4

W T LABSEN

I.—Ha.

I came out of my shell and began to bark. That is all that I really can tell you I might mention that I hold a letter here to say that I am loaded 9s. 2d. per £100, but instead of that it works out at £1 4s. lid. per £100. Mr Hogan That was the loading because Mr Larsen was a hotelkeeper, but it was not taken off after he retired from that business. Peter Denny Leslie, Resident Secretary for New Zealand of the Colonial Mutual Life Assurance Society (Limited), examined. (No. 3.) 1 The Chairman] We shall be glad to hear you now, Mr Leslie? —I am at a disadvantage this morning, because when I came here I did not know that 1 should have to reply to a petition lodged by Mr and Mrs. Larsen. 1 did not know that any such petition had been presented. 1 came here in accordance with the letter received from our solicitors advising that the Committee were going to meet this morning to consider petitions regarding tontine policies of the Colonial Mutual Society The only petition that 1 knew of was one lodged about two years ago by several men in Auckland —Mr Mclvor and others—and I came here this morning prepared to reply to that. Fortunately, however, 1 have the papers relating to Larsen's policy in the same bundle, because I have had a good deal of correspondence with them, and I dare say T shall probably be able to reply to that too. But I want you to know that I had no knowledge of this petition having been presented. I have Mr Larsen's original proposal here—the tontine proposal. It is for £500, payable at death, the premiums being payable until death. The other policy was cancelled. We really have nothing to do with that whatever Apparently it Mas only in force for a tew mouths, and was cancelled, and that was the end of it. 2. Have you got that original policy with you—the one that was surrendered m exchange for the tontine?—Oh, dear! no. That was fifteen years ago. That policy would be simply cancelled, and sent over to our head office in Melbourne. The policy that Mr Larsen is petitioning against is this tontine policy As 1 said, the amount is £500, payable at death, the premiums beino' payable until death. ' The profits were taken on what is called the tontine system. The society has two methods of allotting profits, or, rather, it had at that date—one, the tontine system ; the other, the ordinary system. The difference between the two systems is this Under the ordinary system profits are allotted at fixed periods—at that time every five years. Under the tontine system the policyholder agreed that his profits should be reserved for a fixed period of ten, fifteen, or twenty years' In the event of his death during that period under the ordinary tontine policy no profits whatever were payable, only the sum assured. There seems to have been a good deal of misconception with regard "to this term "tontine." Numbers of people seem to think it has got something to do with the amount assured, and also with the time at which the amount of the policy is payable. It has got nothing at all to do with these. It simply relates to the profits--nothing more" or less. It does not affect the sum assured, or when the sum assured is payable, one iota. Now, this policy which Mr Larsen had is what we call a guaranteed mortuary dividend By paying a slight extra premium he received from the society this privilege : that in the event of hi's death at any time within the tontine period, not only would we pay out the sum assured to his representatives" but we would also refund the whole of the premiums which he had paid. Well, as an investment against death I should say that one could not very well get a better, because simply for the use of his money he has his life covered—that is, if death takes place within the tontine period Mr Larsen, of course, did not refer to that aspect of the policy at all. We were not only covering a liability of £500, but a liability of having to refund every premium he had paid during the tontine period if he died within that period. Mr Larsen has referred to his premium, and talked about the loading Well, of course, 1 cannot tell him, nor can I tell you gentlemen why he was loaded—or rated up, as we call it—because that is information that we cannot supply to the outside public. We simply inform a man of the terms on which we are prepared to take him—that is, the rate of premium required. He can either accept it or refuse it. As a matter of fact, Mr Larsen was rated up eight years. That is to say, his age at the time he took out this policy was thirty-nine next birthday and he was charged the premium for fortyseven next birthday ' The extra premium which he had to pay on account of that ratmg-up amounted to £3 17s 6d a year, which in fifteen years amounted to £58 2s. 6d. lam referring to this matter particularly because Mr Larsen has mentioned it, and also for another reason, lhis extra premium was required to cover an extra risk. He was not a first-class risk. Now, in calculating the surrender value Mr Larsen gets absolutely no consideration for that extra premium which he paid. So that in contrasting the amount of the premiums paid during the period with the amount of the surrender value at the expiry of the period, this sum of £58 2s. 6d. cannot be taken into account at all, because it was required to cover the extra risk. When the petition was being read over, one point caught my attention. It says, ' Your petitioner was informed by the said company that the profits would be about £1 000 per policy at the end of fifteen years and that on the expiry of that period he would have in addition a fully paid-up life policy for £500 It is simply ridiculous for any reasonable man to suppose that the profits could be £1,000 on such 8 POl 3° y Mr Mmsey 1 Will you clear up the point about that " fully paid-up life policy / 1 What is Mr 'Larsen's position now with regard to the company?—At the expiration of the tontine period he had the choice of six options, but did not exercise any 4 Is there any such thing as a paid-up policy until death ?-Tes, certainly, he had the choice of that —of a paid-up policy for a certain amount. 5 Not for £500?— Oh, no !—for an amount which the cash surrender value of the policy would purchase. That is merely an actuarial calculation. The amount of the paid-up policy was £177, apparently