Continuous Installment Policies

The shortcomings of both of the preceding plans are remedied by the continuous-installment policy, which promises a fixed number of installments certain, to be followed by the same installment for as many more years as the beneficiary may outlive the fixed installment period. To illustrate, the policy may provide for the payment of annual installments for twenty years, and if the beneficiary be still alive at the end of the twenty years, for the continuation of the payments during the whole of her subsequent lifetime. It is thus impossible for the beneficiary to be left without an income as may be the case under an ordinary installment policy. Furthermore, the policy overcomes the principal objection to the survivorship annuity because, should the beneficiary not survive the insured many years, the installments will nevertheless be paid after her death until twenty annual payments have been completed. Unless the insured has expressly extended the privilege to the beneficiary, the installments (and this is also true of the ordinary installment policy) cannot be commuted for a lump sum payment, since to do so would defeat the chief object of the policy, viz., the securing of a definite income to the beneficiary. Should the beneficiary die before the insured and while the policy is in force, future premiums will be reduced to the corresponding rate for an ordinary installment policy.

Various special applications of the continuous-installment principle are possible. Thus two or more persons may be named as beneficiaries under the same policy. Should one of them die after receiving the full number of installments certain, the installments relating to such beneficiary will then cease. But in case of death before the fixed number of installments have been paid, the remaining unpaid installments will pass as they come due to the surviving beneficiary or beneficiaries. Again, the insured may feel that it would be financially imprudent to have his beneficiary receive at one time as much as is involved in a full annual installment. If desired, therefore, the companies will make the payments in proportionate semi-annual, quarterly or monthly installments. The continuous-installment feature may also be applied to an endowment policy. In the event of death during the endowment period, the insurance is payable in equal annual installments for a stipulated period like twenty years and as long thereafter as the beneficiary may survive. Likewise, in the event of the insured's survival of the endowment period, the amount of the policy will be payable in twenty annual installments certain to himself or a designated beneficiary, to be followed by similar installments throughout the subsequent lifetime of either the insured or the beneficiary nominated at the time the endowment matures. Under this plan the amount of the installment will depend upon the ages of the insured and beneficiary at the maturity of the endowment.