Equally important in providing life insurance to working people at low cost has been the increasing trend to write ordinary instead of industrial insurance on their lives. An important step in this direction was taken by the Metropolitan Life Insurance Company in 1925 when it began to issue monthly premium ordinary insurance at practically the same rates as for its corresponding quarterly premium policies.
The holders of these monthly ordinary life insurance policies receive the same broad agency service that is rendered the weekly industrial policyholders. Thus, ordinary insurance especially adapted to their circumstances was placed within the reach of many wage earners. Moreover, industrial policyholders have a privilege of converting their insurance into ordinary when circumstances warrant the conversion.
As a result of the revisions in underwriting practices and the emphasis on lower cost forms of insurance, the composition of the company’s business has undergone a marked change in recent years. At the end of 1930 there was $6,400,000,000 of weekly premium business in force in the Metropolitan. By the end of 1942 this total had increased only slightly to $6,500,000,000. At the same time the monthly industrial business much more than tripled, increasing from $396,000,000 to nearly $1,400,000,000.
Similarly, in that time monthly ordinary insurance rose from $986,000,000 to $3,250,000,000. Group insurance increased from $2,703,000,000 to $5,350,000,000. Thus, of the insurance particularly designed for wage earners and their families, 61% was on the weekly premium plan at the end of 1930, as compared with less than 40% at the end of 1941.
In addition to the insurance companies, other socially minded organizations endeavored to furnish lower cost life insurance. But weekly premium and monthly premium industrial insurance continue to be the types that best meet the circumstances of large numbers of wage earners. Perhaps the best known of these outside efforts was the plan of Savings Bank Life insurance in operation in three states.
This insurance was on sale in a number of banks at the request of qualified purchasers. However, the total amount of such insurance was extremely small in comparison with the industrial insurance issued by the life insurance companies. It is, moreover, doubtful that a large proportion of the insurance issued by the banks was on the lives of persons for whom industrial insurance was designed.
These efforts have not resulted in the supplanting of industrial insurance, because cheaper insurance can only be furnished by eliminating the broad services of the agent—services which experience has indicated are necessary for the majority of working men’s families.
One of the valuable services rendered by the agent is to revise the family insurance program as circumstances require. Families frequently begin their program with industrial, and as their economic conditions change they are able to purchase ordinary or even no exam term life insurance. Sometimes it is to their interest to convert the industrial to ordinary insurance; but if the industrial insurance has been outstanding for a number of years it is often desirable to retain this form because of advantages accruing through the age of the policies.
Thus, as time goes on, many families own both types of policies. Industrial insurance is the educator, which gives their children, as they grow up, a sense of insurance values. This development of the family program and the graduation of individuals from one type of insurance to another are reflected in the fact that almost one fourth of Metropolitan ordinary policyholders also carried Metropolitan industrial insurance and about one in every five of group policyholders also owned Metropolitan ordinary or industrial policies. In many families the breadwinner owned ordinary or group insurance, while smaller amounts of industrial insurance are maintained on the dependent members.
Sarah Martin is a freelance marketing writer based out of San Diego, CA. She specializes in finance, business, and life insurance policies. For no exam term life insurance quotes, please visit http://www.equote.com
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