The following is the form of pol. given in the prosp.: Pol. No...... Date...... Sum insured, £..... Prem. due every year on the...... Age next birthday...... John Prudence, of Market Street, Manchester, aged 30, having lodged documents at this office affirming that he is at this date in good health, and having paid his first ann. prem. of £12 16s. 3d., We promise to pay, subject to the conditions specified at the back of this pol., £500 sterling to his legal representatives, three months after satisfactory proof has been furnished of his decease. Provided that he shall so long as he shall live pay into this office, or to its authorized agents, on the roth day of July or within 30 days following of every year, the ann. prem. of £12 16s. 3d. We also promise to pay to the said John Prudence, or to his order on demand, the banking account standing to the credit of this pol., as indorsed on the back, on his surrendering the same with his last renewal receipt. Signed and sealed on behalf of the Brit. Imperial Ins. Corp., Lim., this day of ... Notice. If this pol. is used as a security, the renewal receipt should accompany it. The renewal receipt shows the exact amount standing to the credit of this pol. in Gov. securities up to the date of the last payment. Then on the back are indorsed "Conditions under which this pol. is issued": This pol, and the ins. thereby effected will become void, and all claim on the Corp. will cease-1. If the party whose life is ins. should go beyond the limits of Europe without having paid such extra prem, as the directors may require. 2. If he shall enter upon or be engaged in any active military or naval service. 3. If he commit suicide. 4. If the amount in deposit be permanently withdrawn. The L. ceases to be ins. if the prem. be not paid within 30 days after the day within named for its payment; but in no case can the banking account, as stated below, be forfeited. Privileges of the holder of this pol.-1. He is entitled to the banking account according to the T. below; and if this be not withdrawn by him, the current prem. for the time being having been punctually paid, his legal representatives are entitled to the sum ins., 3 months after proof of death. 2. He may exchange this pol. for another, which will cover the risk of foreign climates, and military and naval service. 3. Should the person insured commit suicide, his representatives are entitled to the sum then in deposit to the account of the pol. 4. Should he discontinue the payment of the fixed ann. prem. as it falls due, his life ceases to be insured; but he can either withdraw the amount in deposit, or have a new pol. for the sum which that deposit will insure, whatever may then be the state of his health at the time. 5. The payment of these sums is guaranteed by the subs. cap. of the Corp. 6. He will receive an ann. audit sheet, showing the assets invested in Gov. securities, and the amount so invested to the account of this pol. We need not give the T. "Banking account of this pol." It works out in almost the exact proportions of that already given in the case of the Consols Co. We observe that the pol. in use by the Co. more recently has undergone some modifications of a prudent, and indeed necessary character. The form of return of new pol. referred to is as follows: The form of ann. audit sheet is very much the same; but deals with the totals paid upon each pol., and standing to its credit. Attached to this last sheet are the certificates of the auditors that the returns are correct, and also of the trustees, to the effect that they hold the sums in trust for the pol.-holders. Three important facts are proved by the foregoing rep. and audit sheet-1. That the system provides Gov. security for L. pol., instead of that of a private co., as in ordin. L. ins. Each insurer is a fund-holder. 2. That the system assigns a defined and expressed current realizable value to each pol.; which value can at any time be obtained on demand, like exchanging a Bank of Eng. note for money. 3. That the system does away with the ordin. plan of lapsing pol. The essential difference between the British Imperial and the Consols Cos. may be stated in a very few words: whereas the Consols Asso. threw the speculation of the sum to be received under any of its pol. upon the holders of such pol., the Brit. Imperial takes the aggregate burthen of this speculation upon itself. For a given prem. paid it guaran. tees the return of a given sum of money, either on withdrawal, or death-and this quite irrespective of any profit or loss it may make upon its Consols investments. This, properly enough, removes the burthen from the pol. to the shareholders; and so remedies a very glaring defect in the orig. Consols scheme. The Brit. Imperial is a respectably constituted co. Great efforts and considerable sums of money have been expended in making its features widely known. These have been attended with moderate success. In 1867, also, the Colonial Ins. Corp. was founded. It embodies this feature : At the end of every third year there is invested in Gov. securities the office surrender value of all the pol. entitled to parti. in profits which have been in force for 3 years and upwards. Certificates are issued to every parti, pol.-holder at such triennial periods, informing him of the par value of the stock to which he is entitled at that date on the surrender of his pol. On the back of each parti. pol. is indorsed a form of receipt, which, being properly filled up and signed by the pol.-holder, will, on presentation to the office, secure to him a transfer of the proper amount of stock to which he may be entitled in consequence of the surrender of his pol. to the office. This arrangement secures to the office the advantage of a range of three years in which to make its stock investments: and the pol.-holders have a like option regarding the surrender of their policies. The most prominent development of the scheme of Consols ins. dates from 1870, when the Positive Government Security L. Assu. Co., Lim., was founded. We have, indeed, a prosp. dated 1869; but that arose from the fact that the scheme upon which the Co. is founded had been perfected some time previously, as will presently appear. We take a prosp. dated 1870, Explanation of Positive Gov. Security Life Assu., which is unlike any other plan known, because it provides, etc. [We shall see what it provides presently.] Among the "objects" set forth in the memorandum of asso. is the following, "To invest any portion of the prems. paid by assurers on L. pol., and also any portion of the paid-up cap. of the Co., in trust, either in Brit. Gov. or other securities, specially to provide," etc. The cap. of the Co. is £500,000, in shares of £1. In a "note" to this ed. of the prosp. there is the following: In May, 1869, the Masonic and General Assu. Co., Lim., first introduced, under license from the inventor, the new and orig. system called Positive Life Assu. to the public. The bus. transacted has been considerable, although the system is, comparatively speaking, still unknown. Abundant evidence has, however, been derived to testify that if a new inst. were formed, under a general and appropriate title, possessing necessary legal powers for carrying it out effectively, on the basis of providing Gov. securities for pol., a far larger bus. could be obtained than by a class inst., whose prem. funds are invested in miscellaneous securities. This purports to explain the necessity for organizing the Positive Co. The remainder of this " note "will be given in our hist. of the Masonic and Gen. and the Positive Cos. The inventor referred to in the above passage is Mr. T. H. Baylis; and he, with the assistance of Mr. Cleland, Mr. Henderson, and others, founded the Positive Co. We 66 propose to give an outline of the scheme; for although the Consols element is but a small feature in it, yet it is impossible to render the scheme intelligible without regarding it pretty much as a whole. There is a preface to the prosp., wherein the reasons why L. ins. in Gt. Brit. has made such slow progress are discussed. We must content ourselves with taking one or two passages: One of the main reasons why the American L. offices transact so much more bus. than ours is that the former command the confidence of the public, because they are under Gov. supervision; indeed the Gov. is morally responsible for their solvency. Every office is compelled to make returns on oath, in forms supplied by the Ins. Department, showing its condition on the 31st Dec. each year. These returns are verified, and reported on in such a manner as proves the stability of the undertakings. So that, in America, the financial condition of every L. office, its liabilities, assets, expenditure, profits, progress, and every particular, is well known to the public generally; and on this satisfactory knowledge the offices seek to obtain public support. Whereas in this country it is well known that L. offices are not under Gov., very little is known of their positions-only so much as the administration are disposed to pub. The result is that our progress is very slow, and is not likely to improve until a more satisfactory system is presented to the public than has yet been in extensive operation. Then with regard to ordinary L. assu. bus., serious objections have always been successfully urged to it. The absence of proved security that pol. will be paid at maturity, their liability to total or partial forfeiture by the accidental omission to pay an ann. prem. throughout life, or death by duelling, or foreign travel, and the want of benefit to the assured whilst living. Hundreds of thousands of instances are on record where great hardships have been experienced from one or other of these objections. The italics in the first of these para. we take as we find. Those in the second are ours, as are those in the next : The Positive Gov. Security L. Assu. Co., Lim., has been specially constituted to effect important improvements. On the points of security for pol.-holders, non-forfeiture of pol., surrender values, and conferring personal benefits on the assu. whilst living, it presents a system which is perfectly original and eminently sound in principle, and is described in the following pages. The advantages it offers over ordin. L. assu. may, to a certain extent, be compared with those of freehold (with Gov. titles) over leasehold properties; or the certainty of the Gov. funds over all other investments. Under the Positive system a L. assu, is represented by a short, simple, indisputable, and negociable contract-in fact a promissory note, bearing a defined, realizable value, held specially in trust in Consols; receivable by "the bearer" at three days' sight, or on the death of the assu. There are no covenants to comply with; because each prem. paid purchases a property outright, without reference to any condition. We now reach the body of the prosp., wherein most of the points already spoken of are reiterated, in some cases over and over again. The first distinct feature we meet with is the following: Positive L. assu. are paid for by a defined number of ann. prems., varying from 1 to 5, 10, 15, 20, 25, 30, or more years, at the option of the assu., instead of continuing throughout the whole of life. This is a great improvement on ordinary L. assu. practice, because it is better to encounter payments in the early productive period of life than at an advanced age Persons who assu. young pay for their assu. before reaching the prime of life, and are therefore freed from all anxiety as to being able to pay the life-long tax attaching to an ordin. L. pol. in old age. Assu. on this system may be effected for amounts varying from £50 upwards. All life That the plan here set forth is an improvement, all candid minds must admit. offices should adopt it. Of course the prems. have to be increased in a corresponding degree. The entire working of the plan will be best shown by the following T., which we take from the prosp. without curtailment : TABLE showing the cost of a Positive Gov. Security Life Assu. of £100, paid for by 30, 25, 20, 15, 10, or 5 Ann. Prems. ; and also the relative amounts of Positive Notes purchased by such Prems. in each case. With participation in profits. Amount of Birth- One-thirtieth One-Twentieth One-Fifteenth paid, being £10 os. od. paid, being One-Fifth part of each £100 Assu. paid, being part of each £6 13s. 4d. £20 os. od. EACH £100 7 II 2 8 9 23 2 9 2 10 2 12 10 3 O 313 11 5 I 5 5 11 5 15 7 2 16 10 2 18 0 4 6 2 3 12 3 4 7 8 17 3 6 I 315 I 7 3 8 10 3 18 4 14 4 6 3 10 6 10 4 I 3 313 6 398 3 15 2 5 3 16 11 3 13 4 3 18 9 4 5 3 11 7 7 II 2 17 8 7 14 6 7 17 7 o 8 83 10 8 7 8 10 6 12 I 8 14 16 2 O IO 6 5 10 6 11 4 7 7 8 7 9 7 7 16 I 8 13 4 Example.-A person aged 30 may assure the sum of £100 by paying either 30 prems. of £2 16s. 10d. each, 25 prems. of £3 2s. 3d. each, 20 prems. of £3 10s. 11d. each, 15 prems. of £4 6s. 2d. each, 10 prems. of £5 17s. 6d. each, or 5 prems. of £10 135. 7d. each. On payment of each prem., the assured would receive a positive note for a 30th (£3 6s. 8d.); a 25th (£4); a 20th (£5); a 15th (£6 13s. 4d.); a 10th (£10); or a 5th (20) part of the 100 assured, regulated by the number of prems. paid. Besides the positive notes, the assured would hold a positive pol. for the bal. of the sum assured as long as the renewal prems. were paid, less the positive notes issued. The following is the form of "policy" "by means of which the contract is carried into specific effect: Sum assured £100, to be paid for by ten ann. prems. of £5 175. 6d. each. Number of pol. 1. JAMES MONEY, of Lombard St., in the City of London, hereinafter called the assured, having applied to the above-named Co. (hereinafter called the Co.), to assu. his own life, and having delivered 7 3 2 9 6 4 £ s. d. 9 2 2 9 5 I 9 7 II 13 11 9 13 16 8 14 I 8 14 6 9 IO 17 II 18 I 5 18 8 10 a statement to the office, in writing, dated the 18th Oct., 1869, signed by him; and having paid the first prem. of £5 175. 6d., and having received the first positive note for £10, the Co. contracts with the assu., his representatives and assigns, as follows: The Co. will, within 3 calendar months after proof of the death of the assu., whilst this pol. is in force, pay to the representatives or assigns of the assu. the sum of £90, making together with the first positive note for £10, £100, and also all bonuses accruing to the assu. The prem. of £5 175. 6d. must be paid on the 19th day of Oct. in the next, and in each of the eight succeeding years, or within 30 days thereafter. On payment of each prem., a positive note for £10,"payable to bearer" 3 months after the death of the assu., will be issued. Such positive notes shall be issued to the legal holder, or last known legal holder of this pol. Every such positive note may be presented at the head office of the Co, at any time, and will be redeemed 3 days after presentation, by payment of £2 75., and the redemption, or payment of such note, in favour of, or to bearer, shall discharge the Co. as against all parties, and from all claims in respect of the amount of such positive note. The payment and redemption of every such positive note may be enforced, notwithstanding this pol. determines, or is, or becomes void. The sum of £90 mentioned above as payable under this pol., independently of the first positive note, will be reduced by the amount of all positive notes to be hereafter issued, whether redeemed, outstanding, or not, as per T. indorsed hereon. The age of the assu. having been admitted by the Co., this pol. is absolutely indisputable. There are the following memo. regarding "freedom from restrictions" and "admission of age," etc. : This contract is free from all restrictions as to right to travel, foreign residence or other usual limitations. The assu. may travel where he pleases. Whenever death takes place, the Co. is compelled to pay the sum assu.; or during life the surrender value expressed on the face of the positive note. No question on this [age] or any other point can be raised after the issue of the pol. The Co. makes its own conditions before accepting a proposal. When once it has done so, it assumes all responsibility, and limits its duties afterwards to those of receiving prems. and paying claims as they arise. The form of positive note is as follows: Positive Note for £ No. of Note, The Positive Gov. Security L. Assu. Co., Lim., promise to pay to bearer 3 months after the death of [the insured] the sum of £ Directors Secretary. 186 Numbered Memorandum.-This positive note is issued under a pol. dated the containing a clause that such positive note will be redeemed 3 days after presentation at the head office of the Co. by payment of £ being the amount standing to the credit of the said pol. in Consols in special trust. The reader is informed that these positive notes are negociable "by simple delivery, like a bank note. No assignment, trans., document, nor signature is necessary to give the transaction validity.' We next have an outline of the "arrangements for carrying out the Positive system": The Memorandum of Asso. empowers the Directors to create trusts for the safe investment of assurers' prems. and a portion of the paid-up cap.; the object being, to hold these moneys as funds not liable for any other than pol. engagements. Acting under this power, the directors create a general trust, and appoint trustees. The action of the trust is regulated by a deed, which defines its objects and purposes. The deed is printed, assurers and shareholders being entitled to a copy. The trust is composed of two funds, viz.:-1. The L. Assu. Fund, which consists of the net prem. paid by assu. The fund is invested in Consols exclusively, in trustees' names, to provide for pol. 2. The Assurers' Guarantee Fund, arising from the investment of one-fifth of the paid-up cap. in Consols, in trustees' names, to provide for any fluctuations that might arise in the mort. amongst the lives assu. These two funds are only liable for pol. engagements; they are under the control of the trustees, over whom assurers and shareholders only have any power, subject to the regulations of the general D. of Trust. The provisions of the D. of Trust cannot be altered without the consent of the assurers and shareholders. The Mem. of Asso. and D. of Trust authorize the creation of separate trusts, to act in harmony with the central trust. A separate trust is created by appointing two suitable persons, to act in conjunction with two of the central trustees. An ann. report and audit sheet is drawn up by the Actuary, giving full particulars of all Positive pol. and Positive notes in force on the 31st Dec. in each year, rendered in a form that enables pol.-holders to ascertain, at any time, that the full value of each pol. or positive note is held in Consols, in trust, to provide for it. A copy of the ann. rep. is forwarded to each pol.-holder, or may be obtained on application at the chief offices, or agents. Under these arrangements and others, which are more fully explained in the D. of Trust, every district or class in the U. K. can be supplied with its own trust, have its own local trustees, as the custodians of the assurers' prems and shareholders' paid-up cap. The plan of "investing prems." is precisely the same as that adopted by the Consols Co., and set forth in the early part of this art. 66 The rates of prem. of the Co. are based upon the English Life T., loaded 20 p.c. The surrender values are calculated at 40 p.c. of the prems. paid. It is held out among the advantages of the system that persons may ins. for the benefit of families or friends 'privately, without mentioning names in wills, or in any other manner." Again, that sums payable under positive notes are exempted from legacy duty or other charges; and that neither probate nor letters of administration are necessary to legalize the payment of positive notes. All payments under pol. or positive notes are made in cash, and not in Consols-the risk of dealing in which falls therefore upon the Co., as in the case of the Brit. Imperial. The scheme of the Co. has been the subject of much criticism. A considerable cap. has been raised-sufficient, if preserved for the purpose, to protect the pol.-holders from all danger arising from fluctuations in Consols: and, assuming that it does not suffer too severely from fraud-to which it grants some facilities; that it obtain a well-selected life bus., at a small cost; and that its affairs be conducted with prudence and strict economy, it may prove all that its pol.-holders can desire. A later development of Consols Ins. occurs in the case of the National Funds Assu. Co., Lim. The Co. was founded in 1870, under the designation of the Minerva Banking Assu. Corp., Lim. In 1872 it adopted its present name, and issued its present prosp., from which we shall quote. The authorized cap. of the Co. is £250,000, in shares of £5. The Man. is Mr. R. F. Henderson, already referred to in connexion with the Positive. The Sec. Mr. W. H. Cooke, who has had large experience in ins. enterprise. The gen. features of the Co. very much resemble those of the Positive; but in the matter of investments, this Co. does not limit itself to Consols, but takes the wider range of "Gov. securities," in which may be included all stocks possessing a Gov. guar. The following purports to be a summary of the new and special advantages offered by the Co. to pol.holders: 1. Assurers absolutely safe. An ample "policy fund" being invested in Gov. securities for the one and only purpose of paying pol. as they become due. Note.-The "pol. fund" consists of all net prems. together with not less than 20 p.c. of the share cap. 2. Each prem. paid is treated as a separate transaction, and secures a completed pol., entirely independent of previous or after payments; consequently (3) no pol. can ever be forfeited. 4. Assurers may discontinue paying prems. at any time. The pol. obtained by previous payments will always remain in force. 5. Loans on most advantageous terms can be obtained upon the deposit of the pol. alone, in three days, and with perfect privacy; consequently (6) pol.-which are issued in the form of promissory notes-are negociable and readily available as a marketable security. 7. Shareholders having share warrants payable to bearer are free from all future liability. The following is the form of the "Assu. Promissory Note": No. P. 637. No P. 637. National Funds Assurance Company, Limited, 33, Finsbury Square, London, E. C., £100: 0: O Jan. 16th, 1873. At seven days' sight after the death of John Prudence, of Cheapside, London, the National Funds Assurance Company, Limited, promise to pay to bearer the sum of one hundred pounds sterling, value received. Countersigned by Examined by For and on behalf of the Company. Directors. This note is the first issued in connexion with a pol. dated 16th Jan., 1873, numbered 637, and will be taken up by the Co. 3 days after presentation for that purpose, on the following terms: On or after January 16, 1874 For the sum of £21 7 2 The prosp. explains that the "second note would be numbered P. 637, and stated in the indorsement or memorandum to be the second. The next would be and third, and so on, the last note being P. 637, to signify that Policy No. 637 has been completed, and the indorsement notice would be 'the last,' and the word 'completed' would be added before the word 'pol.' in the first line." And the following add. explanations are added: It will be observed that this promissory note is, in actual fact, a complete pol. It is in itself a valid document, whether any other prem. shall be paid or not. Hence it cannot be forfeited; and an assu. having once paid one or more prems., remains during his lifetime assu. for a proportionate part or parts of the sum orig. assu., losing only that part for which he does not pay prems. Thus the promissory note given as an example shows that John Prudence has taken out a pol. No. 637; that he has assu. for £500, for which he is to pay, in all, 5 prems. On paying his first prem., he receives his first promissory note, or pol. for £100, being one-fifth of the sum assu. He would have 4 more prems. only to pay, on payment of each of which he would receive a promissory note for £100, so that on paying his 5th and last prem., he would have no more to pay, but would be possessed of 5 promissory notes or 5 pol. for £100, making the £500 which he originally assu., and which would be payable to his representatives whenever his death should occur, even though only one prem. should have been paid; provided that while living he had duly met each prem. as it became due. If, however, after making his 1st, 2nd, or 3rd payments, he should, on any following prem. becoming due, desire to discontinue paying, he will be at perfect liberty to do so, without losing any benefit from his previous payments; he would still be possessed of promissory notes for £100 each for every prem. he had actually paid, and would remain assu. for those sums, together with all bonuses accruing, up to the close of his life. These promissory notes, it will be seen, are payable to bearer, and may therefore be transferred, without trouble, inconvenience, or expense, by simple delivery. They can be deposited at any time at the Co.'s office as security for loans on extremely liberal terms. The payment of prems. may extend over 5, 10, 15, 20, 25, or 30 years. The T. of prems. is arranged in the same form as that of the Positive. The amounts are a shade lower. The form of pol. by which the contract is carried out is as follows: National Funds Assu. Co., Lim., 33, Finsbury Square, Lond., E.C., Jan. 16th, 1873. Sum assu. £500, by five ann. prems. of £53 75. 11d. each. No. of pol. 637. Age 30. John Prudence, of Cheapside, Lond., hereinafter called the assu., having applied to the abovenamed Co., hereinafter called the Co., and having duly complied with all the previous requisitions of the Co., to their satisfaction, and having paid the first prem. of £53 75. 11d., and having received the Co.'s first note of hand for £100, the Co. hereby contracts with the assu. as follows: 1. The Co. will, in 7 days after sight, on satisfactory proof of the death of the assu., whilst this pol. is in force, pay to the representatives or assigns of the assu., or to bearer, the sum of £400, making, together with the Co.'s first promissory note for £100, delivered herewith, a total sum of £500 assured. 2. This pol. shall be considered to be in force if the prem. of £53 75. 11d. shall be paid on or before the 16th day of Jan. in the next and in each of the four succeeding years, or within 30 days thereafter. 3. On payment of each prem. a promissory note for £100, payable to bearer at 7 days' sight after the death of the assu., will be issued by the Co. |