Life insurance policies may be divided into four general classes, viz: Term, Life, Limited Life and Endowment. Any of these may be purchased by a single payment of premium, but the usual method is to pay the premium by annual or semi-annual installments. The formalities to be complied with are similar in all policy contracts - application, medical examination, etc. A term policy merely provides insurance for a certain number of years, at the expiration of which it terminates and has no value. This is the oldest form of policy. A condition is sometimes inserted in a term policy providing that it may be renewed at an increased rate at the end of the period without a medical examination. Policies of this character are called "renewable term" policies.

Life policies provide for the payment of the face of the policy at the death of the insured, whenever that may occur. A whole life insurance is thus seen to be a term insurance for the duration of possible life. Ordinary life policies provide for the payment of premiums during the life of the insured.

Limited life policies are those in which it is provided that after a certain number of payments no further payment of premiums is necessary, and that the policy is fully paid up. The policy may then be held by the insured as an asset awaiting realization upon his death. The periods for the payment of premiums under such policies are usually 10, 15 or 20 years.

An endowment policy is one which provides that its face value shall be payable to the insured at the end of a fixed period (10, 15 or 20 years as the case may be) if he survives, or to the beneficiary if he dies within the period. This form of insurance was introduced later than the other usual forms. It was expected that it would be the means of inducing many persons to insure, who would not otherwise do so, in the hope of receiving the face of the policy during their lifetime. It especially appeals to those who desire to provide against need in old age. Apparently those who take endowment insurance are conscious of superior vitality, since the death rate among endowment policy holders is especially low.

While different companies have many variations and designations for their different policy plans, each policy has as its foundation one of the above forms. Thus a "single premium" policy is one upon which the premium is paid in one amount when the policy is issued. Policies of this kind are written under both the life and endowment plans. Again, an installment policy is one of the above forms of insurance providing that in case of death, instead of the face of the policy being payable in one sum, it is to be paid in a certain number of annual installments (usually twenty), or it may provide that a certain amount shall be paid yearly as long as the beneficiary lives, and should she die before twenty years has elapsed the balance of the twenty payments shall be payable to the beneficiary's estate. In that case it would be called a "continuous installment" policy.

Another form of insurance properly called an "installment-annuity" policy, provides that half the face of the policy shall be payable in twenty annual installments or forty semi-annual installments, the other half of the policy to be paid at the end of twenty years in one sum. Many companies give this form of insurance a name which is to some extent misleading, by calling it a 5% bond. They charge a higher premium per thousand and represent the face of the policy as being paid in twenty years. The twenty annual payments are called coupons, or interest payments. While this form of insurance is an excellent investment in certain cases, the term 5% bond is misleading in that people are induced to believe that they have an investment paying 5% interest.

Still another form of installment insurance is called a "survivorship annuity" policy. This policy provides that a certain amount shall be payable yearly to the beneficiary as long as he or she lives, all payments stopping at his or her death. Should the beneficiary die before the insured, the policy lapses. Some companies provide that the premiums shall revert to the insured in event of the prior death of the beneficiary. This form of policy is designed to furnish protection to a wife or other dependent relative after the death of the insured who is the source of support.

Survivorship

Annuity

Policies

Single Premium

Continuous

Installments

Not a 5 % Bond

A policy is sometimes issued upon the lives of two people, payable upon the death of the first. Such are called joint-life policies. They are sometimes taken by husband and wife, in favor of their children, or they may be payable to the survivor. More frequently they have been taken out by firms upon the joint lives of the partners, and payable to the surviving partner, thereby furnishing him with sufficient ready cash to buy out the deceased partners' interest in the business. For this reason it is commonly known as partnership insurance. To accomplish the same result, partners sometimes insure the lives of each other, thus making separate policies instead of joint life. On some accounts this is preferable to a joint-life policy, since in case of a dissolution of the firm the joint policy cannot be divided.

There are many firms and corporations whose prosperity is often dependent on the ability of its president or manager and the stock-holders would suffer heavy loss in case of his sudden death. This is especially true where a man of ability, but without large financial means is carrying on an extensive business on other people's money. Many such concerns carry enormous lines of insurance upon the life of the man through whom they have so much at stake.

A very few companies have a scheme which they attach to policies, providing that instead of the insured paying all of the premium, the company will loan him a portion of it each year at interest. The idea held out is that annual dividends will care for all or a large part of the loan. This plan cannot be condemned too strongly, as it results in an unsatisfactory condition. If the insured pays the interest on these loans whose amount is increasing yearly, as more premiums fall due then he has a constantly decreasing amount of insurance at a rapidly increasing rate. But if both the loan and interest are allowed to accumulate, there is a more rapidly decreasing amount of insurance at the same rate. In either event when this kind of a proposition matures there is likely to be a Very much dissatisfied policy holder.

A few companies issue what is called Industrial Insurance. This class of insurance is issued on all ages from one to seventy years, in policies ranging from very small amounts up to $200 or $300. The amount sold is almost marvelous. It is, of course, sold principally to people of very limited means.

Several companies insure women on exactly the same terms as men, others charge an extra premium or limit them to certain plans of insurance, while some companies do not insure women upon any terms.