Life Insurance for Workers

October 29, 1935

Report Outline
Social Security and Savings Bank Life Insurance
Industrial Insurance Business in United States
Savings Bank Life Insurance in Massachusetts
Prospects for Extending System to Other States
Special Focus

Social Security and Savings Bank Life Insurance

Emphasis upon social security in its various aspects as a primary objective of the Roosevelt administration has had the indirect effect of spreading interest in a system of low-cost life insurance, designed particularly for persons of small means, which has been in successful operation in Massachusetts for a quarter of a century. Sold “over the counter” by mutual savings banks, without the intervention of agents to whom high commissions would have to be paid, this type of insurance is offered at prices considerably lower than those charged by commercial companies for equivalent protection. Although the system got under way slowly, since 1918 it has experienced a substantial growth which has continued through the depression.

While attempts have been made to institute the Massachusetts plan in other states having mutual savings banks, the commercial insurance companies have so far been successful in warding off competition from this source. A growing social consciousness in the nation, evidenced especially by passage of the Social Security Act, and the increasingly impressive demonstration of the soundness of savings-bank life insurance have given rise to the belief that efforts to extend more widely the benefits of such protection now have a better chance of success than has previously been the case. The legislatures of numerous states are to be called in special session in the next few months to enact laws necessary for full cooperation in the federal social security program. Opportunities will then be present to consider authorization of savings-bank life insurance as a means of filling in gaps in that program and of accomplishing the general benefits inherent in the system.

Past and Proposed Investigations of Insurance Practices

Radical reforms in the investment practices and in certain other aspects of the conduct of the life-insurance business were accomplished in 1906 by a far-reaching revision of the New York state life-insurance code, following the investigation in the previous year by the Armstrong legislative committee of which Charles Evans Hughes served as counsel. The new regulations affected all the larger American companies, since those incorporated in other states were obliged in many particulars to live up to New York standards if they wished to do business in that state. Little was done, however, to improve the position of holders of industrial insurance, which is the type usually bought by persons with small incomes.

ISSUE TRACKER for Related Reports
Life Insurance
Jan. 17, 1945  Regulation of Insurance
Oct. 29, 1935  Life Insurance for Workers
May 19, 1933  Life Insurance in the Depression
Insurance Industry