This section is from the "Everybody's Guide to Money Matters" book, by William Cotton. With a description of the various investments chiefly dealt in on the stock exchange, and the mode of dealing therein. Some account of the pitfalls prepared for the unwary, and suggestions to the cautious investor.
If from any cause it is desired to give up a policy and discontinue paying any more premiums, the offices will pay to the insured what is called the surrender value of the policy, at the same time cancelling it and all its conditions. This surrender value may be roughly calculated at about 40 per cent. of the premiums paid, in a case were bonuses have been added to a policy, and about 33 per cent. of the premiums paid in a case where the bonuses have not been so applied. For example: a person has paid £25 a year in premiums for ten years -- in all £250 -on a policy for £1,000, to which has been added £60 in the shape of bonuses. The surrender value in such a case would be £100. But if the insured had taken his bonuses in cash, or his policy did not carry profits, then the surrender value would be £82 10s. only.
Any insurance office will lend the insured, on the security of the policy, an amount of money not exceeding the surrender value, and the rate of interest is usually moderate.
In this case there would be no necessity to abandon the policy, which would be kept alive and increased by added bonuses as before.