New-York tribune., 1907-11-13
BIG INSURANCE LOANS.
POLTCYHOLDERS AIDED
Nary Sared from Rain by Millions
at ) Per Cent.

recently are TO be found In the operations of the
loan departments of the life insurance compa-
r.ez. particularly the large ones.
The value of a life insurance policy as an as
Sc. on which morey be raised quickly was
never before fully realized nor So largely
taSen advantage of as in the financial strin-
gency which has not altogether passed away
In the last four weeks the insurance companies
have lent millions Of dollars policies TO men
unable 70 raise money in any other way: and
these loans. made at per cent. would have
cost the borrower, even on gilt-edged security.
,nuch more in the open market while the COM
panies could have obtained a better return on
their money by investing il in other ways
Many men, by their ability TO get through a
policy loan Of few hundreds, or a few thou
sands, or many thousands as the case may have
been have thereby been able TO protect invest
nents and savings of years and keep from
financial ruin.
a significant fact about the records of the
loan departments is that many men of large
means have been borrowers. not infreuuently
up 10 the full loan value OF their policies One
Ct the advantages of such loans is that they
can be made quickly If the policy is in good
standing. There are few policies issued by the
large companies now which do not provide that
the holder can borrow money on demand in ac-
cordance with a scale which is given in the
policy.
One OF the features of the present money
stringency is that it has affected most heavily
men Of large means who have had their money
tied up in large enterprises from which they
could not realize at once. One man who
came TO officer of a big company to borrow
10 the limit on one OF the largest policies issued
said he was worth $4,000, but could not
raise cent except on his life insurance. The
., r,ofo
has just called for a large loan on his policies
The largest loan made, so far as known was
one of $4,000. The same company made a loan
Of $4,000. two loans of 10000 each and sew
eral OF $4,000 The largest loan made on a
single policy by another company about
S6o,oOO. but number of loans Of $4,000 have
been made by different companies. Loans OF
$4,000 have not been at all lnfrequent
Most of the companies have largely increased
their total number of loans IN the last few weeks
In comparison with similar periods before. but
the one exception to this proves conclusively
that the borrowing recently has been by men
Of large means, men who are carrying large
policies. In this company the total number
Of loans for October were less than for Septem-
ber, but the total amount borrowed increased
the month by S1,1O0,o00. The total amount
Of policy loans carried on November l was
$63,O00,G0o. many of which had been carried
for some years In the last year the company
has increased its policy loans by SSo00OG0 or
100000.
Policy loans had been gradually increasing
for several months up to the time Of the sus-
pension. OF the Knickerbocker Trust Company.
bur after that they took a sudden Jump In
the week Of this occurrence one company made
$50 loans aggregating 100000. The following
week It made $50 loans, aggregating s., 10000
Last week the number began to drop off. and
only 7t6 loans were made. aggregatlng S796, 600;
lut il was short week, the election cutting out
business day. While year ago the company
was getting only seventy-five or eighty appIi-
cations for loans in a day, the applications have
numbered from $50 20 175 day in the last
few weeks
The extraordinary increase in the loan appli-
cations has pushed the loan departments so
hard that in one company they have had TO draft
clerks from other departments and work az
night Ordinarily when a man made formal
application for loan in the morning, he was
able to come around and get his check in the
afternoon. On account Of the great number OF
applications some Of the applicants have had
tn wait longer than that for their money. Some
sof them, large policyholders in need Of money
II once, have asked that their loans be put
through first. but every application has taken its
proper turn.
The provision for loans on policies was first
pNf INTO Ire insurance contracts by the New
York Life in 1892. The Mutual Life followed
suit in 1899, and now the Equitable and prac-
tically all the companies have this provision in
their policies That ii is of the grea test benefit
70 the holder Of a policy has been proved in
the last few weeks. Probably the great ma
jority Of policyholders never realized before
What a valuable asset they had for tho raising
Of money in times of emergency. AS a rule in
the past the benefits of the loan clause have
been taken advantage of largely by men Of
small means or Of moderate means whose cir
cuTnstances for some reason or other had been
reduced Recently, however. men rated broadly
as Of large fortune have turned 10 their policies
for ready money.
The terms which loans made are nearly
Uniform In the large companies. The amount Of
The loan that may be obtained is based what
Is known as the cash surrender value-that is
What the policy is actually worth to the com
0any and what the company would pay in cash
10 the policyhoder if he wished to give it w.
In broad terms. it amounts TO the cash reserve
seld against the policy. This. OF course, varies
according to the kind of policy. the age at which
II was taken out and the time IT has run Take
For example twenty payment life, one OF the
most popular forms of policy On policy for
100000 taken out nine years ago at the age
II thlrty-fve. the holder would have paid
G32 500 in premiums. He would be able 10 bor-
'ow on this policy about $4,000. OF course, on
continuous instalment policy. which is one Of
'he cheapest. where great part Of the premium
used in the actual insurance. the reserve and
he loan obtained would be smaller
Disease attacks only those