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 conceded and adopted in practice. Policies are made non-forfeitable 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. Various 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 premium, after being in force three years, the reserve and dividend additions on such policy shall, on demand made within six months after such lapse (unless the provisions of the statute had been specifically waived), be taken as a single premium 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 same 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 purchase, or that the amount of the policy shall be reduced correspondingly, 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 reëxamination of the insured life, or that, at
