The Fundamental Purpose of Installment Insurance

The primary object of making an insurance policy payable in installments is to safeguard the beneficiary against the loss of the proceeds. As has been said, the installment plan serves the purpose of "insuring one's insurance". Few beneficiaries under life-insurance policies, and this is especially true of women, possess the necessary business experience so as to invest and manage a large sum of money as to yield a constant and adequate income. Very frequently, too, the sudden receipt of a large lump sum payment means little more to the beneficiary than abundance of money for unnecessary expenditures with the result that the present is thoughtlessly made the period of luxurious living at the risk of experiencing actual want in the future. For these reasons the payment of a policy in a single sum is apt to defeat the very purpose for which the insurance was originally taken, namely, the absolute protection of the beneficiary. Payment in installments, on the contrary, safeguards the beneficiary against the loss of insurance protection by extravagance, bad advice or poor investment.

The underlying purpose of life insurance is the protection of the family, and where a wife, children, or other dependents are named as beneficiaries, it is fundamentally important that the real purpose of the policy, namely, their protection, should be absolutely secured by properly safeguarding the proceeds of the policy upon its maturity. It is stated on good authority that about sixty percent, of the insurance funds left to beneficiaries is lost by them through bad investment or needless expenditure within six years following the death of the insured. This experience is also true of other funds left to the beneficiary. On every hand we can point to examples illustrating how easily and frequently the competence which a husband or father has provided through saving or insurance is lost or foolishly spent by the heir or beneficiary. Modern "income policies" especially where the circumstances justify the use of the continuous income feature, are a guarantee, as we shall see, against such a calamitous contingency.