Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-07-07
TRUST COMPANIES INCREASE
POPULARITY OF INSURANCE
Unfunded and Funded Forms of Handling
Policies Operate to Conserve Estates
and Assist Heirs.
BY /, A, FLEMING

BY /. A. FLEMING
Life insurance policies in force have
doubled several times over within the
last few years, and the increase goes
steadily on. TO the satisfaction Of the
underwriters and ultimately to Che COM
fort and peace of mind of the benefl-
Charles.
Insurance people generally credit the
World War and the subsequent en-
trance of the United States into the
struggle and into life insurance, in
so far as the insurance of soldiers
and sailors lives, as the greatest single
factor In increasing underwriting.
At the time the Government entered
the business insurance companies gen.
ton. but today they admit the wide
benefits Of the action.
Greatly increased fortunes, the
entrance of many into the richer
classes and their participation in large
insurance and the enlargement OF poll
cieS incident to ability TO carry more.
have added their influence to the gain
In the business.
Trust Companies Interested.
Trust companies became interested
and soon found a way to increase their
profits materially and at the same time
add greatly to the real purpose Of in
surance in conserving the proceeds Of
q matured policy to the interests named
therein rs beneflciarieS.
While admitting that they are In
business for profit, they feel that they
have offered something 80 valuable
that the added cost Is Of small con-
sequence.
1t is the function Of q life insurance
company TO create an estate; the duty
of , trust company to conserve the
estate thus created.
In support of the need Of such con-
servation the trust companies claim
that they relieve the surviving heirs
of an estate from the trouble and the
pitfalls of inexperience; that they are
better prepared to handle with safety
funds for investment, TO meet the con-
ditions neceSsitating shifting Of the lat
ter and with better Judgment as to
to bring about situations requiring spe-
cial action.
Life Insurance Trusts.
There are two common forms Of
these trusts, the unfunded and the
funded. Under the former plan the in
Sured executes q deed Of trust with a
corporate trustee and makes life tnsur-
ance policies payable under 1t to the
trust company as trustee Of the deed
The insured pays his own premiums
as they come due and the trust COM
pany has no duties other than the care
of policies until such time Is they be-
come due and payable.
The funded trust provides for de.
posting policies and also additional
securities or cash sutncient 70 produce
income enough to meet premium
charges as they mature, leaving the
trust company to pay premiums and
hold securities and policies until the
maturity of one or more policies.
This trust Is In itself guarantee
that the payment on the premiums Will
be maintained regardless Of any future
financial troubles of the assured. In
come from securities deposited to pay
premiums will be distributed accord
ing to the will of the assured.
Thus the funded trust not only pro-
tects and conServeS insurance but the
insured Immediately creates an estate.
Meeting Emergencies.
Trust companies hold that there is
no other way than through the in
surance trust by which the insured
may provide for exigencies in the life
of the surviving beneficiaries, condl-
lions that may arise even after the
death of the assured may be provided
for by discretionary power dedicated to
the trust company that one might hest
tate to give to any one.
Such emergencies might have to do
with the need of extra money to meet
the expenses Of sudden Illness, the cost
of educating q child, or other ext
gencies.
This discretionary power is not
readily available through any other
form of insurance settlement. Inc
degree to which O trustee may exercise
discretion in the management OF
trust would be determined by the In
slIred and expressed In the agreement.
such an agreement might contain
the most explicit and detailed instruc-
lions, or only a few general tnstruc-
The right to increase the principal
of the trust from time to time or make
the trust irrevocable, or include In IL
q reservation that will enable one to
modify, revoke in part, or terminate
the agreement.
The assured can specify, Tor exam
ple. that payments from principal be
made to a daughter upon her marriage
or to a son when he has reached GER
tain age or as soon as he enters busi-
ness, empower trustee In its discre-.
ton to make payments from principal
to take care of unforeseen emergencies.
In this connection it will be wise TO
limit the amount of such payments
which the trustee Is authorized to make
in any one year. One can establish
trust fund for Q college, hospital or any
charitable organization which may pc
designated. In fact, an insurance trust
agreement can be made to conform to
almost any practical plan that one may
have In mind.
Appreciates Benefits.
It is further claimed by trust COM
panies that the life insurance trust i'm.
presses its usefulness upon business
men speedily and that they are so well
pleased with the added ability to con-
troll their estates even after they have
passed on that they frequently mate
rally increase their lines when made
familiar with the opportunities rs set
forth. =.
Business men generally are familiar
with trust companies, their methods OF