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Friday, 16 May 1930

Senator McLACHLAN (South Australia) . - If a policy-holder refrains for aconsiderable period from payinghis premium, thecompany is deprived of the use of that money, andin the circumstances is entitled to charge compound interest. If the company had the money at' its disposal, it would be receiving interest on it. The contract between the companies and the policyholdersprovides for the payment of premiums within a specified period, and if the money is not placed at the disposal of the company in accordance with the terms of the contract, compound interest should be payable. If it were merely a question of 30 days, compound interest would not be charged, but over a longer period it would be a serious matter, particularly where a number of cases were involved. The point we have to consider is whether it is fair to place a defaulter in a better position than the policy-holder who has paid his premiums. If SenatorRae, for instance, paid his premium on the due date and I, as another policy-holder, refrained from doing so for perhaps two or three years, he shouldnot becompelled to suffer indirectly as a result of my default. This provision, I understand, has been taken from the Queensland act, and was inserted for the protection of policyholders. We wish to assist the policyholders, but we should not extend leniency towards some at the expense of, others. If a. policy-holder in a mutual or cooperative company does not in these circumstances pay compound interest he has an undue advantage over those who have paid their premiums on the due. date.

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