Payment of Dividends After Disability

Most life-insurance contracts to-day are participating and allow the insured to share at periodic intervals in any surplus that has accrued from excess interest earnings, or savings in mortality, loading, etc. Many policies with an initial annual premium of twenty or twenty-five dollars receive a return in dividends of six, eight, ten, or more dollars per year after the policies have been in force over twenty years. The question is, will the company continue to pay these dividends after the insured has become disabled? The premiums charged for the disability clause have been computed on the assumption that the initial premium charged will be waived, and not this premium less dividends. There is no reason, therefore, why the insured should not continue to receive dividends on his policy after disability as well as before. In spite of this fact very few disability clauses make any reference to dividends, and the tacit assumption is that the companies do not expect to pay them after disability. A few clauses state definitely that dividends will be paid after disability, or that the waiver of premiums " shall have the effect of providing the same values and benefits as though premiums waived had been paid."

Participation in surplus after maturity of the policy is on a different basis. The only element of surplus in which the holder of a matured installment policy has a right to share is surplus interest earnings. If the amount of installments is computed on a 3 percent, interest basis and the company earns 4 percent., the extra 1 percent, is contributed equally by all the assets and therefore the recipient of the installments should receive 1 percent, of the funds which still stand to his credit.