Making Depreciation Good by Assurance
PROBABLY the majority of persons find their resources sadly lessened by the great fall that has taken place in the value of investments: The consequences are par- ticularly grave in cases where- the investments represent provision for dependants Or for retirement. In times like the present life assurance is specially valuable because it affords a means' in Most cases of promptly repairing at a comparatively low cost the damage that has been wrought.
By effecting an assurance for the amount of the depreciation one is virtually placed in the same financial state as before the crisis, except for the payment of the premium. The extra expense entailed by the premium should not be onerous if the assurance is Carefully selected to fit the actual need. Whole life non-profit assurances cheaply provide a suns at death; family income assurances provide for children daring their dependency ; and endowment assurances or deferred annuities ensure an income on retirement: Possibly the income produced by the investment has been only temporarily diminished or destroyed. The sanguine nature of man fills him with hope that his investment will ultimately reacquire its original value. He should in that case certainly effect a short-term policy to furnish the requisite protection should anything untimely happen before the income from the investment has been reinstated.
A striking illustration of the value of short term assurance was afforded by the late Mr. Edgar Wallace: Mr. _ Wallace is reported to have effected before his ill-fated journey to America a life assurance for £10,000 payable in the event of his death within three Months. The premium was 12 10s., and the policy had only ten more days to run at the date of his death. No doubt the intention was to assure the fees he anticipated earning unless death should intervene.
Assuming that a recovery in the value of investments is expected within a year, an assurance for £1,000 could be effected against death within that period for a pre- mium approximately as shown below for the ages stated ;
Aged 30.. 50 68. 8d. Aged 45 .. £9 5s. Od.
„ 35 .. £7 Os. Od. „ BO .. 111 Ss. 6d. „ 40 .. £7 18s. dd. ;, 55 .7 £15 7s., Od.
Assurances against death within three years could be effected for annual premiums of from about 15s. to £3 more than those for One year, and against death within five years at from 50s. to„ £0 more per annum; One could assure; for one year, and then from year to year at a gradually rising premium indicated by the increase in the premiums charged at each successive age mentioned in the table.
No medical examination is usually required unless the answers to the questions in the proposal form make it necessary: Assurances of the kind do not carry the right to bonuses nor to surrender values. The premium merely ensures temporary protection for the specified period and nothing more. The selection of a more permanent type, of policy is therefore worth considering. Should appreciation in investments subsequently render the assurance redundant, the policy can be surrendered for cash, and when this is deducted from the amount paid in premiums the net cost of the protection in the
interim will)* found, to be very small.. •