United States. Temporary National Economic Committ.

Investigation of concentration of economic power; monograph no. 1[-43] (Volume no. 2) online

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and (e) maturity. 1 The largest proportion of industrial policies (53.96 percent)
terminated by lapse. This type of termination occurs when the policyholder fails
to continue the payment of premiums and when this failure takes place before the
policy has been in force long enough to have acquired nonforfeiture values.
When policies lapse, no cash is returned to the policyholder and it may be said that
all the policyholder received for the premiums he paid was the insurance protection
he enjoyed while the policy was in force.

Terminations of industrial insurance — Relative importance of different mode of
termination, 1928-87, based on all industrial policies of the Metropolitan, Pru-
dential, John Hancock, and Boston Mutual terminated each year, 1928-87





Percentages of the total number terminating by-


Year


Lapse


Surren-
der


Expiry


Maturity


Death


Total


1928...


68.06
65.17
63.59
59.28
57.36
56.15
54.72
39.96
35.65
31.11


20.72
23.02
27.56
32.78
36.56
36.48
35.01
37.66
35.95
38.72


1.79

1.94

1.52

1.46

1.23

1.68

3.04

13.75

18.24

18.89


1.43

1.49

1.07

.90

.73

.87

1.58

2.30

2.62

3.02


8.00
8.38
6.26
5.58
4.12
4.82
5.65
6.33
7.54
8.26


100


1929


100


1930


100


1931


100


1932


100


1933


100


1934


100


1935_


100


1936


100


1937 „


100






Total


53.96


32.93


5.46


1.47


6.18


100







Source: Annual Reports of the Commissioner of Insurance of Massachusetts.



Surre; der accounted for 32.93 percent of industrial policy terminations. After
policies aave been in force for over 5 years they acquire a nonforfeiture value
which upon surrender may be demanded in cash. 2 Therefore the policies sur-
rendered represent the termination of policy contracts, the cessation of premium
payments, and the realization in cash of nonforfeiture values which had accrued
to the insured.



1 It is possible also for policies to terminate by disability. In industrial insurance the policies which
terminate from this cause are few and have not been considered in this study.

2 Another form in which the nonforfeiture value may be taken is known as "paid-up insurance for a
reduced amount." This runs for the life of the insured.

101



102



CONCENTRATION OF ECONOMIC POWER




CONCENTRATION OF ECONOMIC POWER 103

Death accounted for 6.18 percent of the terminations in this period. It will
be observed that this mode of termination reached its lowest point (4.12 percent)
in 1932 from which it has since risen to 8.26 percent in 1937. The fluctuation in
the relative importance of terminations from death is due principally to the differ-
ences in the absolute numbers of terminations from other causes. There has
been little change in the actual number of terminations by death in this decade.

Under recent liberalizations in the provisions of industrial insurance, before
cash-surrender values are allowed policies may acquire nonforfeiture values which
may be taken in the form of "extended term" insurance. Under this arrange-
ment, with some variations among companies, a policy instead of lapsing upon
the discontinuance of premium payments is converted into paid-up term insur-
ance for the old face amount. The term for which it remains in force depends
upon the size of the reserve built up while premiums were paid. 3

When the terms of such policies expire the policies terminate by expiry. In-
asmuch as it was only in 1935 that extended- term insurance was made available
on industrial policies upon which premiums had been paid for such short periods,
it is understandable why expiry as a mode of termination was relatively unim-
portant before then. Expiry accounted for 1.79 percent of terminations in 1928,
bu* in 1937 accounted for 18.89 percent.

Maturity pertains to the policies written on the endowment plan which mature
in a specified number of years. Endowment policies which continue in force
until the expiration of the specified period terminate by maturity. 4 Maturity
accounted for 1.47 percent of all terminations.

The noteworthy trends in the modes of terminations during the 10 years
1928-37 are the steadiness in the importance of surrender, especially from 1932
on; the decrease in the relative importance of lapse, and the increase in the
importance of expiry. Obviously the decrease in the percentage of lapse and the
increase in percentage of expiry are related and are due to the liberalization of
nonforfeiture provisions mentioned above as a result of which a great many
policies, which under former conditions would have lapsed, now expire. The
total terminations from lapse, surrender, and expiry have fluctuated but little in
this period, ranging from a high of 95.15 percent in 1932 to a low of 88.72 percent
in 1937.



3 The Prudential, for example, in one of its industrial policies written in 1937 provided that the face
insurance "shall be automatically extended, commencing at the end of the period of grace, for a period of
1 week for each 3 weeks' premiums theretofore paid in cash."

4 Whole life policies are considered as endowment policies payable at age 96 when according to the mor-
tality tables all policyholders are supposed to be dead. Therefore those few whole-life policies which
persist until age 96 is reached terminate by maturity.



APPENDIX 9

List of Companies With Life Insurance Policies in Force in 1,666

Insured Families

Industrial policies:

Boston Mutual Life Insurance Co.
John Hancock Mutual Life Insurance Co.
Metropolitan Life Insurance Co.
Prudential Insurance Co. of America, The.
Ordinary policies:

I. Massachusetts companies:

Boston Mutual Life Insurance Co.

Columbian National Life Insurance Co., The.

John Hancock Mutual Life Insurance Co.

Massachusetts Mutual Life Insurance Co.

New England Mutual Life Insurance Co.

Savings Banks.

State Mutual Life Assurance Co. of Worcester
II. Companies of other States:

Acacia Mutual Life Insurance Co.

Aetna Life Insurance Co.

Bankers National Life Insurance Co.

Connecticut General Life Insurance Co.

Equitable Life Assurance Society of the United States, The.

Guardian Life Insurance Co. of America, The.

Home Life Insurance Co.

Metropolitan Life Insurance Co.

Mutual Benefit Life Insurance Co., The.

Mutual Trust Life Insurance Co.

National Life Insurance Co.

New York Life Insurance Co.

Penn Mutual Life Insurance Co., The.

Phoenix Mutual Life Insurance Co.

Provident Mutual Life Insurance Co. of Philadelphia.

Prudential Insurance Co. of America, The.

Security Mutual Life Insurance Co.

Shenandoah Life Insurance Co.

Sun Life Assurance Co. of Canada.

Travelers Insurance Co., The.

Union Central Life Insurance Co., The.

Union Labor Life Insurance Co., The.

Union Mutual Life Insurance Co.

United Life and Accident Insurance Co.

United States Government Life Insurance.
III. Fraternal associations:

Ancient Order of United Workmen.

Brith Abraham.

Eagles.

Elizabeth Daughters of America.

German's Benefit Association.

Herman Sons of America.

Independent Order Sons of Italy.

Knights of Columbus.

Ladies Catholic Benevolent Association.

Lithuanian Alliance of America.

Lithuanian Sons and Daughters Benevolent Association.

Masonic Lodge.

Massachusetts Catholic Order of Foresters.

104



CONCENTRATION OF ECONOMIC POWER 105

Ordinary policies — Continued.

III. Fraternal associations — Continued.

National Aid Society.

New England Order of Protection.

Odd Fellows.

Polish Roman Catholic Society.

Portuguese Continental Union.

Royal Arcanum.

St. Jean Baptiste of America.

San Pellegrino.

Scottish Clan.

Societa Di Salemitani.

Woodmen of the World.

IV. Mutual Benefit Associations:

Aid Association for Lutherans.

Boston Firemen's Mutual Benefit Association.

Boston Police Relief Association.

Economy Grocery Mutual Benefit Association.

Firemen's Permanent Protective Association.

Gamenell Fire Alarm Co. Mutual Benefit Association.

Ginn & Co. Mutual Benefit Association.

H. P. Hood & Sons Mutual Benefit Association.

Massachusetts Firemen's Mutual Benefit Association.

Schrafft's Mutual Benefit Association.

Waltham Watch Mutual Benefit Association.

Western Electric Mutual Benefit Association.

Workmen's Sick and Death Benefit Association.



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Online LibraryUnited States. Temporary National Economic CommittInvestigation of concentration of economic power; monograph no. 1[-43] (Volume no. 2) → online text (page 12 of 19)