Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1902-12-20
AN INSURANCE FRAUD
CONTINUED from First Page.1

1 Ell
from various policy holders. and other
data, 1 am of the opinion that the per-
sons taking these bonds have been led
! &c believe that they are to receive at the
end of the endowment period an
amount of money which the expert
ence of the company demonstrates is
far beyond the bounds of possibility.
This illusion in the minds of policy
holders has not been created by mere
statement of estimates on the part of
the agent, but has its inception in the
deceptive literature and statements
which originate in the home office. For
instance, the agents are taught, and
they in turn instruct the policy hold
ers, the doctrine that enormous profits
accrue from lapses, and that this will
be source Of huge profits to the per-
sistent policyholder. Among other
things kept entirely from the minds of
the policyholders is that policyholders
OF this company derive no benefit what
ever from the lapses which occur at the
end of the first year when the lapses are
the heaviest, and when there is no re-
serve forfeited by the lapses owing to
the fact that the first year is term in
Surance.
Your department has been In receipt
of number of complaints from policy
holders, and during my stay in Des
Moines my mail contained various let
tiers in reference to the representations
under which these policies have been
sold. 1t seems that many have been
told by the agent that payment of $40
for ten years would return to them
$500. The application has been taken,
the note signed for the entire first pre-
MUM, and the. agent departs. When the
contract is sent to the insured he finds
that he is guaranteed only $500 at the
end of the endowment period, and when
he attempts to return the policy and
demand his note back, he is told that
the note has been discounted by some
bank or banker, and will have to be
met at its maturity. The number of
complaints, all couched in similar Lam
guage, leads me to believe that this
practice is not confined to any particu-
lar agent or any partisular locality.
ut has come to my knowledge that
agents have been instructed at the Chi
cago office by the vice president of the
Letting, and the figures which are in the
handwriting of this officer indicate that
the minimum amount which can be
confidently looked for as a settlement |
under these bonds is 5000. Along these
lines, and as an illustration, / wish to |
refer to the following letter written by |
the present secretary to an agent who
applies for information as to the profits
CT bondholders:-
Then follows the secretarys letter.
representing that the $500 bond will be
years.
There is no disposition here in Des
Moines to make war on any legitimate I
business but there is belief that the
Insurance laws of the state have been /
terribly misinterpretel or neglected in
the past few years with reference to
many lines of business. The action
taken by the Minnesota department In
having the first thorough examination
made of this comparatively new life
and trust" business, which is sort of
investment scheme yelled In the name
of insurance, and the boldness with
which the actuary has set out the fig
ures and quoted the methods of the
company. has startled the sleepy ones
to thinking. 1t Is freely predicted that
there will be q demand for an investi
cation bv state officials of Iowa to de-
fernine whether the life and trust"
business can flourish under the insur-
ance laws of the state.