4. An agent insured a planing mill, owned by B, for $8,000. The company, when insuring such risks, inserts a provision in the policy which requires that the insured shall keep a watchman on the property. The agent, in order to induce B to take out a policy, promised that he would not require him to keep a watchman on the premises; whereupon B took the insurance. The policy, however, contained the usual stipulation referred to. The property burnt, but the company refused to pay the loss, because the insured did not comply with the conditions of the policy. What rights has the insured?

5. A loaned B $700 with which to buy furniture. A then had the furniture insured for his own benefit. It was destroyed by fire. Is the company liable?

6. A had his stock of drygoods insured. Subsequently he removed his stock into another storeroom, which was much better protected in case of fire than the former. Can A collect the insurance in case of fire?

7. A sold property to B which was fully insured. B, knowing that the property was insured, thought that he was fully protected. The property was destroyed by fire. Is the company liable to either A or B?

8. B insured his property, worth about $5,000, for $8,000. The property was destroyed by fire. How much can B recover?

9. A had his property insured for $20,000 in the following companies: Etna, $5,000; Hartford, $3,000; Home, $6,000; Vermont, $2,000; Mutual, $4,000. A loss of $7,000 was caused by fire. How much must each company pay?

10. A had his dwelling insured and later decided to remodel the first story so that he could put in a stock of groceries. He still used the upper floors as a dwelling and after he had conducted the grocery for a few months the building was destroyed by fire. The company had never been notified of the alteration. Is the company liable for the loss?

550. Definitions. Life insurance is a contract to pay a designated person, cailed the beneficiary, a certain sum of money on the death of the person whose life is insured. The consideration for the insurance is called the premium, and it may be paid annually, semi-annually, quarterly, or monthly. The amount of the insurance may be paid in one sum on the death of the insured, or in installments at stated periods for a designated length of time.

551. Parties. The person whose life is insured is called the insured, and the company which undertakes to pay the loss is called the insurer, and the person for whose benefit the insu ance is taken out is the beneficiary.

552. Who may insure. Rule: As a general rule any person who is capable of entering into a contract may make a contract of insurance. It is necessary, however, that the beneficiary should have an insurable interest in the life of the insured.

553. Insurable interest. An insurable interest is very hard to define. It means a substantial pecuniary interest in the life of another. If one depends upon another for support or education, he has an insurable interest in the life of the one on whom he is dependent. A minor child has an insurable interest in the life of its parents, and a wife in the life of her husband, a

creditor in the life of his debtor, and a parent in the life of a minor child or one upon whom he is dependent for support. Mere relationship, however, is not sufficient, there must be some dependency. One brother can not insure the life of another, unless one for some reason supports the other. It is not required that the insurable interest shall continue until the insurance becomes due. If it exist at the time of the policy is taken out that is sufficient. Where a creditor has the life of his debtor insured to secure the payment of the debt, the fact that the debt is subsequently paid, will not prevent the creditor from collecting the insurance on the subsequent death of the insured. The beneficiary acquires a vested interest in the insurance contract as soon as it is taken out, and a new beneficiary can not be named without his consent, unless the insured has reserved the right in the policy to change the beneficiary. The insured has the right to make the policy payable to anyone he chooses, if he takes it out himself.

554. Insurance contract. It should be borne in mind that a policy of insurance is a contract between the company and the parties insured, and that no verbal statements of an agent will be allowed to vary the terms of the agreement. An insurance policy should be carefully read and thoroughly understood before it is executed.

555. Application. This is usually a written statement signed by the insured, in which he answers questions as to his age, habits, health, and as to the existence of any dangerous diseases in himself or in his ancestry. This application is usually made a part of the contract and it is absolutely essential that the questions in the application should be answered truthfully, since any material misrepresentation will void the policy.

556. Premium. This is the consideration paid for the insurance. The amount of the premium depends on the amount for which the party is insured, his age, and the kind of policy he has taken out. The validity of the policy depends on the prompt payment of the premium.

557. Policies. There are many different kinds of insurance policies, and a party seeking insurance should study the differ

ent plans and select one to meet his especial requirements, and also that he may understand what he is buying. One of the most common policies is the straight life policy. This policy provides for the payment of a certain sum on the death of the insured on condition that the insured pay the specified premiums at stated intervals during his life.

The endowment policy is one which provides for the payment of a certain sum of money to the insured at the expiration of a given number of years, or to a designated beneficiary, in case the insured dies before the expiration of the endowment period. This is an expensive policy as it does not depend wholly on the death of the insured, but is payable at a specified time. It is often a good policy to buy as it necessitates the saving of a certain sum of money each year to meet the premiums, and has an element of investment as well as protection.

The limited payment life policy provides for the payment of a certain sum on the death of the insured, to a designated beneficiary, on condition of the payment of a certain premium for a specified number of years, or until the death of the insured, if he dies before the expiration of the designated period.

558. Surrender values. The best life insurance companies provide in their policies for a surrender value. This means that if the insured decides not to make any further payments after two or three years, he need not lose all that he has paid in, but will be entitled to have a certain amount of money returned to him. The amount that will be returned at the end of stated periods may be found in tables in the policy. The amount of cash that will be returned at any given period constitutes the surrender value of the policy at that time.

559. Loan value. The insured may also have the privilege of borrowing a certain sum of money on his policy after the expiration of a few years. This is the loan value of the policy. The insured will be required to pay interest on this loan and must usually assign the policy to the company to secure the payment of the debt.

560. Paid-up policy. If the insured decides after two or three years that he can not afford to carry the policy any longer, he

may stop paying the premiums and take out a paid-up policy in which the company agrees to pay a certain amount to the beneficiary on the death of the insured, without the payment of further premiums. The amount of such a policy is usually only a small per cent of the original policy, depending on how long the policy has been in force.

561. Assignment. Life insurance policies are assignable. The insured has the right with the consent of the beneficiary, to assign a policy to secure a debt. It is necessary, however, to give the company notice of the assignment. This does not mean that any one else can be placed in the stead of the insured, or that the beneficiary can be changed without the consent of the company.

It

562. Notice of death. As soon as the insured dies, notice of death should be given to the insurance company at once. is usual to have the attending physician sign a death certificate stating the time and cause of the death.

1. Define life insurance.

2. Who is the insurer?

3. Define beneficiary.

QUESTIONS

4. Who may enter into a contract of life insurance?

5. What is meant by an insurable interest?

6. Is mere relationship sufficient to constitute an insurable interest? 7. Where a creditor has the life of a debtor insured to secure the pay. ment of the debt is it necessary that the indebtedness shall continue until the policy matures?

8. What is the nature of a life insurance contract?

9. Why is an application for life insurance so important?

10. Define premium.

11. Name the different kinds of insurance policies.

12. What is a straight life policy?

13. What is an endowment policy?

14. What is a limited payment life policy?

15. What is the surrender value of a policy?

16. What is the loan value of a policy?

17. Has the insured the right to assign a life insurance policy?