Liberality of Companies in the Granting of Surrender Values

While the foregoing non-forfeiture laws define the amount that must be returned upon the surrender of a policy it should be noted that many of the companies grant surrender values greater than those required by statute. The chief factor in bringing about this situation was competition between the companies. "The agents of the various companies, in the heat of competition" as explained by Mr. William Alexander., "have stimulated the public to demand large surrender values, and the companies are vying with one another in the liberality of their offers." In fact, some companies allow cash values equal to the full reserve at the end of the second or third year, although the loading on the premium is only for the usual amount. With the great majority of companies, however, the non-forfeiture provisions of the policy become operative only after the payment of premiums for two or three years, and then provide for a surrender charge which is greater during the early years of the policy and which diminishes year by year until the tenth, fifteenth or twentieth policy year, the surrender value thereafter being equal to the full reserve on the policy.