The Barre daily times. (Barre, Vt.) 1897-1959, 1906-02-12
Number



That is TO say, for the three com
panies on the average, more than one
half Of the group entering in 1895 had
fallen out before the expiration of the
term, and their policies had lost the ben
cfict of any and all dividends fairly be-
longing to those policies. An eXamina-
tiou Of a fifteen year group which was
formed in 1890 shows that only thirty
seven per cent Of the policies were in
at the finish, and for a twenty.year
group forty per cent
Various attempts have been made to
defend this practice Of defeiTjng divi-
bends and Jumping them for the benefit
of surviving members Of a group, but
its wrongfuiness would seem to be ap-
parent. II is nothing less than gam
BILE on the misfortlmes Of others in q
sense wholly distinct from the nature
OF life insurance itself. All Of these in.
surants are charged largely in excess OF
the costs Of carrying their risks, but
for those who died before the end of
the term there is no return OF this ex-
cess to their benetieiaries and for those
who withdraw OF lapse because of inahil-
ity to keep up the premiums or for other
causes there is similar loss--the ex-
cess charges being seized in both eases
and turned over to the more fortunate
survivors. In principle the practice IS
just az bad as the nldfashioned tontine
arrangement OF appropriating for suryiy-
ors the entire value Of lapscd policies,
and there is as much reason why the law
should interfere in this case as it inter
fered for the prohibition of the other
practice. Every policy which contri-
butes to the dividend fund IS fairly en-
titled TO the return Of its share OF the
fund. whether that policy contract cx-
pires because Of death or lapse.
But this Is not the whole evil of the
deferred dividend scheme. As was point
cd out in the report of the Equitable
Friek committee, these accumulations Of
dividend funds to be paid back only at
the end Of considerable period Of years,
and for which no accounting is made,
must be, as they unquestionably have
been, great cause Of extravaganza,
looseness, speculation and dishonesty in
the management, which has thus been
given a wholly irresponsible control Of a
great and increasing amount of money.
It is shown, for example, that the diyi-
dends actually paid back to the surviv.
ors in these mentioned groups have been
much less than surviving policyholders
were led to expect they would be at
the outset The actual surplus avail
able on twenty year policies, according
TO Mr.. Dawson, ranges only from forty
10 sixty per cent of the estimates pre-
scented when the policies were written.
This is al wrong and ought TO be
stopped by law. IL has been supposed
by most people that Massachusetts law
already prohibited the practice in the
case OF domestic companies, but the
law is not clear on the subject, and while
most Of our companies write no such
policies, the statutes should be amended
TO leave no room for question. The law
need not insist upon annual or three
or fve-year distribution Of surplus, but
IL should insist upon 4 frequent account
ing Of surplus and the acerediting of
the same in due proportion to every
policy as claim upon the company
Springfield Republican.