TO II; not otherwise. in
myself because can't do without Ii. but TO do
now Indicates strange mixture Of rashness and provi
dcncc. J. X. POWERS.
NEW York, April 2, 1871