Insurance of Employees for the Benefit of Their Families

Thus far attention has been called to the insurance of officials and valuable employees for the benefit of the business with which they are connected. Numerous policies, however, are issued today which have for their purpose the insurance of the rank and file of the employees in any given line of business for the benefit of their families, although the employer pays all or a portion of the premiums. Although such insurance appears to be primarily family insurance, it also serves a useful business purpose in increasing the efficiency of the employer's working force. Long service on the part of employees is deemed desirable by employers as one of the best means of keeping up the quality and keeping down the cost of the product. Frequent change in the labor force not only necessitates constant instruction, but, in the long run, spells loss through inefficiency. It is, therefore, with a view to lengthening the service of its employees that many corporations and firms have adopted the profit-sharing plan or are maintaining for their employees, at considerable expense, comprehensive pension or insurance plans.

A great variety of methods is used in this respect, but all have the. same general purpose, viz., the elimination of the loss that is connected with frequent changes in the working personnel. Sometimes the employer accomplishes this purpose through a plan of self insurance, while in other instances the insurance protection is obtained from a company. Sometimes the plan simply provides for the payment to the deceased employee's family of a stipulated pension or a lump sum of insurance, while in other instances, and this is coming to be regarded as preferable, the insurance does not mature as a lump sum payment but the proceeds are paid to the beneficiary in annual, semi annual, quarterly or monthly installments. Again the employer may seek to bind his employees to himself by rewarding them with an endowment policy which provides for the payment of a stipulated sum either in the event of death during a given period like twenty years, or upon their survival of that period. If the employee dies during this period and while still in the service of the employer, the proceeds of the policy pass to the employee's family either under the lump sum or installment plans of payment. If, however, the employee remains with the business during the entire twenty years the proceeds will at the end of that period be paid to him directly. Should the employee cease to remain in the business, the employer usually has the option of surrendering the policy for its cash value or of permitting the employee, if he is willing to refund the back premiums, to take over and himself carry the policy to its maturity.