The daily morning journal and courier., 1901-02-23
COURIER

being able to pass new eXamlnatlon
 This makes business easy to get bu hard to keep, as the lapses of such com
 panies show
 Competition by Liberality.
 Other means of stimulating business
 has been the rivalry in "liberality." |
 began in dropping more or less of the
 defenses against fraud. Fraud may be
 committed In two ways: the applicant
 may deceive the company by false
 statements as to his family or persona
 history, habits of life, present condi-
 ton, etc, so that it issues its contract
 when it would not have done so had il known the truth, or issues it at diff ferent rate from what 1t would have charged had the real risk been dis closed; or he may willfully destroy his own life, causing loss when there should have been none. All these things, if successful, cost; and the cost is borne by the policyholders who do not deceive and do not willfully destroy themselves. It is therefore the duty of a company's managers to protect honest policyhold- CTS against such frauds and losses. When one is asked to make contract based on the statements of the other party to 1t, he has right to know the truth of them, and to be absolved from his promise if they prove to be false. That is the simplest equity and moral ity. That is the rule in every other kind of contract.
 Incontestability.
 The first "liberality" proposed was that if a man could conceal his decep- ton for a year or two, or three, his pol icy should be "incontestable," no matter how gross the fraud. Rivalry has caused such liberality that now some companies call their policies incontesta- ble from the very outset; if the decep- tion once passes muster it's later dis covery will be disregarded.
 Will Courts Permit Fraud?
 There Is, however, such thing as public morals and a public policy" in regard thereto; and the courts are in the habit of regarding fraud and con- tracts permitting fraud as offenses against public morals, and forbidden by public policy, and of dealing with cases of fraud accordingly; and it is not probable that, in the end fraud in life 1 insurance will be found to be less fraud ulent, more laudable, or more condu- cive to commercial and public morali- ty, than fraud in any other matter If the courts permit it in life insurance they must permit it in all transactions. They can permit it fin any case only if there is no difference between right and wrong, and if the truth and a lie are of equal moral and commercial value, and of equal safety for the public. Permis- sion to any fraud is an invitation to all fraud
 Liberality as to Self-Destruction.
 Another liberality is permission to de- stroy ones self in any manner and make the rest pay for it. No company would, in these days at least, contest claim growing out of a suicide which was, under any fair presumption, the legitimate outcome of disease But the cowardly suicide of a sane man-and there are many of tf1em-s a distinct fraud against men who have the cour- age to live, and the honor to fight the battle of life fairly, and stay by their families.
 Annual Cash Values.
 Another liberality is the annual cash
  mand back from the company his con- tribution to the reserve, thus at will changing the transaction from insur- ance to a savings bank deposit.
 The whole theory of life insurance and all it's calculations are based on the du- ration of it's insurance contracts to nat ural maturity. Only so can it fulfill it's special purpose, secure that average ex- perience which gives security to its un- dertakings. protect itself against those | fluctuations of mortality and in general | financial conditions which might other | wise be destructive of companys ex- [ istence; and only so can the business be handled in manner to give the low | est cost. The annual cash value makes 1t possible to wreck or cripple compa- ny in year. Its policyholders may all | withdraw, or so many of it's healthiest l lives may withdraw, taking it's quickest and best assets, leaving only impaired lives to cause an abnormal death loss to be met with reduced income and poorer assets, as to leave it unable to continue business with advantage or even safety. That is no true liberality to those whom life insurance undertakes to protect, for whom it was created, and for whom 1t should be administered. Life insurance \ cannot serve as savings banks without danger of destruction or of serious impairment in efficiency for their own special purpose However willing they may be to take up their policies for cash when the conditions make it convenient and safe to do so, an agreement to do it at any time and under any conditions adds distinct el- sment of danger to the future.
 Loans on Policies.
 Another and kindred liberality is 'loans' on policies, by which the poli- cyholder has the privilege to borrow his contribution to the reserve, pledging his policy as collateral, paying or not paying his debt as he pleases; and he rarely pleases to pay. This was adopted to meet the stock argument of he assessment companies; that man ( should pay each year only the mortali y cost for that year, and keep the re- ( serve in his own pocket. This again is a seeming liberality to ] he policyholder, but not to the family 'ut of whose policy the loan must inally be paid. No one who has seen < he hardships and the disappointlnents { 0 families caused by such settlements 'an covet the task of having to make |, hem; no man who stops to realize what (