because Mr. Brown wants lifetime protection but wishes to stop paying premiums on it at age 65, when he hopes to retire from business. At that time he may wish to discontinue the insurance protection and elect a lifetime income from the cash proceeds of both policies.

3. ENDOWMENT POLICY

An endowment policy enables a person to accumulate a sum of money which is paid to him at a date named in the policy (the maturity date). If the policyholder dies before the maturity date, the money is paid to his beneficiary. Because the premium rate is higher than that of a limited payment life policy or a straight life policy, the policy builds higher cash values.

When a person buys an endowment policy, he selects the date on which he wishes to receive the money. This may be at the expiration of a definite number of years, or at a certain age.

The endowment policy is designed for those who need not only life insurance protection for dependents but also a definite sum of money or income at some future date to supplement or replace their earnings.

An endowment is often used to accumulate a sum of money for a specific purpose. Married men who have been able to cover their family needs with other policies buy endowment policies because this plan provides some additional insurance protection for dependents during the endowment period, and also makes possible the accumulation of funds for retirement purposes.

Single persons who have only moderate family obligations use endowment policies as a means of regularly setting aside portions of their earnings for future use as well as to provide insurance protection for, say, their parents.

People also purchase endowment policies for the purpose of electing a lifetime income at the end of the endowment period, rather than taking a lump sum at that time.

Example

Robert Evans is a buyer in a department store. He is 38 years old, has a wife 34, and a daughter 4.

He now has $40,000 of life insurance, including $10,000 of group insurance, which, with Social Security, would provide a modest income until his daughter is out of high school, and still leave something for his wife.

Mr. Evans has just received an increase in salary and wants to set aside a good part of it. His agent advises him to buy a $10,000 endowment policy maturing at age 65. This will enable him to accumulate money for retirement. With this plus his company pension and Social Security payments, he will have a fairly comfortable income.

On the other hand, should Mr. Evans not live to age 65 the proceeds of this new policy, added to his present insurance, will provide a more adequate income for his wife.

SPECIAL POLICIES FOR FAMILY PROTECTION

Special policies have been developed to help meet the insurance needs of the head of a family with minor children. The head of such a family needs life insurance protection to provide:

1.

2.

3.

Funds to pay off debts and to meet his last sickness and burial expenses.

An income which will help provide for the children until they reach maturity.

Funds sufficient to allow the widow to get readjusted in life, if not sufficient to provide her with a life income.

The first and third needs call for permanent life insurance protection that is either a straight life, a limited pay life, or an

endowment policy. The second need requires only temporary protection and can be met by term insurance.

The family income policy combines these two types of protection. The permanent part is usually a straight life policy. The temporary part is reducing term insurance which runs for 10, 15, or 20 years. from date of purchase - which is called the family protection period.

Thus a $10,000 family income policy would provide a family with an income of $100 a month (1 per cent of $10,000) at the death of the father for the balance of the protection period.

Additionally, it would provide $10,000 for the family from the permanent portion of the policy. Most policies are arranged to pay this $10,000 immediately on the death of the father, but it can instead be used to provide an income.

If the policyholder outlives the family protection period, he has simply a permanent life policy for $10,000 the term portion having ended. At or near the end of this period, his policy provides for a reduction in premium to that of the $10,000 permanent life policy alone.

Many companies will provide the family income benefit by issuing a "rider" that can be purchased as a supplement to a permanent policy which the policyholder already owns.

Companies also offer a family plan policy which also combines straight life with term insurance protection. A typical unit places $5,000 of straight life insurance on the father, $1,000 of term insurance to age 65 on the wife, and $1,000 of term insurance to age 18, 21 or 25 on each of the children. The protection continues as the family group changes. For example, newborn children are automatically covered at no additional cost when they become 15 days old.

Another type of special policy is based on the idea that a young man needs a lower premium rate for a few years and can thereafter afford to pay more while buying an amount of insurance which remains the same throughout life. This is often called a modified or graded-premium policy. Some companies offer policies with premiums increasing yearly for as many as 11 years before becoming fixed at a stated level.

A policy for those under age 21, which will jump to five times the amount of coverage after age 21, has proved to be very popular. It is generally known as a "jumping juvenile" policy. The premiums remain the same throughout life but are higher than for regular juvenile policies.

Some Recent Developments

One of the most important developments in individual life insurance is the guaranteed insurability option. This allows the policyholder to buy additional insurance even if he has become uninsurable. The option is generally offered with the purchase of a whole life or endowment policy to buyers under age 40. Additional insurance can be purchased every three or four years, usually in the same amount as the original policy but often no more than $10,000 each time.

A development which facilitates the payment of monthly premiums, is the preauthorized check plan. The life insurance company, with the authorization of the policyholder and the consent of the bank, draws a draft or check each month on the policyholder's account for the amount of the premium.

Premiums are graded by size by most companies so that the rate per $1,000 of life insurance decreases as the size of the policy purchased increases. Also, most companies write insurance at lower premium rates for women than for men in recognition of the somewhat lower mortality rates for women.

Income protection that the policyholder himself can enjoy that's what life annuities are all about. Life annuities are different from regular insurance:

Life insurance provides a set sum at the policyholder's death. (Under endowment policies, a set sum is provided to the policyholder at a future date if he is still living, or to his beneficiary if he dies before that date.)

Life annuities provide an income to the contract owner (the annuitant) for his entire lifetime.

People buy life insurance because they may not live long enough to support their families. People buy life annuities because they may outlive their earning years.

Life insurance policies and annuity contracts complement each other. The proceeds of life insurance policies may be turned into annuity income. Insurance policies may be included in some types of annuities. Thus, while life insurance is designed to furnish protection for dependents and while life annuities are designed to furnish income for old age, each may meet part of the other objective. Both insurance policies and annuity contracts have their uses in a well-balanced personal security program.

Annuities are based on the principle of a group of people getting together and sharing risks. Individually, these people could not spend their savings without fear of outliving their principal. Some would die before their principal was exhausted, but others would live long after their money had disappeared.