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J BEQUEATHING OUR DEBTS What it means for Policyholders to Borrow on their Life Insurance Policies — Reduction of Protection to Widows and Orphans- Some Possible Remedies Views and Suggestioiu -of Repreaentative Newapapera. taken from their Editorial Pages, following the Discussion on this subject by the Association of Life Insur- ance Presidents ASSC)CIATION OF LIFE INSURANCE PRESIDENTS NEW YORK. 1914 Imprinted for the Information of its Policyholders by the ^ CANADA LIFE ASSURANCE COMPANY m i!iiiiii[:ii:iiiirainiiiiiiiBiiiiiiiiiiiiiiiiiii!ii!iiiiiiii>iii;!<:iiiiiM BEQUEATHING OUR DEBTS iiiiiiiiiiifiiiiiiiiiiiiiiiiji At the recent conference of the Association of Life Insurance Presidents in New York the evils arising from the growing practice of borrowing on the security of Life Insurance policies was fully discussed. The results of this practice were shown to be so serious to beneficiaries, as well as to the companies themselves, that leading newspapers all over the continent made editorial reference to ^t. A number of extracts from these articles have been collected and they are submitted to policyholders of the Canada Life Assurance Company herewith. In your own inti.-est consider the following: Don't borrow unless you must. Don't borrow more than you actually need. Pay the loan off as soon as possible. The company will accept instalments of any amount at any time. Every such (Miy- ment strengthens your policy and reduces the interest charge. N.B.— It is a notable fact that 90 per cent, of the loans made on Life Policies are never repaid by the borrowers. Toronto. May, 1914, iiyiiiiiiiiiiiiwii e 910833 BEQUPATHING OUR DF.BTS EDITORIAL COMMENTS. TAKING MONKY FR< \i T||K BABY'S BANK. Many loan* not all obtained on the iiecurity of a life inaurunce policy ma> iic likanad to taking money from the baby'i bank and not replacing it, lor not more than eight per cent, of all the money borrowed in this manner it ever repaid except through the policy lapaing or maturing. . . . There ia material for aurpriae when one con- •idere the extant to which the practice haa gone, aa ahown at the meeting of the Aaao- ciation of Life Insurance Preeidenta in New York. Theae loana are reported to have increaaed from onc'third of one per cent, of the reserve funda of American companiea in 1886 to aixteen per cent, in 1912 and to nearly eighteen per cent, this year. At the cloae of laat year out of the three billion five hundred million dollara of reaerve funda of all companiee it ia atated that five hundred and fifty million dollara had been loaned to policyholdera. ... If the companiea did not perinit audi loana and it i» un- likely they could all be brought to conaider auch a plan there would be other and more expenaive waya to the borrower to accomplish the aame thing. Tk* problem, it ia evident, ia not eaay of aolution. "Newark (N.J.) Newa." FOR THF. LAST AND MOST EXTREME NECESSITY ONLY. . . . A life insurance policy ought to be one of the most sacred things in a man's life. It ia the stipend that he ia laying aaide for the protection of his family in caae he should be auddenly taken away. To mortgage that providential lund ought to be not the eaaieat and the rr tdiest thing to do. but the last and the most extreme. It ia almoat like taking penniea out of the babiea' aavings bunk. "Cedar Kapids (la.) Republican." A TGAGINC; DEFENSELE.SS HEIRS. Instead of payi. _ ..a we go, it is so much easier, if so much less wise, to borrow from posterity. Extravagance often goes hand in hand with improvidence: and thia ia an extravagant age in an extravagant country. That it is a rich country is perhapa aome temptation, but no excuse. Various evidences, collective and individual, attest this inclinat'on to mortgage the future. What the indignant reflections of our poster- ity, who must shoulder the penalty in either or both added tax or depleted inheri'ance, does not diaturb our blithe and free-handed unconcern. ... An impre' ive aign of the times is the indictment drawn by the insurance fraternity both com- paniea and commisaioners — against the startling increase in the tendency lor >he in- aured to borrow from their OAin heira by dipping into the principal of the protection fund for their families. It in the unbroken increase in this borrowing pro- pensity that ia the disconcerting el- ^ent. ... In part we may blame the cost of high living for personal and municipui necessaries; but also in part there is in increaaing to a diaquieting dri ee. . . . Aa tha total amount of auch loana ia already $500,000,000. the proapect of ita bamg materially increaaed ia not a pleaaant one, for the policyholder who raiiea a loan on his policy commits a dangerous and imprudent act. There is no doubt that in many of the casL'S where the polic" Kaa been pledged the pledge m never redremed. and either the policy ia permitted to la • or only a small port of the sum for which it calls is ulti- mately payable to the designated beneficiary. . . . "Lexington (Ky.) Leader." WIVES SHOULD MAKE INVESTIGATION. . . . There ought to be in each State aome "atateamen" wise enough to see thai to compel insurance companiea to encourage policyholders running into debt is unwise, criminal, dishonest to the children and the wife. Pending such action, we ad- vise the wives of insured men to find out just what value there is to the protection which insurance is supposed to give them, and juat how much, if anything, the husband has borrowed on his policy — for every dollar thua borrowed will be taken away fiom the family in caae of death. The whole system is preposterous encouraging men to save money for the protection of their familiea AND THEN BY LAW COMPF.LLI NG THE INSURANCE COMPANIES TO TEMPT SUCH MEN TO RUN INTO DEBT. . . . — "New York Evening Jouma'." IJODV BLOW TO THRIFT. A report just issued by '.he Association of Life Insurance Presidents reveaU the astonishing mora diiquiating ia tha atatamanl that onca . oin ii mada it II not apt to b« repaid but, on tha contrary, mora will be taken r .1 the policy parmiti from lima to time It ihii mil rather painful evidence of failing ihrifl on ihc part of a tubilantial body of the peupla> -"Providence (R.I.) Journal." DEPI.ORABI.K (OMMENT ON EXTRAVAGANCE. The increaia of the boi ' »> ig of money on life policiei 11 believed to be tha reiull of extravagant living on tt'4 part of tha iniured. It ii not commend- able and ihould be diicouraged by life iniurance companiea. The real purpoie of life iniuranca i«. and nhould be, 10 provide for the lupport of wife or dependent family in caie of the death of tne miured. . . . Wha> a deplorable comment thii ii m the extravagance of thouaandi of American people.— Rock liland (III.) Argui." i LIVING BEYOND THEIR MEANS. . , . There ii juit one anawer to thii aitounding encroachment iipnn a protective inveitment -the American people are increaiingly living beyond their meani. . . . The report of the Aiaociation of Life Iniurance Preiident* telU u» that, ai the rnult of thii unusual expaniion of borrowing on life iniurance, beneficiarieii will be deprived of more than half a b'Uion dollari of life inr- -ance protection. Thi* prediction, by the way, can be lafely niade becauie experience ^wi that a la' ro- portion of the iniurance protection thui withdrawn is never replaced Mak all due allov%\nce for the poiiibility of profitable re-investmrnt for thii b >: rowed 1 ...ey, the inevitable loaaand waste implicit in thii practice must total to i^.ar.y. tiiai.y millions. When one coniiders the extent to which American huibandi and !'t,.hci» have re- couric to life iniurance ai the one lure guarantee of thr' 'amiliei a^u '<' nce appeals as most inhuman and sinister. Evidently the mania lor iiving beyond orr's means ha< reached a point where it no longer balks at the threat of a beggaring death. -"Milwaukee (Wis.) Free Press " IMPROVIDENCE THE CAUSE. Such a practice is not in keeping with the ideals of life insurance om- panies and they are doing well in striving to make their policyholders see the danger of it Probably the basic trouble is in the preient traniitory tendency of people to live up to the amount of their income. Initead of basing their mode of life on what they can afford they are limited only by their inability to spend more than they poaaeai. While fortune smiles things go along smoothly enough, and they usually carry sufficient life insurance to make them feel that they are protected. When some misfortune comes of a business natur, , or sickness or something else, these ir ,.rovident people are often too ready to avail themselves of the borrowing opportunities of their insur- ance policies (-fence the great increase deplored by the insurance companies- and justly. "Cambridge (Mass.) Standard." BEQUEATHING OUR DEBTS IMPAIRING OLD AGE PROVISIONS. i. indii^rj^ kT''"' "">''•' °' ''^'"' "" '° " '^•" '^y°"'l '»">"« h" become « mdicted by the tremendous expansion of loan, upon life in.ur.nce policies which w« brought to attention at a recent convention of life insurance men. The ri-^T'T •'"*"''''«• ~ f" °W «8e. made through outstanding polide. is toans. Not alone for government are economy and retrenchment necessary. The Ume ,s long overdue when mdividuals must resume the old-fashioned habit of living (N Y Tioumir'" '""'""' '^'''''- °' '• '"" "°* '"^°"'* '•"•" "AlbanJ A DANGER SIGNAL. <^« *'''° t-^ "°t «al«e that a. a nation we are living beyond our means, need, but to examme the annual reports of the life insurance companies. Borrowing mo^y on I.fe.n.urance.s-or ought to be-a last extremity. . . . Reckless extravagance ..a national characten.t.c. But when it carries us too far it always has led ^d it always will lead to most undesirable results, to forced and sudden curtailments which are extremely uncomfortable. When those times come they are inexpressTuyh^^er lai.) Union •• '""~" borrowing on life insurance policies.--San Diego DEFEATS THE PURPOSE OF LIFE INSURANCE. The Association of Life Insurance Presidents calls attention to the rapid increase of policy loans m recent years. . . . The magnitude of this loss of protection o dependent, can be better appreciated by a few comparisons. Half a billion dollars .s in exce« of he total amount of ordinary life insurance in force in any single State Zl^M U ■ ' '""''";" '**' ^""" °' ^'^" ^°'^- P—ylvania. llIinL. Oh o and Massachusetts . . . The Association is serving an excellent purpo«^ ii^ call- ing attention to the ncrease in nolicv loans I ;f. iii,tifi»J ;„ .►. .• ^ policy oans. . . . Life insurance companies are dlltlh ■""""""« to discourage policy loans. Figures show that they too often dcleat the real purpose of insurance.- "Portland (Ore.) Journal." DOUBLING THE PREMIUM RATE. if this «,,; r.1 ,J'''.**'°''' "'"/"^ object and purpose of life insurance is defeated If this sort of thing is permitted to go on. policies should not be treated or regarded sho^H ."k '°'J°"°«'"8. ">°"«y "«Pt in extreme emergencies. Certainly they should no be used as securities in business transactions, for it is a question of law as Tnl l:JT 1 \i' T"^^^"" '•" " "«•'' "» '° "- ''" P°'-^ """^-t the Unowle;,;: on hi „T beneficiar.es. . . . Now. if a policyholder borrows money on his policy, even at the current rates of interest for loan money, and if he borrow^ rate for the entire policy. For instance, if $1,250 were borrowed on a $5,000 policy that was issued under normal conditions, it would practically mean that the bor^wer was paying premiums on a $10,000 policy. . . . -"Boston (Mass.) Evening Glor" LOANS REMAIN UNPAID. deman J^^ ^f'' "' '"rl"^ ""^ '" " ""'"" ^^"""^ '""°'"' " '""^'"f^ by the increased demands for oans on life insurance policies which was brought to attention at a recent convention of life insurance men. ... At present the nol.V^K^U u allv fh. ^»t,» ,„ J J 1 . • . P"»ent tie policyholders have virtu- ally the nght to demand loans on their policies. That right has been freely exercised BEQUEATHING OUR DEBTS S I to raiK fund, for nr.i«:ell«neou. purpows. Such uw of it ha. a tendency to defeat the purpoae of life m.urance. Each policy", value i. impaired by m> much a. is the loan agam.t It which, once placed, i. more likely to remain than to be repaid. -Portland (Me.) Telegram." THE PROTECTION WITHDRAWN. The warning iuued recently by president, of great life insurance companie. against the system of obtaming loans on policies was timely. A. they My but a .mall proportion of the«> loan, are ever repaid, the re.ult being that the protection intended tor widow, and orphan, is withdrawn, defeating in large meaaure the original pur- POTC of the policy contract. . . . "Helena (Mont.) Record." BUT \ SMALL PORTION REPAID. ... And undoubtedly the privilege has been of great value to rame people But It Mem. that only a .mall portion, .ay ten per cent., of .uch loan, are ever repaid. *^° r °' '*'° '^''"^ '" ''"P=''«^- «"«^ '" ""any ca.es the whole is forfeited ... The object of insurance is the protection of the family in the caw of the death of the person insured. Such protection is easily destroyed or lessened if the practice mentioned become, too general. . . . -"Lynn (Mass.) News, " LITTLE LES.S THAN ROBBING BENEFK lARIES. One dangerous method of gambling with the capital which should belong to posterity IS attracting close attention of the life insurance companies, which have appointed a committee to investigate the .preading and evil practice of borrowing on life insurance policies. ... A man who borrows money on his insurance policy deliberately takes chances with the protection which he has supposedly arranged for his widow, his children or other dependents. Borrowing on an in.urance policy is almost certain to lessen that protection to a great extent, for it has been discovered that not more than ten per cent, of the money that is secured as a loan from the insur- ance companies by policyholders is ever repaid. ... The Association of Life Insurance Presidents has undertaken a campaign to reduce the borrowing habit among policyholders. Here is grave need for a campaign of education. Borrowing on life insurance policies is little less than robbing those who may be in want after the present generation is gone. It is a practice little short of criminal and one that to a large degree nullifies all the protection that life insurance offer.. It cannot be discouraged too strongly.— "Hartford (Conn.) Post." THE POLICY SHOULD BE SACRED. ... The thing to be guarded against is reckless borrowing. Depreciating the value of an insurance policy for purchasing an automobile, or for social extra- vagances, or for precarious investments, is almost on a par with actual theft from the beneficiaries. It is usually persons whose dependents are in need of the protection that borrow on their policies for the most reckless purposes. A policy should be held sacred for the benefit of those who are left to struggle with the world after the death of the insured. That was the original purpose of the holder of the policy, and all temp- tation to subvert that end should be resisted unless some tangible gain can be secured by depreciating the value of the policy through borrowing. Protection of dependent, should be kept m mind at a!! hazards. "Wilkes Bane (Pa.) Record." A ROBBERY OF COMFORT.S. Insurance companies, while very ready to lend money on life insurance policies, are beginning to take a very sensible attitude on the matter in issuing warnings as to BEQUEATHING OUR DEBTS the very large increaae in the practice and the corresponding fact that the payments on these loans are very slow in forthcoming, the borrowers seeming prone to keep up the interest payments only, while the principal of the policy remains decreased. . . . With many men the life insurance policy they hold constitutes the entire estate which they may leave to their family at death. To impair it by borrowing is to impair the future protection of the family in the event of an unexpected demise and is not a mere temporary accommodation personally, but almost a robbery of comforts for those who may remain behind. Going slower on life insurance loans will be the best policy for many an American citizen to follow. . . . — ^"Taunton (Mass.) Gazette." DEFEATING ITS PURPOSE. . . . The tendency of policyholders not to repay loans from insurance companies and the fact that over a half billion dollars is now outstanding in such form present a real problem to insurance companies. The policyholder is robbing the beneficiary to meet business needs or to indulge in extravagance, thus defeating the prime purpose of insurance. . . . — "Oklahoma City (Okla.) Times." INkMICAL TO INSURANCE BUSINESS. The life insurance companies are directing attention to the growth of a practice among a great many policyholders that they regard as a deplorable evil and are agitating the matter of taking some concerted action to put a check on it. This is the borrowing of money on policies. True, that is a privilege that the policyholder is entitled to exer- cise, but in so doing he defeats the very purpose for which he takes out life insurance by reducing, according to the amount of his loan, the protection and benefits of the same, unless he should make repayment, which only about te:i per cent, of these borrowers do, according to the reports of the companies. . . . 1 1 is obvious why the effect should be inimical to that business when so many policies return but a portion of their face value to the beneficiaries either at the time they mature or become payable because of the death of the persons on whose lives they are written. Disappointment is certain to be entertained in such cases, while it is frequently the fact that the borrower gets tired of paying the interest on the loan he has secured on his policy, in addition to the premium on the latter, and allows it to lapse. . . .--"Fall -er (Mass.) Globe." PAWNING PROTECTION OF FAMILIES. When a sudden demand is made for an unusual sum of money the holder of a life insurance policy is tempted to pawn the protection he has built up for his family, and as sudden demands for unusual sums of money are growing more frequent among us year by year policy loans are increiising in trolume. . . . The life insurance presidents hold out no suggestion as to checking this growing custom, but a general campaign against it may yet be necessary in the interest of those for whose benefit life insurance exists.— "Syracuse (N.Y.) Post-Standard." PAWNING THE PROVISION FOR WIDOWS. Life insurance has advanced tremendously in recent years. It has improved its methods materially. Prejudice against it has almost disappeared. Itnowenjovs unprecedented favor, both as a protection and as an investment. . . A m. -< might negotiate a loan on his life insurance policy to finance a sickness or « funera.. but he Iocs not do it to pay the grocer, the butcher or the clothing bill. In general, it is said to be not the high cost of living but the INCREASINGLY EXTRAVAGANT WAY OF LIVING THAT PROMPTS SO MANY AMERICANS TO PAWN THE PROVISION THEY INTENDED TO MAKE FOR THEIR WIDOWS AND THEIR CHILDREN OR FOR THEIR OWN OLD AGE. . . .—"Cleveland (O.) News " BEQUEATHING OUR DEBTS HOW MUCH FOR NECESSITIES OR AUTOMOBILES? The presidents of the big insurance companies of the country are holding a convention in New York, anc* some interesting facts are coming out in the speeches about life insurance. . . . Not one out of ten men who pledge their policies for loans ever pay back the money. It is gone for good, and their families have just that much less in case of death. The presidents are talking long and patiently how to over- come the habit of putting policies ui pawn in this way. It would be interesting to know how much of the half billion dollars went to pay for necessities, how much for the pur- chase of homes, how much for automobiles, and how much simply represented hard luck. --"Gary (Ind.) Tribune." BORROWING FROM THE WIDOW. The convention of presidents of life insurance companies in session in New York today has before it among other things the vexing problem of the mortgaged life in- surance policy. . . . The life insurance presidents do well to consider this problem. They do well to discLts ways and means of lessening the evil. They do well to sound an alarm in the interests of the bereaved dependents who must pay all these millions in loans if the policyholders do not. Your life insurance policy is a sacred trust. It is a fund for the protection of your loved ones when you die. When you borrow money on it with the policy as security, YOU ARE BORROWING FROM YOUR OWN WIDOW AND YOUR OWN ORPHANS. And when you are dead you cannot pay. Think a little deeper about that loan on your policy, Mr. Policyholder. Pay it if you can. Reduce it, anyway. Don't leave your widow and orphans the legacy of a bad debt — with you as the debtor. -"South Bend (Ind.) Tribune." ROBBING PETER TO PAY PAUL. . . . The abuse is, of course within the rights of the policyholder, but he is abusing his future or the future of the beneficiary, as experience shows that scarcely ten per cent, of the money so borrowed is ever paid back and often policies lapi.^ because of this practice. TTie mere statement of the fact that loans upon policies have in- creased from $19,000,000 in 1888 to $587,000,000 in 1912 is sufficient to show the extent of this unfortunate practice of robbing Peter to pay I ,ul. Here is a vast problem representing a condition that publicity of its gravity ought to serve to check. "Balti- more (Md.) American." LOANS MEAN LO.SS AND SUFFERING. The theory of life insurance is that it is for the protection agianst some calamity or hard times. At the death of the breadwinner the insurance becomes a protection to the widow and the children. Or the policy matures when the earning capacity of the breadwinner is on the decline and the money comes in to tide the insured through to the end. With this theory in mind, the amount of loans against the comfort of widowhood and old age appears stupendous. . . . Probably a share of the bor- rowing is made to meet contingencies for which the insurance was taken in the first place. But much must stand for loss and suffering, because the loans were made. — "Utica (N Y.) Observer." KEEPING UP WITH THE PROCESSION. . . . That means that policyholders have been borrowing big sums on their policies, borrowing on the future, and paying interest. The amounts borrowed must come out of the returns of the policies at maturity or at death of the holders. It is not a good showing and a bad practice, but then there has been a mighty urge to keep BEQUEATHING OUR DEBTS up with the proceMion in the last twenty-five yeara. something of the strength of which may be seen in the growing loans on life policies.— "Youngstown (O.) Vindicator." THE LOAN BEHIND THE TRAGEDY. . . . Extravagant living, the struggle to keep up with one's fashionable neighbors, is as disastrous as the struggle to keep up immense armaments, which are bringing European powers to the verge of bankruptcy. Gone are the days of tl rift and modest living. Life is one long pretense, a keeping up of appearance until comes the tragedy so often seen in the wanted column: "A middle-aged woman of refined appearance wants a position as housekeeper. Good home rather than wages." Behind many of these annuncements will be found an insurance policy with such a heavy loan on it as to leave just enough for funeral expenses.— "Springfield (Mass.) Home- stead." BORROWER ESC.\PES. THE WIDOW REGRETS. • . . Extravagance, as a national trait, is no more clearly shown than by these statistics. There is much merit in the proposition to make borrowing on policies less easy of ■(rcomplishment. Borrowing on them is seductive. They are not actively and constantly urging repayment like the private creditor or endorser, and yet time slips around and in due season cuts down the tardy borrower, who thereby escapes regret, but at the expense of his bereaved family.— "Williamsport (Pa.) Sun." INDULGENCE On HARD TIMES? . . . The rising line of loans corresponds fairly well with the rising cost of living: and it also corresponds fairly well with the automobile fever. . . Once a loan is made on a policy, there it remains, and is found cutting down the family insurance fund when the poli:y becomes payable, usually when it is most needed. On the total business of thirty-nine leading companies the average ratio of policy loans to reserves at the close of 191 1 was 15.98 per cent. Kansas is one of 28 States where the ratio exceeded this figure, the ratio of loans to reserves in this State being at that time 16.78 per cent The principle of hfe insurance is present sacrifice for a future good. Do these figures indicate a decUne in that spirit, or a necessity that leaves choice out of account? Does it mean a reign of pleasure and indulgence or hard times: high living or high-cost living? The purposes for which the loans were made would show, but these purposes as a rule are not reported to the insurance companies.— "Topeka (Kan.) Capital." LUXURIES vs. LIFE INSURANCE. . . . To hold the business the companies gave loans on policies to enable those who otherwise would have to drop out to keep the protection for their families. It has happened, though, that this primary object has been lost sight of by policyholders. To-day loans art asked for many reasons other than retention of protection. Many leans are secured for the payment of debts that never should have been allowed to accumulate, for business expansions-of questionable wisdom and even for the purchase of luxuries. . . . — "Portsmouth (N.H.) Times." AUTOMOBILES vs. PROTECTION. The Association of Life Insurance Presidents in session in .New \ork is dis- cussing questions that are of interest in hundreds of thousands of American homes. . . . But the demands of an extravagant age have prompted borrowing on policies for far different reasons. Many an automobile has been bought with the money which should have remained in the fund created for the benefit of the wife and children in BEQUEATHING OUR DEBTS 9 the event of the death of the head of the houte. It i> well for the president* of the inaurmnce companies to call attuntion to this matter and to urge reform. . . "Water- ville (Me.) Sentinel." TOO MUCH HIGH LIVING. An unhealthy aign ii manifested in American i^e by the rapid and steady in- crease in loans made upon life insurance policies. This may be justly taken, noi so much as an indication of bad business conditions, as an increase in extravagant h . ,ng on the part of the families of men who carry life insurance policies. The carrying of a life insurance policy is an absolute nece.«sity, by men who can possibly pay the premium and who have other people dependent upon them. Perhaps there was some discussion, years ago, as to the advisability of carrying a life insurance policy, but that question is not open for discussion now. An insurance policy is part of the foundation of every thrifty life. But, borrowing money on an insurance policy is not gotd busi- ness, unless the necessity is urgent. When loans of this sort are made in so many diffe. -nt parts of the country, and made so ofi.n. a state of affair indicated whici does not speak well for American life. This condition indicates th \merica is suffer- ing from the cost of too much high living and that some people who are not able to do so. are enjoying luxuries and conveniences wKich their income does not junify. — "Montgomery (/ la.) Advertiser." EXTRACTING THE BENEFIT. Men lorrow close up to the cash value of their policies to buy motor cars, to take their fam.lies abroad, to indulge themselves in other ways. They may be able to afford the motor cars, »he tours and the indulgences, but. of course, as the insurance companies have pointed out. the loan made on the policy extracts from it the protection to the policyholder's family -the very thing for which he took out the policy and has been paying his premiums. . . . —"Washington (DC.) Times." is country, arrived few one loaded ible source nations are individuals to equalize I of general A SYMPTOMATIC liABIT. Borrowing on insurance policies is a habit which is growing in th It should be discouraged. ... In the spending era at which we have ; think of the solid advanta^s of an intact insurance policy as compared with up with loans. The habit of borrowing from the most convenient avail' is a symptom of the financial heedlessness of the day. Cities. States and borrowing almost up to the limit of their interest paying powers, and naturally think they can do Hkewise. . . The object of insurance being the shocks and multiply the incentives to thrift, any question involving it i interest. — "Paterson (N.J.) Chronic' .." HAZARDOUS WASTE FOR CURRENT EXPENSES. Tne unwisdom of borrowing money on life insurance policie.s has just been shown in an impressive manner by the results of an investigation m»de by the general counsel for the Association of Life Insurance Presidents. . . . These figures call attention to the folly of obtaining money upon the life insurance policy that should be held as a sacred trust for the benefit of the family of the insured. . . . The fact that one can have his life insured and at the same tin- be able in the hours of trouble to get needed cash upon his life insurance policy, is one of the best features of modern life in ance. But too many have taken unwise advantage of this convenience. Hundreds, and perhaps thousands, have borrowed money for speculative purposes, or have consumed the fund for luxuries which were beyond the means of the borrower. Many policies have been milked dry during the lives of the insured and have b;n 10 BEQliEATHING OUR DEBT.- practicaily worthleu at the time when they should have provided legacies lor the help> leu. There is a general sentiment among insurance companies to-day to diiicouraga policy loans. This seems wise. It is hazardous waste for current expenses or for business u.?r<. . 'ow on them at a low xvithout her consent? — "Columbus (O.) Dispatch." IN THE INTEREST OF SUPPOSED BENEFICIARIES. It has been a cause of great satisfaction to the public that life insurance has become so general in this country. It has kept above the poverty line millions of our BEQUEATHING OUR DEBTS paople left othcrwiic destitute by the death of the family breadwinner. . . . Thia borrowing by policyholderi ia no detriment to the companies. . . . But in the in- terest of the supposed beneficiariea of these policies, and of the public upon which rest* the burden of providing for the unfortunate, (he officials of the companies earnestly protest against the practice of borrowing on policies and urge that it shall cease except in cases of the most imperative necessity. — ^"San Francisco (Cal.) Chronicle." SOMETIMKS PLAIN MEAMIEARTEDNESS. . . . When a man borrows on his policy, he expects to pay it back soon. This investigation by the insurance presidents showed that few of these loans are ever repaid. The modern married woman is ill-fitted to cope with the world. The time that might have provided her with a breadwinning equipment, has gone to service to husband and children. It is a pretty mean-hearted man who does not do everything possible to leave some degree of comfort behind him, and to leave it intact, unmort- gaged either by personal extravagance or business ambition. — "Cheyenne (Wyo.) State Leader." POOR BL'SINESS JUDGMENT. Surprising figures also are presented in a paper by President Childs, of the Columbian National Life Insurance Company, which indicate a growing habit of borrowing upon policies. Besides constituting a serious drain on the funds of the company this practice indicates poor business judgment on the part o( the policyholder. The value of his policy is materially decreased and those dependent upon him are afforded just that much less protection. In many cases the loans arc made without knowledge of the policyholders' families or other beneficiarien. "New Britain (Conn.) Herald." LIFE COMPANIES SHOULD DRAW THE LINE TIGHTER. It is unfortunate that the kind of borrowing in question cannot be checked in the vast extent to which it prevails. But the life policy, according to its terms, is a certificate of credit, and legislation could scarcely differentiate in treating it. But if life companies would draw the line more strictly and discourage such loaning except in the case of proof of imperative need, it would go far. One company, how- ever, could not do it unless all its important rivals did the snme. "Montclair (N.J.) Times." DRASTIC ACTION NECES.SARY. The meeting of the Association of Life Insurance Presidents at ilie liotei Aster was of decided interest and some very plain truths were told at the sessions. Particular attention was paid to the growing tendency of policyholders to mortgage their policies. It is a pity that such statements are absolutely true, but they are. We agree with Mr. Childs that some drastic action is necessary in order to put an end to the evil. "Long Island City (N.Y.) Star." A NOTICE OF WITHDRAWAL PROPOSED. We imagine, however, that the rapid growth in the volume of money outstanding in loans to policyholders is due in part to the growth in knowledge of what a life insurance policy really is. it has come to be regarded as an investment with savings as well as loan features. Incidentally there is no better security, from the com- pany's standpoint, than policy loans. Some underwriters would welcome a law or regulation empowering the companies to take advantage of notice of either sixty or ninety days. Savings banks are thus protected from runs. "New York Commercial. ' I 14 BEQUEATHING OUR DEBTS SAFEGUARD THE BENEFICIARY. ■ . . Much of tha moiMy goM into MiterpriaM which mmtarially boMfit thoM dependent on the policyholder. Take, (or instance, the caaa of a man whose butinaM ia suffering from temporary depreaoon. By pledging hia inaurance. ha ia enabled to raise sufficient funds to carry it over the atormy period and make a success of it. It would be folly for that man to aat hia face against borrowing on his insurance. . . . It is true, of course, that a large proportion of the money secured by pledging policies is wasted or diverted from the beneficiaries. It is true, too, that the practice is growing and that it is a tendency which ought to he diacouraged. A sufficient corrective, however, will be the application of a few common-sense rules designed to safeguard the inteiejts of thoae for whoae benefit the policiea are iaaued.— "Springfield (III.) State Journal." BORROWING VALUES OF POLICIES SHOULD BE SUBORDINATED. It is a highly important and valuable service the Association of Life Insurance Presidents is rendering the public in its endeavor to halt the growth of the oractice of borrowing upon life insurance policies. . . . The protection that ought to be given the family is impaired and sometimes practically destroyed through this system of borrowing and any effort that promises the lessening of this growing evil will be wel- comed and encouraged by all thoughtful persons. Would it not help toward the desired end if the life insurance companies directed their agenU in soliciting business to subor- dinate the borrowing value of their policies and emphasize their value in giving solid anJ permanent protection>— "Montpelier (Vt.) Journal." REDUCE THE LOAN VALUE. A report by Robert Lynn Cox, formerly of Buffalo and now general counsel of the Association of Life Insurance Preaidenta, on the amount of loans made against policies and the effect on beneficiariea contain.! some surprising statistics. . . . What this borrowing costs beneficiaries is shown by the fact that the returns to com- panies by borrowers do not exceed ten per cent. . . . How this situation can be remedied is not apparent, unless the companies greatly reduce or eliminate altogether the loan value of policies. But it is to be borne in mind that many insurance agents who sell life policies make much of the loan value of their policies, pointing out with great force that money can be had on the policies at any time at a low rate and be kept as long as it is needed. The insurance presidents might help a little by forbidding their agents to make so much of the loan value feature.— "Buffalo (N.Y.) Express." EDUCATION RATHER THAN LEGISLATION. . . . Reports show that not more than ten per cent, of the money borrowed nn insurances policies is ever repaid. The rest stands virtually as a charge against the estate, to be paid too often from the small sum left the widow and children. The poliryhoider mortgages the future, not of himself, but of those for whom he took the policy, whose interests should be paramount with him. It is not a matter to be con- trolled by law. . . . Public opinion must control the matter. Insurance officials do well to call attention to it.— "Cleveland (O.) Plain Dealer." \ GREAT REFORM. . . . If the insurance companies can overcome this borrowing evil they will have accomplished a great reform. . . . How the companies can prevent this tendency except by moral suasion it is difficult to see. . . . — "Harrisburg (Pa.) Telegraph." BEQUEATHING O R DEBTS IS PROTECTION A .SACRED DUTY. ... Of couraa. if tha policy ii -nadc payabi* to tha %»ifa in event of daaUi har conaant i* uaually naeaiaary to aacure tha loan. But too i (tan thia coniant ia raadily obtainad baeauaa tha autoinobila contribute! to har plaaaura aa wall aa to that of har huaband. Sh«: diacount* ^ha future proaparity which la to take care of the loan. To protect hia fanily by life inauranca ia a aacred duty that every huaband and father owaa to thoae dependant upon him, and it ahould be an equally aacred duty to keep that inauranca unimpaired. The policy ahould never be reaorted to for a loan except for a dire neceaaity, and then the aame motive that prompts the payment of the prumiuma ahould stimulate a daaire to repay tha loan. ... In the correction of this, as in tha correction of other preaent-day evils, the rem«i> is in the education of the people rather than in legislation. "Naahua (N.H.) Telr«raph." EDUCATION THE SOLUTION. "The Capital" some time ago commented on the great incraast^ mi loana on life inauranca policiea, which the managers of the large companies regard as a serious con- dition. The trouble is that the equitiea represented by insurance payments are squan- dered to satisfy the craze for pleasure and so the savings of life insurance go to buy automobiles and other purchaaea that the buyers cannot in fact afford. Now comes the "Atlanta Georgian" and demands that the law stop this thing by prohibiting the insurance companiea from loaning on their policiea. But the remedy doea not meet the disease in several reapects. . This is a matter for the use of commonsenae and good judgment by the policyholder and beneficiary. They can do what the; will with their own. and no law can fairly prohibit them; neither can the policyholder !-« gifted with good sense by an act of the legislature. - "Topelt.i (Kan.) Capital " March 9. 1914. M BEQUEATHING OUR DEBTS POLICY LOANS The attention of Canada Life policyholders is urgently directed to the foregoing pages of this booklet. The opinions expressed there are those of many of the most influential and best known newspapers published on the continent and they reflect the unani- mous opinion of thinking men everywhere that this matter has come to be a serious menace, not only to the widow and orphan, but also to tht entire framework of insurance. Because it is so easy to obtain money in this wa\ policy holders somctin -s abuse the privilege, obtaining loans when they are not really needed, or borrowing a larger amount than is necessary. Every loan reduces the protection of your beneficiary and undermines the strength of your policy contract. lilllllllllMillinillllillMIIIHIilllllilllllliM^^^^^^ HOLD ON! MiiiHiHuniiuiiiittiini Do not throw away what you may not be able to get back. Out of every nine men applying for insurance, one is per- manently rejected because of physical unfitness. Perhaps that one could have got it a little while ago — but he left it too late, and some weakness or other developed. If you let your insurance lapse, what guarantee have you that you will be able to replace it ? There comes a time in the life of every man when he realizes to the full the need of insurance. The having it or not having it is the difference between content and bitter regret. Be on the safe side and keep your insurance in force. CANADA LIFE ASSURANCE COMPANY iiillillllillllillllllllMWiilll^ SIX FACTS From tht 97th ANNUAL REPORT of THE CANADA LIFE ASSURANCE COMPANY '■ItUIMIIIIMIIHHIiriHtMllldUlirillH^ In important respects the CompMiy in i » 1 3 occelled it* record for any previoua year in its history. 1. THE SURPLUS EARNED in 1913 was $1,709,959.66. eueeding by over $179,000 the earnings of 1912, and by a much larger amount the earning* of any previou* year. The present net aurpius is $6,183,278.39. 2. THE INCOME of $8,094,885.70 was sreater than that of the previous year bv $696,125.96. and the greatest in the Company's history. The rate of interest earned, which had been steadily advancing since 1899. was further improved in 1913. This is an important factor in producing surplus. 3. THE ASSETS were inci«aaed by $3.860.27 1 .32, and now stand at $52,161,794.81. 4. THE TOTAL ASSURANCES now in force are for $153,121,363.94. an increase of over $8,273,000 in the year. 5. THE PAYMENTS TO fK)LlCYHOLDERS in 1913 totalled $2.878.016.1 1, an increase of $415,051.31 over thoseof 1912. In addition to this. LOANS TO POLICYHOLDERS on security of their policy con- tracts were made for $1,692,248.71. 6. THE MORTALITY of the year was again more favorable than the expectation, and this, with a continued LOW EXPENSE RATIO, contributed to the earning of a record surplus.