Title: Life Insurance and Economic Depressions
Date: October 6, 1931
Location: Northampton, MA
Context: Coolidge delivers a radio address from his home in Northampton advocating life insurance.
The opening of this series of radio programs on life insurance has been assigned to me because I am a Director of the New York Life Insurance Company. Our purpose is to give helpful messages to our own policy-holders, and to those who are insured in other companies, and to the public at large. Our efforts will be in the interest of all sound life insurance without any partisan or competitive flavor in order to provide information for all those who are interested in thrift, in building up an estate and in safeguarding their homes and businesses.
Some two years ago I became a Director of the life insurance company which is sponsoring these radio programs because I believed that life insurance is the most effective instrumentality for the promotion of industry, saving and character ever devised. It is the essence of economic security and independence. This has been demonstrated especially by the present business depression. When the market value of most personal property and real estate has depreciated, the contract value of life insurance policies in the first-class companies of the United States and Canada has been an outstanding exception of firmness and stability. Not a dollar has been defaulted on any payment that has fallen due.
The foundation of life insurance rests upon the senior securities of the whole nation, the United States Government, the States, Counties and Cities, the farms, the homes, the great railways, the public utilities and the important industries which all together constitute the basis of our economic life. It is in these enduring values that the funds for the protection of your policy contracts are and must be invested. The stability of life insurance rests upon America.
The value of a life insurance policy does not depend on any particular investment, it is secured by the entire assets of the issuing company. Every well established life insurance company possesses assets in excess of its liabilities fixed by law, in order that it may have a substantial surplus for contingencies and provide additional safety and protection for your policy contracts.
Life insurance is as safe as any financial institution can be. The New York Life began business less than 69 years after the signing of the Declaration of Independence. It has been in continuous operation for over 86 years and in a little more than 13 years will be 100 years old. Several other leading life insurance companies will soon reach the century mark. During almost a century these companies have successfully met many periods of storm and stress such as the Mexican War, the Civil War, the Spanish-American War, and the World War, through whose shadow we are still passing; the devastating epidemics of yellow fever, cholera and influenza, which severely tested but proved the security of life insurance; and the many financial panics and depressions, which have come on average once in every seven years, from that of 1857 down to the present time.
Through all these periods of disturbance, during which thousands of businesses failed and thousands of fortunes were swept away, these old companies have passed safely, and have never once failed to meet an obligation.
When these companies were established, in the early forties, they were conceived solely as a beneficient program for the protection of widows and orphans. They are now much more than that. Through the effort and devotion of public-spirited citizens, high-minded state officials and company executives, they have become a nation-wide institution for intelligent thrift and investment to provide against the hazards of life for men, women and children and to supply comfort and support in old age. They are a successful and thoroughly tried form of protection against want.
In the year 1930, the life insurance companies of the United States and Canada paid to living policy-holders, in dividends, surrender values and matured endowments, a total of about 1 billion, 450 million dollars. In addition, they paid to the beneficiaries of deceased policy-holders, chiefly widows and children, approximately 950 million dollars—a grand total of more than 2 billion, 400 million dollars. This vast sum was one year’s result of foresight and thrift of those who had saved in the past to protect themselves and their dependents against want in the future. Few transactions can match this record in amount or in importance.
Now I want to make some practical suggestions.
Give more thought to the life insurance you now own. Remember that your life insurance policies are property, probably the best property you have. This property need cause you no worry. The value of your policy does not vary except to increase as you continue to pay your premiums.
Do not borrow on your policies except as a last resort; because a policy loan puts a mortgage upon your contract, impairs its value and diminishes the amount of protection to your beneficiaries. But if you have made a policy loan in some extreme emergency, pay it off as soon as you can, so as to bring your investment and your protection back to their full value. If you cannot pay off your entire loan at one time, you can probably arrange with your company for installment repayments. Your company will do everything within reason to make it convenient for you to do this.
Review your policy contracts from time to time. Familiarize yourselves with the various privileges and options to which you are entitled.
Do not let any one persuade you to alter or switch your policies without the best advice of the companies that issued them. If a change is advisable, have the change made in the company which insured you. If your policy is in the New York Life, see the New York Life about it. If it is in another company, see that company. Beware of the so-called twister and abstractor or any agent who offers to save money for you by replacing your policy in another company. If you let some one switch you, he will surely make money but you will probably lose.
Hold fast to your policy. Do not let your life insurance lapse if you can possibly avoid it, especially in times of uncertainty like the present, when insurance is even more necessary than in times of prosperity. Life insurance is an anchor to windward when other things fail you or your dependents.
Hold fast to your insurance for reasons of economy. You will never get a new policy at the low premium of the younger age on which your present policy is based.
No doubt a great many who are now listening-in served in the Army or Navy and took Government Insurance during the World War. Do not let these policies lapse. Keep them in force. Buy new insurance, when you need it, in some good company; but do not let any one persuade you to replace your Government policies by any other insurance. Your Government policies are a direct obligation of the United States and the rates are lower than you can secure elsewhere for similar contracts, because the taxpayers are paying the operating expenses.
I should like to appeal particularly to the young people.
I urge young men and women to secure all the life insurance they can while they are young as a savings plan for their own future and to create estates to protect their dependents. And I urge every father and mother, as they are interested in the future of their children, to see that they are taught the purpose and value of life insurance. Parents should help their children to take out policies at as early an age as possible. The earlier the age, the lower the rate. Taking out either life or endowment policies for children after they are ten years old and turning the policies over to them as soon as they are self-supporting, will not only start them out in life with a gift of real value, but will assist them in early acquiring a sense of responsibility and habits of saving which will help them through their lives.
The man whose estate has shrunk during the past two years may see it restored to its former value when conditions improve; in the meantime, through life insurance he can restore it immediately to par for the protection of his family. In this respect life insurance is important not only to persons of moderate means, but also to the wealthy whose property has decreased in present value. Even the rich man whose investments are all gilt-edge would be wise to carry enough life insurance to provide cash for his debts, inheritance taxes, administration costs and other expenses in the settlement of his estate. This will protect his executors against the necessity of sacrificing good property, possibly in a poor market, and safeguard his estate against shrinkage.
Looking into the future, have you ever had this thought about life insurance? You have just a few really important plans. You want an independent income when it comes time to retire so that you will be safe and reasonably comfortable. You are saving also for the independence and safety of your family. You want your wife to have enough income to provide for the children and furnish support for her old age, if you do not live. If the home which you own is mortgaged, you want to leave it free and clear to your family.
Through life insurance you can secure the realization of your essential plans for the future. Insurance can make you independent if you live; if you do not, it may retire your mortgage, or provide your wife a life income, or assure her, while your children are growing up, the means to pay for their education, all depending on the amount you invest in your policies annually, on the kind of policy you buy and on the arrangements you make as to the methods of payment to your beneficiaries.
The same policies serve to provide for you if you reach old age or for your loved ones do not. In addition to its safety these are some of the reasons why life insurance is a wise investment for every person. Those who stick to their policies through thick and thin are never disappointed.
And finally, I would urge you to keep in closer touch with your company and with the agents who have served you well. The companies you are insured in are glad to consult with you and advise you about your life insurance problems. The Executive Officers of the great life insurance companies have a high sense of trusteeship and will do all they possibly can, for the policy-holders interests are committed to their charge.
Citation: The Roswell Daily Record, October 20, 1931.