Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1913-12-20
Loans on Policies.
I'M the philadelphia Record.

From the Philadelphia Record.
At the recent convention of Insur-
anoe Commissioners of the United
states general disapproval was ex-
pressed of the growing habit OF bor-
/ rowing money on life insurance poll
cies. Such loans have been increas-
| ing rapidly in the past ten years, and
| their total now amounts to 50, 5OO,0O0.
If the increase should continue at the
same rate the total at the end OF
| twenty years would be $l,6OO,O00, 000.
If this is an evil-and probably 1t is
there is little that anybody but the
| borrowers can do to mend 1t. All life
Insurance policies have a cash value
after they have run O few years; and
the companies issuing them are re-
uuired by law to pay the cash value
to the insured on demand. The alter
native of q loan of the same amount
as the cash surrender value Is of ad-
vantage to both parties; the COM
pany retains a contributor to Its in
surance fund and gets interest on its
loan, while the borrower has the en-
joyment in advance of part of his
insurance money, and his policy re-
mains alive, so that the excess of its
face value over the amount borrow
ed will accrue to the beneficiary
There is nothing In such transac-
lions that would justify their inhibi-
ton by law. Neither can the prohibi-
ton come from the company, for any
company that should refuse to make
loans and insist upon the surrender
and extinction of the policy as condi-
lions to paying its cash value to the
holder would find its business drifting
toward some other and less finicky
concern. The only effective regula-
ton would be the practise of self
restraint by the insured. The man
who is tempted to sacrifice the Sc
curity of his dependent family by the
prospect of joy rides in his own auto
mobile must find strength in him to
resist. OF course all borrowings on
life insurance policies are not actu-
ated by frivolity. Misfortune may
make a draft on the insurance fund
a necessity; or q business opportu-
nifty, or an investment, may present
itself that would make such loan
excusable. A prudent man, however,
would not take a risk of this charac-
ter, except as a last resort; and the
safe rule is expressible in the single
word don't"
There Is one aspect of the case, how
ever, which is of public concern. The
State insurance commissioners gath
cred in convention were unanimously
of the opinion that something should
be done to check the demands IN the
legal reserves of the Insurance COM
panies, not to save reckless borrow
ers from themselves, but in the public
interest If all policyholders have the
right to demand immediate loans on
their policies they might wreck weaker
companies in a period of stringency,
just as in the case of a run on a
bank A sudden call for a half-bil-
lion in cash might embarrass even the
stronger companies. 1t was suggest
ed, therefore, that insurance COM
panies should have an option similar
to that given to savings banks, to re-
quire sixty days notice from policy
holders of a desire to borrow on the
security of their policies. This option
would probably not be exercised
under ordinary circumstances; and a
company with large surplus would
rarely avail itself of the same. To
put all of them on an equality, how
ever, the option should be written
into all policies-and this would re-
quire a legislative prescription. The
suggestion should be needed.
wisconsin's New Eugenic Inv.
From the Milwaukee Sentinel.
At the eleventh hour our County
Medical Society has fallen hilariously
and furiously foul of that excruciat-
ing eugenic marriage law.
We say hilariously, because the