740 THE POPULAR SCIENCE MONTHLY. 



it is but fair that such charge be made as to fully compensate the 

 association for the loss of a withdrawing member. 



These views may be considered as the equitable, middle course 

 between two extreme positions, and they are now very generally con- 

 ceded and adopted in practice. Policies are made non-forf citable after 

 two or three annual payments, and when lapsed, if presented within 

 reasonable time, either paid-up insurance is granted or a percentage 

 of the reserve allowed as cash surrender value. A few, indeed, have 

 gone further, and printed in the contract the fixed cash surrender value 

 that may be obtained at the end of every year. This innovation is 

 not unlikely to be permanently ingrafted upon the business, and even 

 now there is hardly a reputable company that declines to purchase its 

 own policies when presented at the proper time ; and the amounts 

 thus expended are far greater than is generally known. One leading 

 company of this State, whose annual premium income for 1879 was 

 about $12,500,000, paid over $4,500,000 for surrendered policies. Vari- 

 ous intricate formulas have been devised by actuaries to determine the 

 strictly equitable surrender value, which, however, as far as the general 

 reader is concerned, all culminate in a larger or smaller percentage of 

 the reserve. 



While proper agitation, competition, and a sense of justice, brought 

 about a fair adjustment of cash surrender values, the question of paid- 

 up insurance has been definitively determined in New York by the 

 enactment of a statute, which went into effect January 1, 1880. It 

 provides that when a policy shall lapse for the non-payment of pre- 

 mium, after being in force three years, the reserve and dividend addi- 

 tions on such policy shall, on demand made vntliin six months after 

 such lapse (unless the provisions of the statute had been specifically 

 waived), be taken as a single j^remium at the published rates of the 

 company, and be applied either to continue the policy in force at its 

 full amount, so long as such single premium will purchase temporary 

 insurance for that amount, or to purchase paid-up insurance, payable 

 at the scwie time as the original insurance ; provided, however, that 

 the net value of the insurance given for such single premium shall in 

 no case be less than two thirds of the entire reserve. That is to say, 

 that the whole amount of the policy shall remain in force for such a 

 length of time as no less than two thirds of the net reserve will pur- 

 chase, or that the amount of the policy shall be reduced correspond- 

 ingly, and be made to expire at the time originally fixed by the policy. 

 In principle, therefore, the question may be considered as permanently 

 settled, and new methods will certainly be devised to adjust minor 

 practical difficulties upon an equitable basis. 



Still, many crude ideas yet prevail among the insuring public, which 

 lead to misunderstandings that ought not to exist. Some intelligent 

 men, even, imagine that a company should be compelled to reinstate 

 a lapsed policy without reexamination of the insured life, or that, at 



