THE EVOLUTION OF POLICIES 201

long popular and many strong companies were built up by its use.

In recent years the same principle in other forms has been made use of, both in Great Britain and in this country. In Great Britain the "discounted bonus" policy has been introduced. Under its provisions the company reduces the annual premium by the amount of the value of its expected bonus—usually declared every five years—commuted into an annual cash payment. Should the company be unable to maintain its rate of bonus, there must be a readjustment, usually either by increasing the premium or by diminishing the sum insured.

In the United States, under the name "advanced dividend," the idea is utilised as follows : A certain portion of each premium during a deferred dividend period is advanced by the company and is charged against the policy as a loan; interest is accumulated against this at a rate stipulated and agreed upon; in event of the death of the insured during the period this ac-cumulation is cancelled by a return premium feature, and, of course, if the premium loans are not availed of, there is paid, in addition to the sum insured, the amount of this premium re-turn; at the end of the deferred dividend period the accumulated surplus is applied to wipe out the indebtedness or to reduce it, if not sufficient to pay it in full.