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Friday, 16 May 1930

Senator RAE (New South Wales) .- The clause provides that in the event of any premiums due on any life policy remaining unpaid for a longer period than 30 days, the company may charge compound interest thereon. I should like to know what justification there is for charging compound instead of simple interest in such circumstances. If compound interest is charged it may cause the forfeitureof policies which would be detrimental not only to the individual policy-holders, but to the company. An enormous number of policies are forfeited every year in consequence of policyholders being unable to keep up their premiums. Those who have had experience know that compound, interest is an excessive burden, and inthese circumstances the companies should be satisfied with simple interest on overdue premiums. Toomany penalties are imposed on policy-holders who are unable to meet their obligations, which, in many instances, cause forfeitures. Imove -

That the word " compound " be left out with a view to insert in lieu thereof the word simple."

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