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The Natural System
OF
LiEE Insurance:
MKINtJ
OF THE PR IX( I PL ES A Xh PH. 1 ( Tl( 'E
or
Tin;
Safety Fund Life kociatioo
RY
J. H. WRIGHT,
SlTKRISTKXDKNT OK Ai.K.S"<Ii:s.
Axxocin/inn.1 Jor Ihr inxiirrtnce of h're.t art' tn fip rntih-rd nmmui th" very
noblest inxlilutionx of rhilizi'd Koc'r/)/, mid llirir iisri'uhii'.is run br nllf.tli'i. ht/
titiinsniul.s itf /lappi/ and contented ftiinilifs, resciwd Iti/ tin Ir inmns //"in the
bitterness of poverty and the dt gradation nj chnriti/." — Lokd I'RoriiH.v M.
^^Blott ttiil|i scd mcis uiuo."
Prur.i-iiKn nv tifk Assck iation.
SAINT JOHN. NEW BRUNSWICK.
1 8 8 .") .
.1. <t A. MCMILLAN, rit! N'TKU-i
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Entered uccording to Act of I^irliiunont of (iinada, in the
Year 18si, by
"TiiK Dominion Sakkty Fund Likk AssfKivTioN,"
in the office of tho Minister of AKricullun'.
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PREFACE.
WARFARE. AND WHEREFORE?
A lUTTKK WMrfaie has lonj; liiicii ra^'iiij; lictwci-n llu- ailvo-
oatt'S of Life Insiiraiiff l»y ra'vel-I'rt'rniuiiis, aii<l tin- fr'n-mU
of IiisiiraiuH' l)y Post-MortetM AsHCHsnuMits, — the nuo wit-M-
ing the tnatjic power of iiiitiuMis<> nioiioy accurniilationH, —
the other appealing to popular prejudice a^aitist the (hm>,'erH
of powerful monopoly.
The battle is not ytover, — it still rnires all aloiiirtlip line.
^^any are confused hy the loud waruinus of ea-li --not
to entrust the protection of their dependent oiu's to the other ;
while otliers Mindly adhere to the system for which, without
ade(pjato information, they may have eoneeived a preferenee,
T\w mission (»f this little work is to lay before the pid>-
lic of this Dominion enough of the principles and history of
T-ife Insurance to enable each dispassionate reader to decide
intellifjently upon the merits of the contendinj; systems, and
whether there i^; not a new and vet better system of |>rotec-
tion to the widow and orphan of the future than has hereto-
fore been oflered to the Canadian public.
It shows t'uit lu'ither of the rival systems is sole i)ro-
prietor of all the merits, and neither, of all the defects ; that
the popular uprising^ acjainst that system which so Ioiil,' held
undisputed sway was not without reason ; that the fierce
assaults a.i^^ainst which Assessment Insurance has ever hail to
battle, arc not without cause.
The Safkty Ft'xd System is the result of an iutellij^'ont
effort to combine the merits, and avoid the defects, (»f both its
older competitors ; and while, in these j>ages, the defects of
each are fearlessly exposed and their merits cheerfully
aeknowledtjcd, our one object is to define and vindicate our
own principles.
This little book may result in a saving of anununition to
those who have been wont to waste it in attacking princi[)les
(3)
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i\iitiiral Svst<'iii of Lite liisiiraiico.
I.
WHAT IS i,iFK i.\sri;.\N(K?
" // M till ,^tnii(liiii/ loi/it/or, slioidilii' fn tihtniliU'r, nj hoitu of mnnbi
ni> II, lo ihl'nul I'ur/i ntlur's Ikhiu'h frmn the ciimiti/ that n/iootH uii
the nhf (ind in t/tf dark. It in tin- rtitliuttiini nf /luUfriiil'/, ,
V'ithoih liir di'Afnirtiim of imh'pendfncr mid iitdiridindili/. It '
i.s a I'l.iiiihf iriflioiit cnni, irliir.h cnrirfw.-i (hr ijirer ^lud dutif not !
/( 'Hilintv the lYcen'ir.'' — Kw/AH VVkk.iit.
TnK |)ussil)h' widow and orpliati is the .ictive prlniiplj' in
liiff I'i>iirani'('. If Wi- could circiimsciilic oiir (U-votioii to
tlii' lia|i|'ii;t''>> and wcll-lx-iiij; of di'in'iidfiit ones liv tliu
uncorcaiii U'lmii' of our own lift*, we would have no lu-cd for
iiiwuranci'. I'.nt this we caunot do. I^ove of ofl'sjiiinj^ — a
[•art i>f iiur very iiaturi- - leaclus licyotid the limits of our
own lift- to tlir i-ud of theirs. It deiuauds that we should
exert our powers, while w».' live, iu providiu<; for thi-ir sup-
port niid education, and ur;,'es the provident father to [u-oteet
tlu'iu a:,^'iinst 1<ks of these hy the possihlt; early failure of hi.s
p<»wers in death, lo funiinh thin proi'.ction in the exvUmve
fiiiirtioii of life iiti<nr(tii('i\ and the motives which prompt the
hushand or father to invoke the security which it otlers are
aiuonf? the hiirliest and purest that aninnitethe human breast.
"It is a strange anomaly," says Henjamin Franklin, "that
men should he carel'ul to iiHure their houses, their liirnitiue,
their ships, their n)erchaudi/c, and yet ne,i,dect to insure tiieir
lives, surely the most iuiportant of all to their families, and
fur n)ore subject *o loss." They are prompted to the one
only by consideration of l>usincss prudiMice, and exjject no
other return lor its cost than immunity from personal loss;
they are uijj;ed to the other by turther eonsitlcrations of
parental and coujunal taillifulness, and the ri'turu which it
Oilers for its cost is tiie couscioii.suess of bavin;,' dischari;;ed a
duty towards depenilent ones, by thus "substitutini^ the cer-
tainty of a siiULf patrimony for the uncertainty of the con-
tinuance of tlu'ii- own life."
(6) S
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Tlt> Sntnntl SijHtnn it/ LiJ*: Innuratu'f.
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\n prohrtiitn Ut tlir ixfnh', uilti iIm' n)nMrt|iM>iit rclcilNi*
fruiii iiiixiity in tin* imiIv ntiini Mllrrctl liy tire or initriiic in-
suraiMc lor its cmhJ, h,, prdtn'tinn t<» tln' JnmHij, with its roiisi'-
*|ti<-iit MUiHluflioii iimI I'l-lf.'iHc fniiii anxious nirr, in the 'iiily
n'tiirii lilV' in>*iirim(f kHitm fur itn rust. Ami what oiIht
ri'tni'ii <l<»fs tli«- |irMvi<lriit t'atln-i' iifcil? Liviiit', In- priivi(l«-s
t'ur Ills hnl|xi>l|o|(i hy llin iiVMI ^kill UIkI I'lirrKli'^t ; aiHJ,
tlyiii;;, tlitir iii>(>itM iiiu Nii|mlic(| liy Iiim own prixlfiit Ion-
tlioiiulit ill |ilariiu^ the seal uf tli*- life iiisiiniiicc r.tinpaiiy
ii|ioM his <!oui-.
'I'hr r4>!;iil;ir physician will ilia^noNv tlii' purticnlar ( aso of
IiIh Kovcral patients, an<l apply a spt<<-ial n'nit><|y tu rach ; hut
lh«' nnpiiic will ('ninpiiiitDl a iiostniin fintii a iiiimiIht of n>-
ini'ilial ayfiits, ainl a«-siin> the piihlic that his is a spi-rilic for
"cvcrv (lisnise incith-nt to hiunanity." How lik" his iiiMJdi.
oils aiiv<>rtis«>iii(Mit is the followin;/ I'amiliar iiiiLrj;«'t from or-
dinary life insurance' appeals; " NO matter what may he the
ohjrct of your solicitude -he assured -whether yon are
thinkini; uf the maintenance of ^('iieral hfalth ( ?i ur ot' com-
furl and ciuupetence in voiir old a<_'e !''•, or <»l' tlh' IlltlTOsts
of »!('(' and cliildrcii \>Im>ii >oii iiiii} \w no iiiorr, or of a
provision lor your hoy when he reaches mature jij^e i?). or
of the happy marriage and wechliii^ portion of your little
dauy;liter (.'i one day to he, you hope, a hliishiiiK hridc, now
a tiny, prattling fairy of two or three vears — never mind
the siiliject matter-he assured." I.il'e insurance is, indeed,
the only -me sjtecilic fur ** NollelliMlo lor tlu' liit<'n»M<s of
nife uimI cliiidron >vli(>ii you iiiay he no inonS'' l)iit
lliis is its only l'nn<'(ioii.
It is the I'uiictiou. luit nf ///V iiisi(r<nir<\ hut nj (lit' ninini/n
Ixiiik, io acciHuulale deposits hy which alone the other "ob-
jects (»f solicitude" can be Hceurcd. ,
'i'lie comijinatiou in the same system of the function of |
life insurance with that of the savinj^s hank is thus rej^arded
by Jnsiintiicf ( 'onunissitiin'r Turhor, nf MdssarliKK.n'tlH: — "To
unite, more than iieed be for the assurance of its contractH,
the proper business of an insurance company with the func-
tions of a savings bank, imikes a combination both incon-
.ijruous and unwise. . . . The company thereby needlessly
assunu's the oblii^ations and responsibilities of a banker in
.addition to the obligations ami responsibilities of an insurer,
and prejudices its safety as an insurance institution by ex-
})osure to the dangers incident to its banking operations." j
Every beiielit beyond simple pratrction, otlered by an in-
surance company, iiikkI hr pdid for in f/rcM.-t nf the cost uf that I
proti'ctioH, and far greater and more satisfactory benefits would o
. W
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iT<(iilt iVuin lilt iiiv«-»tiiiriit )>r tlwit fx«'«-*t<« ill rf^iiliir MiivinuH
iiiKtitiitioiis, ttr in tli«' IniMincH.. r:i|iiiiil <*t'ili«* ii4Hiirr«l.
INSIKK Koli l'IC()Ti:( TInN,
.\NI» I-I:AVK li.\NKIN(* To IMK M.VNKM.
II.
M YSTKUY.
Tlir iiuMT workiiiirs i»f tlio lifV- insiiraiu-r oIVh-c Iiiivc luii^'
Imm'H iii>-Iiiitii(lri| ill nivMh'ry. Tlif iigfiit lia^ t>\vv Inch flti-
<|iii>n( ill lii<« ii|)|M>:iis Mil l)(>liiili' (if tlH> p'MNiltlf willow ami
r;illu'rU'H> rliil.I, hy wliirli In- liiH Htiirtd In attiiin llii- nnlilrst
aiii| iiKot iiiisclli<4|i iiiipiiUi- lit' till* liuniaii lniMHt : Im- lia<<
|>aiiit»Ml fill- a%'!irit'«' fVrvifl |ti(tiire» of wiallh Mnwini; rrniii
till- iii-iiiraiicr |inliry ill the r<>ini of ciKlowiiu'iifM, 'runliiu' pro-
tits, ami "Miiiiai ilividt'tids : Imt In* has tx-vrr liail tlu- tciiicri'v
to iitvailc llic iiiiii'i' citiirt of this "rhiirch of tiiiancial salva
lion," aiiii ( xpitsf t<» viij>;ar yazi' its hidilcii iiiysifrit's. With-
in the veil is hfiiiK drawn annually over sHi(i.(Mi(»,0OU tVoin
tlu' famines of llic nohjrsl iiu>n of Anicrica, while only alioiit
*li.">.0( »<),()»(( I In annually rt'tiirned to tht'ir widows and or-
ihati cliildreii. l-'or over u rcntiiry. why om- hnndretl dol-
ar-i slionid Im- collfctiMl from the insnred lor <'\»'ry twcnly-
livc dollai's returned to thu widow, wuh ritdtloin asked and
never answered. Meanwhile life insurance " has ^rown upon
the country like a proilijirions drt-ani, lia\ iii^; palaces, powers,
and potentates of its own, with incomes that little kinys mi^ht
envy."
I'kUt the present aye is mori- impiisitive and practical in
its spirit. I )oiriiia and prescription have losi their power
over the pu!>lic mind. Kven life insurance is called upon to
answer How'.' an<l Why? and the answer has heen so incom-
plet«' and unsatisfactory that a t ival system, ItoMly assailing
the principles and jiraetiee of tlie ancient olii,'areliy, and as
holdly proclaiming its own, has met with such popular favor
that, after a contest of less than a score of years, it far exceeds
its powerful antagonist in the mairnitude ol the interests com-
mitted to its charge. Hut, that men are prone to rush from
one extreme into the other is painfully illust.ated hv the his-
tory of this reaction against the system of levid premium in-
surance, with its extreme «'X])onse and pyramids of reserves.
The tendency has heen to reject as false every |)rinciple
upon which that system is hused — to discard, alike, the geii-
l*r»
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7'At .Suliuul Sjf»l9tn u/ Lij't Inturanet,
iiini* iiii*l ilii> NiMiriuiiM ; mill, ti»t u rcMiilt, roitiKTiiiivu or iinmv
Mifiit iiiHiiruni'i' iitiM lou olU'ii Itroiiuht only <liMiippuiiitiiii>iii to
il'« irii-tiil'* :iii<l liaUiitiN.
Ii ix (III* |*iii|Mi><)' ol' ilicMi- |iaucK to ri'iiiovc tlu* Vfil iiiul
nIiow what iii'i* tiic |»riii<'it>l«'M •>!' ttu* N<ii>iM'i> ol lilr iiiniiniiu'v,
tllltl llii •lt'M'|*i|i|||i lil« )>r |iax| fX|K*l irlH'f ; to rilll llir ll'IM-
iVoiii llic talx' , >iii*i •!) iMoii»||'ulc that tht- h\^tt'iii \vi- aWviM-ati*
i>crit|tii>M the triif inhhlh' uroiinti tictwcfii thi* twofXtrciiu'Mot'
cxiiciiMivi' iiiHiii-aii) t' hv h'M'l |)t'<-rniiiiii<« ati*! ih) ittii'«'tiain or
iiiilflinilf iiiMiiiilK'f l»y ym.-./ innrhtn u-m •.'nuiiti ; ihatiti'ili-
hoiliih ivi'iy tUriu'Ht of |M'r|M'tiiity ami iVfry piiiHiph- of
iM|iiity atitl I'foiioMiy whiili the sri« im- of lilf iiiHiiraiiLi' rt-
cogni/i's, or thi' expfru-iu'i' ol" tlu' past han (U'Vi'lop**!.
*• Wi' <"m r)ow look h:uk upon tlu' pa>*t i'X|»«'rictuo of ihoxc
phill!» anil lakr (linii a» a lia^is upon \\hi<'h to lou u< I oilier,
uikI po>Mihly more i'ar-ri'tu hiii^ nittho<lH, ami t'rotii tlicin wi*
tan j,Mt|i«'i lad"* upuu uliitii w*- may rra^onaltly pr«'«liniti'
H(uuul luiurr rixulis." WiUimn McCabc, I\ I. A., Jliuj.^ Man.
thi'trtur yihth Anieiiniii Lij't.
"Lift' inKurancf in worth all it cohIx ; hut uny iinprovt-
m«iit> ill that syslt-ni oiiyht sur«'ly to In- «'ou>*i(l»'n'(l an<l loin-
liifii.lt'd as a hli'ssin^ to tlir foiniiiMuily." — Shpimrd Unmiinn.
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III.
TiiK i.i:\ i.L iM:i;.Mii M an aly/kd.
'I'Ih' hvcl-pniiiiuui ou t'Vi'iy lilc pnjity is i-oinposcd of
thiir ili-liiirl liiiiiinls: (1) Cost of liixuiaiu-f. I'i) Ki-serve,
['A) l.«)atliii.t!.
COST OF INSURANCE.
It is iiuportaiil U> j;ct a cU-ar i-onccptioii «>!' lliis tliiiKUt,
ami to ilo Ko, wu shall suppose earh of 1,(»U0 nun, '2\ years of
a^e, to deposit Si in hank, undir an a^-iveinent that the
.•^LCdd thu> deposiH'(l shall he paid to the family of the lirsl
to (lie. A death oceiiis; tlu' ."^l.UUO is paid to the widow ; a
hei.'ilhy man, tin- same aj^e as deeeaxed, take> his plaee, and
the iK pttsits are lepealeil. At the i-nd of the yeaj' they have
liad fi<ilit deaths (Ameriean Kxperieiiee Tahle of Mortality),
eaeh ha> paid SS, and the einhl widows have received the
!i<S,OUO. Kat'h survivor has had one year's |>roteiti<Mi to tin-
extent of ;sl.()U(», and )f>S was TtiK cost oy ixst KANtE that
year. Should anv wish now to discontinue, he has had full
Ar«^A»«.
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The L» nl- t^mnmiti Annlifiil,
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ViiliH*, ill till- |tr(iii*ctiiiii I'lirniolifil, for iIm' iiiniiry paid
till' hank llll^ no iiidiii-v tin df|Mi»ii wiili uliiih in u'lvc him »
utirn-iidcr vtiliif lUv wlioU* aiii)*unt !» imw ininisiiriiiK lu
till' llr<T«>.ilit'H ot' the ri^dlt lifi'iMVi'd wivrt who huvi- h< iii
dfprivrd of ihf hii|>|iort the Millmv; haii<lN oi ihtir hi!<>hatid«
luiil allordi'd.
l.«>l (hi* di'iMwitN \m- rohtiiiiM-d, iiiidiT ihf ^aiiif <>ondili«»n4,
ViMir alU'i' yt'ar. NVh«ii nuh >>\ thf I,<mi(i ax-ofiatr^. i>. :U1
Vfars ol »iiv, iht'V will have nine dtathx, lllal^ill^' tin* cn.vr «iF
iNHt'KANci': ij*'.) liitit y«>ar; wluii tl viarM of a^'ts ten will die,
inakin^i ^1<| tin- «n»r ok in-h iian* i; liiat v«ar. 'rhii-, ilii»
t ti«*r ol iNMiUANt K any viar is din* lly d» ptiidtnt uii (lit*
tiuiiihir iif di'iilliH iliat year l«> tin* I,(MI0 living;; and as i||i>
rtiUt ol' aiinnal iiioriality i*< iKcixtarily ^rcaliT iim a^'c ad-
vniH'c'**, HO llu' ro>r «»K iS.-ii:AN« K. imist iu'r«'«.«*aiily inrrfaHf
with till' a^*' ot' the iii'^iiri'd,
"Apart from th«- cxprnMt* of condiK tin^' ilic hiiHin«Hs, the
«()>*T »»K iNHi'KlN«i :i»I,<HKi for oiu' vi'iir at ii Kivcn au«' irill he
na mniiij tloUni/* <is tfii rf trill fn: (l>ufl,H in oiif ifnir nj' /onn juimttis
inmriinj that ^um nt t/uit <///»■ \ tiiati ('omiMiinly in-
Hnri'H u I'crtaiii sum on liiH life jii^t as he drx-s on Iuh lioiisi',
liy paying the Maiiif pn'miiini year alter yrar. Vci ilu- rifk
nj tu-in nil liin lij'f M I'll- 1 1 ili[]i'niit lit ilijji II lit (ii/i.^, wliilf that of
onu on till! Ikmi^c rommoiilv ri'inainH the xanu'. li is thJM
paying for a nninhh' ri.-il: ii ith n mmihnit /irt niiiiin which is the
pfi'iiliarily of lifr insiiranci', and tlir somri' ol all ils iiiyst»'ry."
— F.lir.nr H'riij/it.
'J'liis mystery, — how the F'Jtn K of iiiHiiraiuv can iu- the
snine year alter year uk aye advatuts as at aj^e of entry, and
yet the (OS!" in< rease with each yea." of life, will lie deepened
l>y ixaiiiinini; the fllect of aduiitliii;, new entrants to our
theoretical Hociety.
We hav*' seen that the N ATI KM, <(»ST o|' IN.SIUANc i; at
uge "^4 is .^S.OU; at ;i^e :{♦), .^'.(.(lU; and at a^e 11, .tiKHHt.
Admit now, with our original ^roiip. aj^'eij 41, an fptal
iinmher a^ed 1*4. The lieaths will he ](» • 8" 18 in the
2,<tO(), mahin^' >'.• the cost to old and yoiin^ alike. 'I'he
former have ;:ained and the latter lost 5*1 each as a result of
the union.
Had the (»ri;;inal j;roup attained the ajre of tiO years when
the union occiirreil, the result woiiM he much niaynitied, as
the natmal cost at that age is .':2<». 'I'here then would he
20 I 8 '6\ deaths, making the cost to each ."i!?17. The old
would uain s'.t hy the union, while the
fur their philanllirupy.
younj; would pay >:'J
\
•■>j
'»-?«
}
The Nntunil Sijifffm of Lijr hmiiratiri'.
~t
At tliiw st!ij;(' It'l a tliini fri'onp .-it tlio ayo of 41 cntcM".
Payment licint^ frradiiated l)v the nattual cost at a^c of
entry, tlioy must pay l!") per c-ciit. more than tlicir associates
nil of whom entiTed iit aire 21. The deaths in the ,'{,000 will l»o
20 ■ H ■ 10 14. rnakinjj; S44,Ooo, the total of death losses
ff>r tfie year. The eost to each of the old meinhors would he
$13.')4 — a train of !^12.U) upon their natural cist; to each of
the youn^j memhers 8i;i.o4 — a loss to them of s").r)4 ; to eaeli
of tile middh-'-uueil SKI.'.l'i — a loss to them of S().!>2.
All this eonfiisio;^ and ine((uity would he avoided hy each
payintr itUo a eoninion MoR'i t auy I'uiid the natural cost of
his presnit ajre, without reference to his ajre at entry. Thus;
1,0(10 aj,'i(l (•)(», pay >^JC..OO each 5JC.,0(H»
1.000 " 41, " 10.(l(t " .., 1(I,(MM)
1,01)0 " '2i, " S,(l() " S.dOO
T')tal payments to Mortuary I'uiid total dfath losses :i:lJ,0(Mi
And this is the plan really i>ractieed. How this c;in he done,
and the fad of his payin<r an increasing cost concealed from
the a.ssured, can he understood only hy studying the luiture
of the second element of the level-j)ri;mium.
Reserve.
Much is said and written on the reserves of Level-I'remium
Life Insurance, hut U'w uuderstiuxl what they are and what
they are for. Yet there is no need for confusion here. The
NATl'llAL nu'thod of insurance would he to jiay the cost of
risk each year, gradually iiu-reasing from ^S at age 'J 4 to SiJO
at age (iO; hut the ahtifici.' T< method is to charge $11* eaeh
year from the lirst as a /'vr/-premium. This involves an
over-paym(>nt for nuuiy years, which the cotupany hanks to
the credit of the policy and uses in after years to help the
$\\) pay the then increased cost if the risk. These over-
paynu'iits of the earlier years c'.,.stitute the reserve, whose
only function is to pay for insurance to he furnished in the
distant future.
The general impression of this huui is that it is vi'alth,
a guarantee of stability, security to the {)olicy-holder that
the contracts made hy the company will l)e fullilled ; that,
for exam})le, should an e])idemic occur, this Reserve Fund
woulil be poured into the Mortuary I'^uid, and thus save
from loss the d(M»endents of the insured who die. Ent the
fact is, the Reserve Fund is not wealth l)ut a debt, not stre/ujth
but iceakness, and cannot, under any circumstances, be used to
discharge claims upon the Mortuary Fund. The moment
•iB*^!
I I
7
\^
tt?^'*
1 4
1i
\-
The Level- Premium Annhjzed.
II I
it is toiii'lu'd for such a purpose the (^»in|);uiy is bank-
rupt, though it lias millions of res»M-vos besidis. Itcservos
luivecruslit'il scores of cornpiniies, an<l have never rescued one.
An eini nt authority, Anizi Dodd, formerly mathenia-
tieiun and now })resi<lent of the Mutual HeiU'tit Life Insu-
rance Company of New Jersey, in his report to his IJoard of
Directors (Jan. 1S83) thus I'Xplaiiis to them the nature and
p\irpose of their Reserve Fund of thirty-three millinu dollars:
" it arises from t!ie single circumstance that the risk of
death (and therefore the <'Ost of INsikanci:) increases with
each year of life, while the i»remiinu which is paid on the
policy ditlbrs in amount from the cost of insurance. This
increasing cost woidd he the nati'HAI. premium, l-'or the
sake of convenience, the sum ordinarily agreed to he paid in
each year is dlrtt'rent, and is called the artificial i»remiuin.
During n)any years after the policy is issued, the artificial
premium is greater than the natural, and in after years it is
li'ss. In the ca«e of a policy isstied at the age of y;"), the
artificial premium is greater than the cost of insurance till
the insured reaches the age of oO. After that age it grows
rapidly less.
" Out of this state of things arises the whole matter of kk-
Sf^RVKS, so fundamental and so much discussed in life insur-
ance. Simple as it is when stated, it is remarkahle how often
it is imperfectly or ohscurelv conceived. \h' thk I'OLIcy
CONTRACT, JNSTKAO OF CALLING FOR THE SAME PR KM 1 I'M
EACH YEAR, J^FIOt'LD CALL FOP THE GRADUALLY 1N(.REA.S-
ING NATURAL PREMIUM, THKItE WOULD HE NO NEED OF
RESERVES OR ACCUMULATED Fi NDs. The company and its
memhers would do husiness on the rule of "pay as you go."
The PULICY-HOLDEU would (JET yearly the ECiUIVALENT
OF HIS MONEY PAID. Jiut under the system almost univer-
sally in use, he pays largely in advance, and the com})any
holds the money to oHset against insurance in after years,
when the insured does :iot wish to he called on for larger
payments. The reserve fund thus arising is sometimes called
the WEALTH of life insurance companies. It isohviously not
such, hut a dkbt from the corporation to its memhers: a
great trust fund i-onfided to the managers."
"The fact is, the reserve is simply and purely a hank
deposit, belonging for life or death to the depositor, and
HAVING NO MORE PvEAL CONNKCTION WITH THE INSURANCE
RISK THAN A CORRESPONDING DEPOSIT IN A LANK ACRO.SS
THE STREET WOULD HAVE." — Emorij McCUixtock, Actuary
No rtkwesterri Mu tvul.
.•*»»>
^«
f
y
The Nulural iSyntan of Lij'c Insurainr,
1
*' No part of tlie reserve can be used lo {)ay a (li'atli claim
on any policy save the one to wliicli it belongs, — any more
than a bank (jf diiposit can use the funds of one (hpositor to
make g«jod its losses to any other." — ii'. />. Williuiu.i, Con-
suUiiKj Adaari/.
Loading.
Kx|H'iise is inseparably attachcrl tu the ellicient manage-
ment ot life insurance under any form whatever, ami a sum
for this purpose - ealletl LOADlNt; —is athied to the two ele-
ments of the level-picmium ali'eady descrilx'd Though this
is the primary source- fioiu wliich expense is paid, the whole
SUlil'lAS, yet to be exjtlained, is available lor ih;ii purpo>e,
and [iractically the managers are unrestricted in the amount
so tonsumcd.
The following analysis, by Klizur Wright, of a level-pre-
mium at seven diflerent peri(Hl> iii the life of a policy, will
clearly illustrate its three-fold nature, the function of each
of the elements composing it, ^ud their relation to ea(;h other:
Wholk Ln-i: I'oMCY. A<iK at Kntuy 82. Levkl PuhMiuii —
I'nijablc (UiiiiKiUij Jur Lije — ^2\\M).
First Yk.vu. Tuk.v M;v. 32.
Cost of IiLSuriiiict', KjlS.'i.IiO
Dcpo.sil lor Kesorve, itT.lu
l.oiidiiig, tJO.GO
Total I'remiuiu,
Sixth Vkau. Then Atiic 37.
(lost of Insuriuice,
Deposit for Ki'surve,
Loiiiling,
<■_
Ml. 00
$K
7.(M)
y:;. 10
(iU.(iO
Total Prciuiuiu,
Elkvknth Ykak. ThilS \iiV. 42.
Cost of Insurance,....
Deposit for Reserve,
Loading,
SiXTKESTU YkaK
Cost of Insurance,
DeiKisit for Keservi',
Loading
Total Preniiuni
Thk> A(;e 47.
Total Prciniuni,
T WENT Y-FlKST Y EAR.
Cost of Insurance,
Deposit for Reserve,
Loading,
Total Premiuui,
. *241.()0
. )$U1.00
SD.IO
GO.GO
t2H.OO
.W100.J)0
7'J..W
GO.GO
Then AciE 52.
8241.00
Siiaa.7o
57.70
60.(30
S241.00
••'*»-
\ \
1
?
\ S
1
'4
L.
rfW.*^
claiin
lUOK'
ilur lit
I. ( 'on-
u Slim
;li lliis
wliole
mount
L'l-prc-
y, will
it" OJlcIl
other:
M —
tiO.OO
$241. (JO
'.):;. iO
bO.llU
-i^LMl.OO
SO 1.00
SU.IO
GU.GO
S2tl.00
IOO.90
tJO.CO
$241.00
l.J'^.70
57.70
S241.00 W'J
1
i>
t
/hid - ( 'p f\>h'rj/ — Surrrudrr Vithte.
1.1
'I'UlWTY-SlXlir Ykau. Tiik.v A<tK "i".
Cosf of Iiiswraiii'C,
I)c|i(isit fur i;r>('rvo,
Loa<lin>r
Total I'romiuin,
«14H.lO
;f2.:;o
tiil.CiO
, S241.00
TniUTV-FiRST Yr-.AR. Thi-.n A<iK <VJ.
Cost of InsiiniiM'*'
I>e(iiict from [{cservr,
.)!jilMO.(SO
.20
Paifl by this yeiirs rrcmiiim,
I-niidinV, ■••."•
?l.sn.40
CO.!')!)
Total rreniium ?241.0O
Total ainoiinf in Kpsitvp at end of tills yi-ur, int. 4 percent , 194,05?. 70
If will be obscrvefl frmn the nhove:
1st. Thiit the ;issiiii'(l li:is ])iii(l each year !?(•(».>)() for ex-
penses ;
2n(l. That h*.- has paid each year the natural wst of his
insnrane«\ whieh has increased from SS.'i.oO the first year to
§!180.r)0 the thirly-lirst year;
.Srd. That diirini,' these years lie has made deposits in
rp:sp:rve. in sums frotn $97.10 downward, to the anioimt, at
4 %■ int.. of .S4.Ho2.70 ;
4th. That the deposits to kkskkvi"; cease the thirty-first
year, and it conlril)Utes 20 cents to help the premium pay
that year's cost of in.*;uraxck and exi'KNSk.
Each year thereafter, as the cost of insurance continues to
increase, the contributions from reserve will gradually he-
come greater.
)
IV.
Paid TIP- POLICY — SURRENDER VALUE.
Should the assured under the policy whose [iremiums are
analyzed in the preceding chapter fail to ]>ay his thirty-second
premium, he would recei\'e no consider.ition whatever for his
])aynients to onM of inxiirctncp. and cxpi'nxc ; and, ('/' tlieij have I |
bpen rcnsmnahle in amount, he has receiccd thrir fnll valve in the j
jrrotectioii f>irni>^lti'(l. As well miLrlit he claim that the price i
of a barrel of llour which his family has cimsumed and en- •
joyed is money lost, as that a reasonalile [)rice fr)r that protec- ' i
tion which sweetened his sleej:> for thirty-one years, and has
I been a perpetual shield to his household a<rainst ruin when \
^A his children were voung and helpless, was monev wasted. -.«
^1 — : — '^
S 14
)
The Ndtural System of Lifr InHurance.
liiit 1)0 is now sixty-three yeiirs of ape: his family have
j^row'ii up, :iii(l, iKTchancc, no loii^^cr need that {)rott'('tlon
wliich was so jfrcMt a hoon a frw y«':irs ajjfo- the rather, he
now needs jnoney to siipjtort himself" in liis dt 'lining' and un-
productive yeitrs, that he m.'iy not i)e a hurOen to his chil-
dren, lie Iwe^ paid >!4,'>')"2.70 into the hank of the eompany
to help pay tur protrction not yi't reC('lv<Ml; ;ind :i> thetitne
npproaeiies lor its delivery he tinds he has no need for the
commodity, Imt jj;reiit need for its price. He oMcrs to sur-
nmdcr his policy, hut linds that it makes no just provision
for smy eontinjrcncy hut death, and that he is un«lfr a hond
of over four thousand (lolla»"s to ^io on with his payments.
Even under the Massachusetts Xon-Forfeiture Law, of his
reserve he nuist forfeit $!).'5().r)4 outright, and wtjuld receive
but !*!|{,7'J"J.](» worth of /i/Z/i/v insurance, under the condition
that at his death all the unpaid premiums (J^'J H jier year),
with it', interest, will he deducted froiii his claim.
If he insists upon receiving cash instead of future insur-
ance, he is entirely ;it the mercy of the company.
Actuaiy Willey tells ns that, " In deci<lini( what surren-
der value should lie paid on a policy, every company is a law
mWo itself, just as much as in the repjulation of the annual
premiums, Hardly any two companies have the same rides
for deterndning the surrender value, and there are hut few
in which there is any fixed standard for computing it. . . .
A )<iirrni(h'r cil.VRCi]-; of 25 per rent, of tlif rrsrrri' i.< a,^ low f«.s
the iiKj.'^t Vihcinl voin])(Hiicx udopt^ w/iilr vitniy rliarge ")<) per cent."
The holder of this policy has paid the increasitiff cost
of all the insurance he has received, through thirty-one
ye;irs and all the expense chargeahle to his policy, and has
deposited, in addition, for insurance not yet delivered the sum
of $4,()>i2.74^; l)ut he can now withilraw that hank deposit,
no matter how jrreat Ins exifrencit-s mav be, oidv hv forfeit-
ing from >^l,1Ga.l7 to $2,:J2«.3r) to" his hankers. How
precious this privilege of depositing in the life-insurance
bank !
Amzi Dodd, speaking of the i>ractice of the largest com-
pany in the world, says :
"They seldou) pay, I am informed, more than 50, and
often less than 50, per cent, of the Reserve; and wlien it is
considered how large, within the past few years of pecuniary
distress, has l)een the nund)er of ))urchased policies, and jioli-
cies forfeited entirely, it is apparent that large sums of money
have been accumulated from these sources. . . . To illus-
trate : take the case of my own policy, Issued in 1854; its j^^
i
;^
r
I
•*»*-:
<**-*'
\\ coin-
50, and
en it is
•uniary
(1 ])()li-
nioney
iUus-
54; its
i
J'}
cent"
1
^ cost
■
v-(inu
ul lias
H)im
e posit,
ortVil-
IIow
1
I
n ranee
1
;
Oriijin of Snrplu)* — JUi'itle.nilH.
10
\
HVMVAiW. vuliie is now $4,lino. 1 have |iai*I the company
fiillv for all the itisiiraneu I have had, and I'or all the ex-
peiiscs intident to n\y )iolirv. If I say tu tlif cnnipMiiy, I
have no lucd of the insurance, and <,'reat need of ilu- nioiu-y,
and will ;;ive np my future insurance and take hack the monev
1 have advanced for it, the company will idiar^'e me for such
a ehan^'e from oO t(. CHI per cent., i.e., from .>!li,lliO to S'J.oliO."
"" Of flic same Company Mli/ur Wriirht says : "The lapses
have lucn id)out as numerous us the remainin*; nu'inliers, and ^ ;
have forfeited (from ilicir reserve), or heen char;,'ed on sur- | '
render, sums wliich ay^'reyalc hilterly nearly a miij.ion l»oi,-
LAlts A \ i;aI{."" No wonder that the same authority, who
has ilevoted the eneruies of a lonif lift; to a reform of the { '
abuses of life insurance, exclaims almcjst in despair: \
"The lite insurance policy, nv i:kas()N of thk AccfMt-
LATloN I'Niu.li IT, is a trap which st-rews tip ti^diter and
tiiihter, till liheration comes oidv l)v death, or expiration of
the term. When there is as perfect an iniderstiindinu he- j i
iweeii the Company and the p(dicy-holder as hetweeli the
savin;;s hunk and the di'jtositor. and there is no forfeiture out ,
ol" projiortion to the dama;^e of non-fnifdment of c()ntract, i j
life insurance will ri'cover its popularity, and take thorns out j
of the pillows of younj,' fathers, who now shun it as they I
would a pestilence." j [
It is to hrinj^f altoiit this perfect understanding between
the Dominion Sakkiy Fund I>iri; Aksociation and its
patrons that these pages are written.
V.
ORIiUN OF SfTKPLUS — D1VIDP:XDS.
No branch of our subjeet is so much descanted tipon by life-
agents, and so little understood by the i»ublic, as DIVIDENDS.
As one listens to the fervid ehxpience of the sol.citor, as he
rings the varied changes upon the richness of this source of
wealth to the assured, he fancies the Company possesses a se-
cret iniknown to otiier iinancial institutions, by w'dch wealth
can be created from nought. Dut not so — even ilie mystery
of the dividend can be ex|»lained. and the world move on.
If t!ie data upon which the level premium is calculated
be exactly realized in practice, there would l)e no surplus,
and no dividends; but as a fortification against fate and lickle
r
^]>. 10
'••mtJ''^
I
The Natural Si/^tnn of f.lj'c In^nranrr..
fditiMH', (Imsc (l;it:i ;ir<' alt<»K<'tlur favornhlo i(» llic ('<»iii|Mm\,
and in praclu'c a surplus Is the invnrinlile rt'siilt.
1st. The taMc.H of mortality Ity wiiicli tlio cost of INHUR-
ANTK is (U'ti'irniiH'd in cal-'ulMtiiiLc fhc incniiurn, indicate a
dratli-rafc cnnsidcrahly liii;licT than is rcali/.i'd in practice —
especially in these latitudes. The tahular costs of' the insur-
anees riiinished l>y the lar^M'sl (':inadian company for the
vear 1SS;{-1 .iLTLfrri^'ated i^ la7,(IM."(, while th;- actual cost w.i.';
hut S'J.'i;!.>«i l.t(>. leaviiu; a prnjit from this source alon«> of
:Ti20;!,2:!0.'»l. As the actual cost was hut oH^ jter cent, of the
assumed, :i pMlicy-lioIder payinLr ^slNO.Of) jis his cost oi- l\-
SUHANCi; piiid an uver-chaif^e ol" .'i>s;! '.IS.
" l>ividcuds lo policy-Iiolilers sire praetieally a misnomer.
They iir<! maiidy a restitution of tlu^ over-payments whirdi
have lieen made in the pretnisos." — \ctuary Willnj.
'Jnd. If the iii;si:rvk earns a rate of interest hi;;her than
thai assumed in its calculation - 4 or 11 [ler cent. tti(>re is
a second source i^^ iM-ffit to the comp.'uiy. The averaj^e rat*'
earned in Canada in ISH.'J was over 0^ percent. — leaving; 2
or -J per cent. oT the entire .'{FCSkkn r. as profit. The larj^'esl
Canadian companv, havin^^ a lilv'^ElfVl-; of •^4.(J4t),'Jo7.47, thus
deriv.MJ a profit of" !^02,.SO.').15.
Tliis is just so nnicli more |)ai<l hy the policy-holders than
they realize. Thus, in the case analyzed, if the assured pays
his IVJiid premium he has l)ecn allowed itiil 4 percent, interest
on his reserve ihe last year, while it was really worth ti] per
cent. If thv- 4 p( r i-ent. is his money, so must th(> additional
'1\ per cent, he, and this amounts to Si 11.84. which should he
ad(lcd to his premium ]»aynient to give his actual premium
for thai year.
.Srd. The richest source of profit is the forfeiture of the
whole or a part of the kt^khve, by discontinuan* e, as briefly
referred to alreadv.
The really te»nporary nature of what are entered into as
wh<de life enyaLrements i> a sad commentary on the fickleness
of human fortunes and the instal ility of humati jinrposes.
Notwithsl.andimx the fa<'t that, " whether a ntan will be able
to pay in some future year is often as much a matter of nncer-
taintv as whetlu'r he will die in that year." m( n. ovtM- confi-
tleul of tiieir powers to battle with fortune, audi of their
own stability of purpose, are ])ersuaded into taking upon
themselves oblii^ations r(M(uiring a lif(>-time to fulfil, and to
place themselves under bosuls wdiieli increase as ihe years
gather, that they will never change their puri)o«e. The ag-
%A
-f*f*-
* f
i
f
}
/ '":
INHUH-
licate a
rtici' —
i> iiisiir-
for t Ik-
OS t wat;
iluno of
. (if the
1
OF IN- '
snonicr.
i
s whirh
1
1 ;
ler than 1
thorciH '
•avinK 2
(■ lar^'csl '
.47. thuK
1
Icrs than
ri'd pays
. interest i
Ih t'..\ per
(l(liti<>i\al ^
should he
jircjuinm
1
iro of tlie
as briefly
m1 into as
i
fickleness
purposes.
11 l.e al.le ' ;
of nncer-
j
vor confi-
1
of their
in<^r upon 1
lil, ami to I
th(> vears 5^
Thb a-
*-7
i
>,
f
•"♦^•t
Or\f)>n of Surplus — [>ividendn. 1
;(r('jrate of these hoiids for persistent payment (reserv»'i hi-id
hy tile companies in .Vinerica lo-day is JHO millionH of (h)l-
lurM — II sntn eipial to the eomhinol value of the t-ntin- co(t(»n
crop of the world, and the ••ilk crop of India, China, and
Japan.
The usual result is the forfeiture (»f the hond. I'rof. Van
Arnrinj;e, of Colunihia Colle^'f, a must searchin;: critic nf
the siilijcct, declares; " ( )f t-very i<io polieies whieh cnise,
hut 10 will cease hy death and expiry ; I •'> will he jjiven up
for a sli-rht compeiisaiioii. and 7o will l»e ahsolutely thrown
away hy the hohU-rs,"
This opinion is very strikinj^ly conlirtned hy the consoll-
dati'd experience uf thirty .\merican life oflices, sittce piih-
li»hcd. ( )f l,(fj7,")'J!> entrants to those rompanies np to 1S71,
Ill,(i!»-J luul ilisconliniied, and 44. -Is") had di»'d, at that date,
makini,' ctver iiin»- «lisconlinuances to each death.
.James T. Iliirns, cdiisidting actuary, says: ''The ex|)e-
rieuee of the hest life coriipanies on this continent shows that
not more than lOoiit of every 1<>() insurers ki>ep their poli-
cies in forcv' for 20 years."
N'atiian W'illey, an :u>tuary of eminence, says : "It is ji
lamentahle fact that tin- policies, as a class, taken duririj; the
last few years, jirc short-lived ; in the hest companies only
seven or eij;ht years is estimated the average. And this is
mostly owinj: to the dissatisl'action of the pulilic and th«' mis-
representations which agents have made ahoiit future divi-
dends, surrendei- vahus. liherality of the company, etc. Lite
insurance in this rountrv has not hei-n oirrihiiic, hnt it h;is
heen f>iiilli/ done, and a thorou<;h reform is imperatively de-
manded. Hut the fault is not wholly on the part ofthea^'uts;
the officers of many companies are e<|ually tn Idaiiu- fur fur-
nishin;^' the means and the opportunity of misrepresentation.
They sup|>|y aj^ents with printed dociuuents t^ivinj; wonderi'ul
hypothetical statements, whieh may he realized utider certain
conditions; tifkv cai'sI': (jfikat kxp?:(TATIons and 01 vp:
rNriNiTi;siMAi. KKsui/r.<<. . . . I!ui more information now
prevails in rej^ard to this suhject. .Men are insurin<,' now
for insurance, and not for the prcuuist-d dividends; they are
i)uyinir insiiiance as a protection to their families against
want, and not as an investment."
Eli/.ur Wrii^dit says : " Jii/ tlir f/ain.-f of for/cifiirc, companies
of virtual swindlers, under the name of liife Insurance Com-
panies, wasfirii/ (t full thu'd af ihi: J'nnd,-i eidnislnl to llteir aire,
have existed throu<,di an entire generation and made a show
of solvency and rcspectaliility. In reality, for ingenious \
rogues, a mutual life insuran<e company with the forfeiture; \^
r
VK
The Natural Sysleia of Life Ijuturanc:.
\
cimisu ill itH poiicicH Ih tin oii{u;iiu> of |)liiiitKr, with :i priticiplu
(if iiiiiiinrtiility in it."
'I'lif (itinpanifs iiniy " inh Pt-tcr to pay I'aiil " hy iiiiikiiiv;
»livi(U'ii<l.s iVuiii this rich siMinf (d pinlii ; lint llu- tiiiir will
coriu' when ili<; iidiii dI' ''nli^'lit«*ii(><| conscictict' wotiM ratlii'i-
wiii tiioiicy at tlic I'aro Itaiik or kcix* talilf, wImtc the ricli
man is as liaMt; to li»«! Its llic p<»<»r, than l»y this ln'iiin^' nu
porsisti'iu'*', whfti; a (•(•llsidiTahlc part <ir l.'ir vvholr of ihf
UKSKUVK is tlu' wa^MT, and whrn- (In- w innip^s an-rin- oiily
to lh(»si' whosu ('(HitimuMl ijood rorlunc (.'iiahh-s thi>ni to keep
lip their payiiu'iitH, and tliu losses only to those who, hy the
niist'nrtnne of poverty, are compelled to forlVit ihusf i.avini,'^
whieh minht have resened their homes iVoin llu- hherili'>
hummer, or saved their lamilie- iVoin hnii<,er.
ILiW loudly <loe;> piust experience <iii! for ii less costly
Hystem of protection, in whiih men will not he compelled to
la|>se l»y its extreiiu' «'X pens*', and hy whit-h they will (.KT
WHAT THKY PAY Foil Willi, !•: TIIKY PAY— placili;^ little in
the hands of lIu' company tit forfeit !
All the prolits (»l)taiiied from the tiiree sonrce^ nami'd are
added to the total ineoine from L(>ai)!N(}; the expenses are
paid with lavish hand ; and what then remains is sriU'LlH,
a part of which is relnrnetl to tlu' policy-lxtlders as divid icU.
A few more words of expert testimony and we shall leave
this snhjc'ct.
The Insiirance romni'ssioner o/tlie St.-it.- <.f Majiie. says:
"This ri'payment to the p(dicy-hoider has no claim to any
snoh coi^nomcn as '' dividend," and is all a tU'li.sion. It is
merely a return to the owner of a |>arl «)f the exci-ss, pre-
viously taken i>ut of his own pocket when he purchased his
policy, or had it renew»nl. And it is tuly a part, inasmuch
as a deduction has l)eeii made from the excess for the ex- I...,
jienses of its own collection. It is, in fact, as if (iie should
sell for a i(ullnr an article of y//V// o»7//.s valui', and ;;ive hack
afterward /»'e/t^/-/<V<; C('/</.'< for a 'lin'dend. 'JMie railroad com-
pany and inn-keeper who should charge" double fan- to tliiir
customers in advance, and pay l>ack (tiie-half the surplus
afterward, have ai eqiuil claim to credit for payin<; u rich
dividend on their investment."
A cari'ful student of the wl<ole sidiject of life insurance,
in an able paper in Itnrpcrs'' Mnnllilfi M(i(/(i::iiir, .lamiary, ISS],
remarks: "The whole system of dividends to policy-ludders
is a vicious one. The promised dividends are a halt to the
puldic and the (.tccasion of an ir'-esistihle icmntation to the
olliccrs of the com[tanies : the excessive premiinus which
make them possible tlemoralize the business. The more
i
Jj^B^***»»-
•*i»>i^V
r
•♦•/*-»
\SK
\
ri.
r
4.J
•*)»^-i
h the A'» .«•••/•»•« Xt'cfMatyf — Krpn-t 7\atimony.
■^1
nearly the prt-niiiiiii Mpproiifhcs tlic iihiuiiiiiiii licit is con-
hiMtcnt with satrty, the hetttr liutli tnr the eoriiiiuiueh tiiid 'or
the a«Mure<l."
I.KT I's t'AilRV 11118 I.FXHON WITH I'M,
I
VI.
IS TIIK HKSi:i;\K NKCKSSAIJY. AND TIIK SYS-
TKM ADAITKI) To TIIK UKAL NKKDS
(>1 11 IK PKOIMJ-:?
EXPERT TESTIMONY.
The UKsf.uvK is eertaiiilv iiec'eKKarv if we would pav a
level-preiniiim. The e<»st ol' iusnraiiee iiiereasioj: with every
vear oi' life is no tietion, hut the result ot° a tixed law ol
nature which it is madness to attempt, l»y any iu^«-nions
device, fo (Vuslrale. Assessment insurance has j^euerally
iirnored this has.d principle in the science, and the re^ultint;
conliision has ln-en illustiatcd hy our theoretical society,
and more t'orcihly in practice hy the disaster which has al-
ready overtaken many honest, hut Juis^fiiided, attempts to fly
in the lace of natui'.''s ilecree. Ihit, as the reserve is only a
cloak heneath whii-h the advancing cost of insurance is col-
lected, why not pay that advancing cost, without the cloak ?
Amzi I)odd tells us: —
"if thk i'oi,i(,'V contract, instkad <)I" cAi,!.iN(i yon
THE 8AMK I'UKMII M KACIl YKAK, SlIOl'l.I) < ALI, F()U TIIK
fiRADUAI.I.V INCin:.iSlN(i NATIKAL I'KKM I CM, Til KKK \V(»l'M»
S'K No :.'KKI) or RK.sKI{\'i:s l)R ACClMLLA'rK!) ITNDS. TnK
COMl'ANY ANM» ITf< MKMHKRS WOULD HO BUSINESS ON THE
RULE OF 'PAY AS YOU GO.' TllE I'OI.ICY-IIOLDKR WOULD
(iET YEARLY THE EQUIVAI-ENT OF HIS MONEY I'Ain."
When a man insures his life, the commodity he hnys is
protection, to liis dependent ones. Let him apply the prin-
ciple's jipon which it is liought and sold on the level-prenjium
plan, to the huyin^ and selling of some other commodity, and
see how reasoiialde it looks.
He is ."32 years of age, and has just insured his life for
!?1 0,000, under a level-premium (»f .*2il per year. l\' the sup-
|)osition is i)((t loo violent, we shall suppose the agent ex[»lained
lO him in «letail the nature of his contract. He is captivated
hy the mathematical nicety and subtle refinement of the sys- 1
tern, and longs for u level-grocery bill.
*^fi^r
8 Hi)
{
I
w
Thi ytUiirul Syttlcm 11/ Life Iiuiuninee,
*1
He liaMtciiN to WiH ur<»c(>r, 11 man who contliit-ih liin ItiHiiifMH
ill |)riii('«-ly Nlylc, iiiiii of t'c|iiil«'il m-;ill)i wliiili. Iiuwcmt,
<'oii»iH(h ill Ilix Iruiliu the k<mm| rurttiiif to hold a tew liitllioti
ihtllars of •>>>!. T |N>o|ih>'M inoiicy it) tniHi, iht- tft'iiiK ot whirh
not he il ih'tinoi, h't't him iiiiiKliT of the Mlnatioti.
lie ih (li'liyiiitil with the |»roH|icct of <,.'ittiii;,' yt-t inori- IiiihI
fiiixlN to hamlU', and i-moiii jiu'rs hi» rn^toniii' in hi* liiiicv,
Tlu-y i.j;n'«- that thf LKVKi.-tiiuM kuy 1111,1, »hall hf>^j41 \>vr
yt'iir whilr ihf ciiHtoiiici' liv»>; ^'tid.iKi |»rr iiiiiiiini ■^hall )»•
th<' dt'uU't's pltilil ; llir ll»t (•()>( ot' tin- ^jtM-fl'ifs |o In- deli \ fl'id
thu tirHf. year Hhall he i^Mli. .'{(); and th<! first (U'poNii, to piy lor
jj;roc»'rirs after thirty yt-ars, >hall lie .'^!)7.I0. A ma\iimiiii
stah' of cost of sii|tji|iis to Im' dt'livcri'd cacli yrar i>< auirrd
Upon, aMowint^' for a u>'ii<hial ini'rfa)««> in roiisumption :ts ihi*
custoiiM'r's family iiicri-aHi's in aye and tinndu'iH, ho that tin*
maximum ihi- thirly-lirst yoar shall In- ."MMt.tlo. j-liii'li y<ar
ihi' dilli'niuf hi'lWiH'ii thi- cost of iht; yoods, with the com-
iiiiMKion iiddi'il, and !ji24l, in t«) hu dcpohiicd with the Krotcr —
to (iroiil an iticiriixintf </riicrrii itill, — ami alti-r tliirtv y»'ars,
when the c<»sl and commissi(»n may cxcci'd S2 1 1 per annum,
tilt' ditlcrenct! i.s to In- paid from these deposits, tn keep ihinijH
level. As a hait, the juroeer .assures iiis euntidiiiLC eiisloiner
that he can h:indle that money much hetter than tlu- customer
himself can, and that if it earns more than ( per i-ent. intei-est,
the excess, with the value of any undeli\ired uckkIs, may pos-
sihlv l>e returned t(j him as a IHVIDIIM). No provision i>.
made for the ii'tuin of thai (iver-payinent, exci'pt in ;,'io< ci ics,
and when he no lon;;»'r needs that comnMHliiy he, too, will
hnd himsi'lf in a " trap." 'I'o complete the analogy, the
grocer must aj^'ree to ri-turn the amoimt in tvust at the death
of his customer, provith'd it lias not alre;idy htcn forfeited
by some technical hreach of contract.
The analogy is not a torced one, for there is no m(»re rea-
son for a man going into a "trap" to escape an increasing
inffurance bill than to escape an increasing tjnxrri/ hill. \Vh:it
other commodity in the wlude category of human wants
would a sane man think of paying lor frc^m lifteen to tliirty
years in advance, even if he knew its cost to him would
surely increase?
Then why so j»ay tor protection? Why attempt what
has resulted only in disappointment and loss to ninety of
every hundrecl who liavi; attempted il in the past?
r.VV AH YUU UO, AND (Ji;r WHAT VoU I'AV 1 ()l{, Tav for
protiction to vour dependent one i the cost of each vear l)V
Itself, and get thai iirotertioii. Add the r»'.st'c/''.< thus saved to
your own caj)ital, or invest them where they will not he
bevoiid vour own control.
)
-nt^j
4
'!>
s&^-
Crt
'r
•S
/m tht Rutrvf SeeeMiiryt — H/prrt TfMimony.
til 15
•'Tlio fiM't that miili'r tln» onliniiry form of policy tlic
lonm'r niu' HtiivH in llic cotnpiitn
I)oi)'t ronfi'M iniiltility to traiixiut yuiir own IniMinoM to
ikIviimiiiuc, Ity crtMitirii; a tni^t yon ltavi> no |M)wi>r to rrvokc
|)on't aihnit wi'aknf«*«* Ity tin- off.rt'|n'iitiMl confoxMlun that th«'
ri-xi'i'vi' wduM nut li«> navfil it' not ilr|HHiti>ii with th*' <-i>ni-
panv, anti ln'yon»l your r<MU'h. 'VSw laxciiiatinn of so«'inK n
iwink ai'ciMint t^row, :in<l knowing it U at ymir coininainl in
('a«*«' of t'in<'rucnt'v, i«< a nnirh t^n-atrr in('«-ntiv«' tft Irnu-alily
and |>«>rMi>«tf>n<'(* of lU'iMMit than thf tircail of fort'i'itin^' ihat
whith yon catntot rrarli, rvm in thf «lir»'>*l rxlri'niily. FUo,
\\\\s ilu siivin:_'>^ hankn tlouri^h, withuiit tin- aid of a canvasser?
It han airrady lurn kith that lh»' fxlstrnt't' of th«' n^<»rvo,
and the |>fnalty of t'orfcitinK it, in \vhoh> or in part, hy dis-
rontitnianci', Auv^ nni nernn* pfrsi'-li-ncr, and as Kli/nr
Wright rt'asiinahly Hn^m-Nts: -
onlinarv form of policy the
, IV tin* tnor«' it ('ohIh hini to )iv\.
out, rnusi have something; to do in an-onntin;; lor tht> ini-
nn-n-^r outward ^frainltlt'."
From ihi' >arni' hiyh anlhority wo learn that "three
Ihinn* are es><t-ntial to thf perniaiM'n«'0 and prosperity (»f the
ior»i|»any : -
"(1) That the nu'iid)er.H sliail enter in gocul h« iillh, und
without iidieritanee of speeial diseaHe;
"(■J) That each shall conf riliuti- yearlv in advance to the
I'und lor lh»' paviutiil of dealli-lossc's during; the yrar, in pro-
portion tu the ehanee, as nie' urod hy some mortality taide,
of the t(>m|»any's loHinj? hy In own death <lurinjr the year ;
*'(r{) That wIh'U thf pnlicy covers :i term of yciirs, the
persistenct! of the animal advaiuc payments shall he
sunieieutly seeuretl,
" What is called co-operative life insurance >(cnerally fails,
partialiv or whollv, for want of the second and third essen-
tials." '
The only necessity for the existence of the reserve nr>,'ed
Ity the most al)le defenders of the system, is that it furnishes
this third issential; or, in other words, the forfeitures recom-
pense the ci)iiipany for diminished vitality as u result of the
retirement »f healthy lives.
r.ef(tre rlisciissliijf this suliject, it is diii' to our readers, in
a few words, to make them Itetter actpiainted with the
autlioritv whose opinions we so freely (|uote.
I''Ji7.in' Wriirht has made more of a study of this particu-
lar hr.-mch of the sidiject than any other liviii}^ man. When
Insuiance Commissioner of .Massachusetts, he [)laced on the
1,; statute books of that ('ommonwealth the first legislative en-
)
'7^
)
Thf iVd/iiru/ Synhm of Liff huturaim .
•^1
<
iictiiU'iU for protcfiiii}; tlir tit(litM of ttit> ri'iiriiii; iHilii'V*
lioldir ill liix riM»rv«» — llu' Ntinl'url'i'itmr I.iiw of |M»'l|,
iilr«-ai|y iiiriitiuiH'«l. For liiiiliy yntrM In* iiKit'tl«'*l I**!' >i uutn*
roiiipli-lt' rct'orni; ttiiil, tlmn^h opiKMtMl l»y rili itii* ritrccH at
the <'i>iiiiiiiii)(l of It wi-iilltiy Mlit;iiii-liy mIiomi' iiiiiii>4t rrvi'iiiirM
hv iiHMiiili'il, li)> ii:m livi'tl tn mm> (Iii> (■aiHc triiiiii|)ii uml lii>«
viuWHcryHtiili/.«Ml ill thf Mhhmiu IhhiKn luwut' IHHI.
"'riiiit law iw thf iiriKiiici of tliiit inaMtcr iiiiiid wliidi Iiim
(|mii(> sit itiiirli, williMiit r)'war<t. savi* ilii> rnn><riuiiMiM"«i of u
landalili' ijcHin- lu ht'iH-lit iIm- m«'al max"* u|' puli. y hnlilrr"* atul
plarc tli«> htiMiiicHN of lit'<> iimiiraiM't' wlicrc it dcMcrvt'M to Hlaiid
— tin- un-atrst liuiiianitarian iiiMtitiitinii of itii> ttnv iVfi'tl
from till' ^'raHjiin^ avarice wiiicli liaM no loiii; ami hiicrcHNl'nlly
('oiilro||«Ml it, and is now ho inaiiiicMtlv I'lidati^crin^ il^ Nal't'ty.
I rt'lVr to inv Iriend, the lion. Kli/.iir Wright, tlie vetiran
Actlliiry ol' iiiv tiiiK'H." — /<;. />. \\'illiiim», ('iint*ullin(j Aflmirif.
Ainoti);; his opinion^ which ultimately Mwiiyed the mimi
of the MiisHacliiiscKs legislature, we liiid :
'* Tlu' ahsoliilt' nt'ct'HKiiy for u certain forfi'iliin' or mirren-
der ('har^e to si-cnri' the persistence of the paymeiitH, jiiHtities
neither an excessive charge, nor tin- iiiei|nity of making; it too
Hliiall on some p(dicies iind loo lat>>e on oilier^.
"The praetict' of the I'ompanies triinscends the ri-asons for
it, aixl rides roiiKh-i^hotl over the tdd l.atin law maxim, i^f
mudiis in rebus (evervthinjj; Iwis its limits.)
" If a company does not indulge in extnivaKain'o o( ex-
penscH. the rettervf of the firnt yeav (jinn umple nerurity for per-
<ri»/»'nc«'."
This proposition he <lemonstrat(s hy logic and hy iiuithe-
niati(t<, proving that the lorleiture of that amount will be
more efiective in accomplishing its purpose than the forfeiture
of tlu' wh(de reserve, and will fully recompense the coni[iany
for a possilile diminishe(| vitality as a rt'siilt of the retirement
of healthy lives.
How great is this hond ? The aiverage age of entry into .'{()
AiiH'ricr.n companies is iJo years, making the average reserve
tit the eml of the tirst year $9.82 mi nirli St, 000 innnntni-r.
TirioN A iu><i:iivi; of !*^l() on i:vi ii .'^l,0(>() isst ranck
IH A St KI'iClKN'r BOND TO flOltSlST, AND COM IM.KTKI.Y
ANSWERS THK UKqUIRILMKNT Ol' TlIK TIIIUI) ICSSKNTIAL.
" There is no reason,'' says Mr. Wright, " ji7o/ « life insur-
ance aHHorialion which iti.Hure.-< without hankiiuj, xhould not he (is
pennanent ax (ini/ other, and better <(erommo<l(ite all those business
men who wish to have all the capil<d they can for use in their own
biisiness."
<
i
rf'-.>*v
1
/((■(■.
It AN'CK
KIKI.Y
r
1^ Ihf Hi « I " .\>i>!*mfryf — Kxfttrt T'^lntmty.
Wf nIuiII n<lil iiiitn* rxiHTt ti>«(ini)>ny In •«iip|)nrt llio
opiiiiniiH oC tlii>« liiirli ;iiiilinrily.
Sli«-|)|mr)l iloiiiaiio, the ilixtiiiuiii<«lici| rii'tiiarv nf New
Y«»rk. "•hvh:
"A** a |i«'rH4iii uri>WM uIiIit, tin* ri^k of ilyini;, or in otlu'r
vvuriU, tilt* r<M< nf innurnnvt, iiiM'fMMtirily inrrciiMCM, niiil tliix
rott iiiiHi lu> |iai<t iMf, in tnin** hIi:i|m> or iii:iiini<r, iiihIit tinv
ami rvriy "v^ii m n\' lilr inHiiraiirr," |{y tin- -y-h-rn <•! U'Vfl-
|)i«'ininiiio, "ilu* annual |iaynicntN n'i{iiirc«| arc, t'nr many
yrarw, larm'ly in ••xrr?»Hor tlic artinil cmwI of tin* rink. Tln'»*e
»'X<'i'«.«i\r |iayiiniilx t'onHtitiitr tlu- n-M-rvts. which arc, in I'acC,
hinipiv t|c|H».it», or tiay tiiciii'< in mlvahcc, tor innnrancc iirnni"
{hcmI In hi> InnuHhttl in the inlnrc, ami akk not aiwoM rKi.Y
NK« JXSAIlY lo XKt rUK THi; I'Uo'l I r HmN |»I>IKH». TIics»«
vast ai-(tnniilatit)n><, «)0 A>it)M:i) Moi.Ki.Y iiv nik: auiii i< iai.
HYMTKM «>!•' i.KYKl.-i'itr.MM M^, have, in too many instiinccM.
hccn l<>>t liv the (liHhont'siy or int-ompctency ut'thoMe charKcii
willi their cn-titi|y and inve«trnenl.
" Thev oiler t'earrnl temptation^ to nn^^crnpnlons and <lc-
Mi^ninK nicn to ^et poHMCMHion of a company in order !<» iiNe
or maiiipiilale llic-e trnnt I'nnds fur their own personal advan-
tage. Moreover, it a policy hnlder >hiiidd omit, liy accident
(»r neci'Hsity, to pay any ntipidaied preminm when dne, Imh
rertt'iv*' or He«'n(Mnlated deposits may, l»y the nsnal terms of
the policy contract, he fort'cilcd or conliscateil, and the policy
Indder ix ntirely at the mercy of the company."
Mr. Iloinans, who has spent a whole life "within tlio
veil," knows where<)f hi- speaks. These *' ^reat trnst finnln
conlidcd to the Manajicrs,' nnlike the trust finids of otlu-r
liankin;; insiitiiiions, far exceed any security otlired for llu'ir
honest and failhlnl administration, even hy stock coinpa"
nies, whose capital soon liecomcs hut a dn»p in the hiicket
when compared with these enormous aeennndations of in-
dci)lcilness. In view of this fact, and while th»' richest
moneyed institutions of the age are crashin;; in ruins through
the falliliility of human nature-its lialiilily to err in juili;-
mcut and to hi' overcome hy yre.-it temptation - shall we
point to the roiR mundrkd an'd khuity millions, not of
wealth, hut of trust fumls, now controlled hy the few men
who manauc American i/ife Insurance < 'ompaiiies, and cry
" lU'hold a tower of stro!ij;th !" This " tower of strcn^'th ""
has proved the ruin <)\' every I.evel-I'remium Life Insuraiico
(!ompany that has failed. The reserve, collected ff»r the p.ay-
inent of insurance to he delivered " aftkr many ykar."," is
in part scpiandered or applie<l to other u.ses. The Depart-
*
,"T»»'
'?«
? 24
} -
The Natural System of Life Insurance.
iiioiit of rnsiir.'iiicc (l'S('f)V('rs the fart, !m(l, like a })]iyKiriaii
wild kills his paficnt I' si lu- die of tlic disi'asi', it declares the
c'oiiipaiiy insolvent. 'I'hen eoiiies the wui;cKiN(; and the
SPOILS.
Of 2r)() siu'h companies that have started hiisiness in
America. Imt -ts are alive to <lay. Those that failed diiriny
till' ten years, 187.'{-8.'i, alone, had collected over skvknty-
8KVKN' Ml I, LIONS pjoietlian they returned to their too-confiding
policy-holders. The irresistil)le loj^^icof t'acts has demonstrated
that the large reserve fund of Level-Picnuiim Insurance is a
source oi' vra/cn ess, which threatens the stahility of the richest
companies of to-day.
There is a fond delusion prevalent amongst policy-holders
that the reserve is a re-insnrance fund, upon which the risk
would he transferred to a solvent com]»anv in case of disastt-r.
The following grim joke, })er|tetrated hy the lleceiver of
a company whose memory is still green in the thousands of
American homes it had plundered, forcihiy illustrates the
vanity of such hopes.
\Ve (juote from the Savannah Nevs, Decemher ti, 1883:
"Tlie ways of hankriipt life insurance companies are de-
vious and dark, and ditlicult to deline. What hecomes of the
assets of the broken concerns, the most diligent eiKiuiries of
the disgusted policy-holders fail to discover. A well-known
citizen of this city had a policy for >^r),000 in tin" Knicker-
bocker Life Insurance ('om|)any, which gavi- up the ghost
some time ago. Jle wrote to the Keceiver to know what his
policy was worth. The following is an extract from the re-
ply he received :
Your claim is valued by the Receiver at
\\\\\ he deducts from liis valuation —
]•'())• your indebtedness on jireniiiMU notes, ... ,
For your iiulebtedness on premium charges,
Total detluetions,
Leaving the net amount of your claim only
It is on this last sum. (he dividend will be rated.
likely to exceed 20 per cent., or, say $0.00''^ ! !
A writer in the International lieriew estimates that, in the
" ti-ansfers " of eight com]»anies (1871-77) to the Universal,
nearly twenty-six millions' worth of policies disap|)eared,
and that in the I'niversal, seventy-four millions more linallv
disa])peared within that period of seven years.
lion. Oliver Pill.sluiry, Insurance Commissioner of New
Hampshire, says :—
" No substantial reason has yet been adduced, why a per-
son should not pay and renew insurance on his life annually.
SI 70
SO 00
491 42
491
42
SO
00
ed. It ijs
not
"•*-e«irt
i
■S
I
i^i
i
•a
&^^^
s
is the Renerve Necei^mry? — Expert l^esfhtunnj.
25 S
ns lie (loos oJi Ills MisiiinM*' |tr<>|if'r(y. Tilfo hisiirntict'. von-
(liK'tt'd sdiiM'W liat :irt<'r tlu' iiiiuiiu'r nf aiitiii:il lite iiisuruiKH',
would Inrtroiy do siway with the necessity of the lieiivy "re-
serve" af'CiirMuiiitioils, f///Tr((/j/ //(»' s/zA/cr/ iif ilrrp rdiict'rn iniuniii
thttiKtlitfiil b:(,'<nn'xx iiirn. it is very desirahh; that so?iie method
shoidd he devis(>(l whicii may easilv he e(»mpri'hen(lf(l. and
thronjxli which the masses may ohtain reliahle life insurance,
f.'ipiridlhi ihiriiiff tlif Idlh'tr prriod, at lens o.^if, AVI) HAVK .IL'ST
WHAT TIIKY I'AV VuK.''
Hon. Stephen II. Khodcs, TnHur.inn' ('iiinmlsHioiter of Afdsn-
(irhnHetts, says : —
"It is lif'comini; more apparent every day that a radical
ehai-ue in the phnisot' lite insurance is demanded ....
What the puhlic recpure and will have is a form of insurajjce
adapted to their necessities, i^evel-premiums, exten<iin,<,' he-
yond the jjroducin^ a<;e, and endowments linideued with
enormous expenses, will not meei their wants. Of the va-
rious schemes or plans of insurance adapted to tiie wants of
thi' nia-^ses. thai of Mr. \Vri<;hl and that of .Mr. Sheppar.i
llomans, known as 'Life hi.^nrmicf niilioul l(tr</f .Iccittmila-
tioiifi or Jlcserven^ are the most prominent at the; present
time."
Hon..I. M. l-'oster. /»s. (.hmmls.^i'oner of J^euvsi/lvdnia. finys:
" Insurance tor a terin of vears, or fntni vear to vear. as
adopted hy several companies, is growing in popular favor,
liecaiise it avoid'^ the comi>lications <rrowin<,'- oiH of the wlude-
life contract, mid <li.^pt:nftc-'< wit/i lanjc accuntnldlion.i."
lion. Philip L. Spooner, Insvrrnicv (hinnuxHioncr for H7.s-
consin, speakin,<r of the system of insui-ance hy natural ])re-
minms, without re-crves, says: "This plan of life insurance;
is one the want of which has lon<^ been felt as l)ein<,f within
the cnm])rehension of the ordinary mind. It mi<,dit he well
called the common sense system of life insui-ance, for. while
the indemnity is a^^ unquestioned as lliat of the (dd-time sys-
tem, yet, unlike the latter, i-t is not so inextricahly connected
with fine-spun theories as to mystily the assiucd, if not the
actuary hin)self."
William McCahe, Esq., F. I. A.. Enti-., MoiuK/in;/ iJirrrtor
North Ameriatn Jjifr, says :
" Eminc it actuaries, whose o)»inious liav(! commanded
universal rt -pect, have of late years pointed out the necessity
of emi>loying some modihcation of the jiresent plans, v/ilch
k/kiU be free (or largely ho) from the henry hiirden of accuinula-
tions for future benetit, which is cast on the shoidders of the
present.
rf^^-rt
r
Sl 26
\'
Tfie Nntnrnl Syi^tcm of Life Tnnnrance.
"TIhtc arc fluinsnnds wlio Wiint lif*; insurance, nnd wlio
desiri' liiiit in rase of liit'ir iniliintly dcatlis, its protcrtinj;
mantle ni:iy bo east around those dependent upon tlietn; and
tfio.su who have not an ahundaiit share of wealth, need
some cheaper form, covering liiliy llie necessities of the
present, without ainj it.nnvce.HMii'i/ (icciiinulation for fiitiiri', cnntiu-
geneit'H thiit innij never occur."
We tni^ht (pinte the opinions of Fjicius McAdain, James
V. iSiirns, and «ither actuaries of eniinence, who unite their
testiiuony tiiat a system of life insurance re(piirinj:: ))ayinent.s
to a niortuiiry fninl in advance (if deaths, hy each mendter in
proportion to ids own risk of dyiui;, and rcfiuiriutf a reason-
ahle honil for persistent payments, is not only sound, hut
thoro\i<,ddy adapted to the real wants of the people.
Consideriuff that the reserve finid is not wealth hut a <lel)l ;
is not streiKjth l)Ut we(i/:)h'!<.-< ; that it does not in any sense
guarantee the payment of a death claim, hut threali'us to
defeat its payment l>y hankruptiu}^ the company when its
mortuary fund nii>^ht he in a healthy condition ; that hut
few wlu) contrihute to tiiat fund ever derive any henelit fron>
it; and that thousands who most need protection are iniahle
to buy it when heavv deiiosits are also demanded : the elliirls
of the Dominion Sakktv Fund Lii'i': Associatiox to fur-
nish that protection without the eiunhrous, dan;^erous hiirden
of heavy reserve, should enlist t';» sym[)athies of all friends
of the people and enenues of arrogant monop<dy.
Says a thoughtful observer, in Ilarpn's i}fo)ithli/ Muj/aziiie,
" Never in history or mythology has such a rain of gold
descended upon the heads of common men. Tlu' way in
which they have misused it forms the strongest of comments
upon the (UuKjcr to our voiiniinnHij, which thinks itself a free
one, from the over-vmMeriii;/ power of (jrent-moneyed corporations^'
The danger is not realized by the people of this dominion,
because here the system has not reached its fn llest develop-
ment. The largest Canadian company is a mere pigmy
when placed beside a leading American rival — one of which
has expended upon its New York ottlce bnilding alone a sinn
about eipuil to the entire reserve of our proudest company,
j»nd pays its president a salary of .S37,o<»() per annum.
Here the public Miind has nt)t been sho.ked by <lisclosures
of the bribery of legislatures and of government oflicials, and
the nund)erless extravaganci's that have shaken public ni-
lidenee in the institution in th, neighboring republic, ,i.id
driven the {)eo])le from the Scylla of corrupting accmnulations
into the C'harvbdis of " The Assessment Delusion." While
^
'. »
V
S^<«*«-
•^-^'^m
i:
\^
V
V
m'V'9*
f
Principles of the Safrty Fiunl iSystfw.
n^
27
we iK'lievc that tlio nianajijomoiit o( C'rinadinn insnraiico Ims
Ix't'ii iiion* lioiu'st and loss extravaL'ant, wi- caiiiiot lori^'ft that
the system is tlio same, and we dun't know what thf future
nmy develop. "The fault is not so iniicli in the men as in
the system. It leads into tem|)tation. It woidd eorniiit
angels."
Let ns learn the lesson the past so foreihly teaches, ami
not ^ive piH'ferenco to a system which, in its normal develop-
ment, is fraught with danger to our free instittitions.
vir.
PRINCIPLES OF Tin: SAFETY FIND SYSTEM.
The veil has been nunoved. the principl(!S of the science
of life-insurance hav;* hccn made plain ; the developments of
past experience have in part been made known. We are now
prepared to examine the princii)Ics upon which the system <»f
the Dominion SAi'inv FiNi; Lii'K Association is based,
and intelliijentlv di'cido whether thev embodv the essentials
of permanence which thiit science demands, and the prin-
ciples of eijuity ind economy which past experience has
developed.
COST OF INSURANCE.
First Principle. — The cost of insurance nnist be paid by
the assured.
This principle is axiomatic, yet deserves some considera-
tion.
Stock Companies have been organized for the purpose of
selling life-insurance to the people; and just as dealers in
other commodities make their prolit by selling goads in ad-
vance of cost, so the Ct)mpauy dealing in life-insurance
expectts to make dividends upon its stock by collecting from
the assured more than the cost of the insurance furnished
and the expenses of transacting the business. liut the
ordinary merchant knows the cost of his wares when he fixes
their price, while the Insurance Company must tlx the selling
price of the commodity in which it deals, and collect that
from the assured, before death writes the invoice oj" ils cost.
To those who have been led to reflect only .()on the
uncertainity of lifi-, upon those unaccountable freaks by
which deatli so often passes by his natural victims — the old,
the diseased, the wounded, and the deformed — and strikes
'?£
A
•t^^-rtJ-
'^^
if 28
r —
"-^M-^
The Natural Syxlem of Life lumrance.
down tlio licaltliy hi all tlicir powers of vitjoroiiK matiliood, iia-
ttirc <«'i'iiis to (il)oy MO law liiit inconstancy, to t'lirnish no data
by which death's " inv<»icc " cindd he jire-dclcrtnincd. Vet,
amid all this inicertainty and iriconstaiicy rcjU'ardini; death's
dcalinys with the iinliviihial ur the /'»■»', he doe-> oIm-v a won-
derlidly constant law in his dealin^^s with the iikiiii/. 'I'hns,
amongst .■)(;;{,()()() persons a<;(M| .'itl he is (timnxt eertnin to mark
"),lili7 as his uwn <Iurin)^ a y«'ar; hot in select inc.- his victims
he may (•ap^icion^ly disretjard all iinman notions of the titnuss
of things, and strike where least <;xpected.
No pheiioMienoii of nature is more remarkaiile than the
constani y l>y which events dependioLC on constant thoiiuh
nid<nown causes are always ruprodi;<'ed in the same order
irlii'ii coiixidfreil in btrije aniaherif. " The ratio of male to female
hirtlis lurnishes a noted instance. If we consider (»nly a
small ninnher of liirths, nothint^ can he more iniceftain than
the ri'sult; hiit taking a lari^e nwmlier, the proportion of
males to females is found to he almost invar i<ilth\ and ni'arly
as twenty-one to twt'iUy. A similar constancy is lemarked
in the results in statistical ciKjiiiries of vwvy kind. The
luuuber of (;rimes of the same species eoM>mittcd in a year;
tlie ratio of the numhcr of ac(piiltals to the niiml)er of trials ;
of pati'iits admitted to puidic hospitals; of railroad acci-
denis, t^e., all atti'st tin; constancy nj the re,-<u/ti<." This con-
stant approximation to lixed rai.ios, which is proved hy all
experieuc(>, in the reiiirience of events of the same kind,
enaliles ns to determine the average residt of a sciies of
coming events, of whose cause we may he ignorant, witli as
much precisidii as if we had accurate and detailed knowledge
of the causes which determine tlu'ir occnrrcui-e. It is the
api>licatir)n of this law that has raised life-insurance to the
dignity of a science. As soon as the rcipiisiti' data irom past
experience co\dd l>e arranged, life-insurance was no longer to
grovel in the darkness of mere cijujecture, hut could pre-
ealculate the cost of its risks at the several ages with inathe-
niatical precision.
For this ])urpose the results of a series of observations
on ()2,o.'»7 lives, assured by seventeen liritish offices, were
arranged into the Ac1iiarir.< Table of Mnr'iliin in 184:>. which
table is still very generally in use. The American l^xperi-
ence Table was arnitiged by Mr. Sheppard llomaus from the
mortality experience ot' tlu' Mutual Life of New York, with
other available statistics: ;ui(l, though it indicates a lower
rate of mortality than the former table, it is better adaitted
to American business, and has long been the standard in
New Y(U'k and several other States. In 1874 a committee of
\
i
"-'SH-;^
•V^r^^rt
)
i
Pn'itriplfM iif the Sajtii/ Fund Syxtem.
29 ^
Aiiu'rican Actiiarifs I'umiiu'nct'tl arraiitMH)^' tl.rdata t'linii'^liiMl
l»y thirty American oflicfs, aixl l\\v ri'.siilt of tluir lal»<»rs lias
recently l»eeii |iiilili>lic(|. it is the ciiii-'iiiidiiiri «x|K'rieMcc
(tf tliiisc (itli(i> Iroiii the is^iu' ol tlicir lirst pnii y up to
1874, and cojiipriHcs <iliscrvatinii> on l.d^T.o'Ji* assiin-d lives
— tile iiidst extensive werloH of ohservationH yet taladaled.
It is (Voiii tlie data fiirnislied liy llie Mortality Tidilc, and
the .issiiiiiptinii tlia( iiMtiire will cdiitimie to oli^y her own
laws, that tin' Company calculates tlu' iiirolci' nj runt nj iimnr-
diici' irlilrh (hnfli >r>'ll u-rlfr l<ir if in tlw fiiliir>\ and !ty which
the price is lixed in advance. IT (ickle fortune shoidd turn
her i)ack upon the('ompauy, if the natural law upon which
it ri'lies shoidd prove inconstant, and (K'ath-Iosses pour in
upon the ('ompany in excess ot' ils calculations, the compara-
tively small capital stock could not htui^ avert dis;i-.ler. To
make money, tJie Company must collect mon- than the co.-<t of
insurance; if it collects li-ss, nun is inevilahle. The fact
that disaster from this source has m-ver \ -t overtaken a
(.'ompany increases our confidence in the constancy of ua-
ture's law; hut the other fact remains that the ri'^k < he
price charj,'ed proving.' adeipiate, if risk there he, rc'ally rests
ui)on the assured. If it proves excessive, the Company reai)s
a rich reward at their expcn.se, — if it |)roves inadc<piate, the
assurt'd are involved in the ruin. These facts loni;- auo
taught till! insiiriiiLr public of Ainerica that ca|iital, as a
guarantee of the [)ermanence of a system of life insurance,
is an expensive luxury, not Wfirlh its cost.
Actuary Willey hut slates a fa'uiliar fact when he says
that "some of the oldest and largest Companies on this con-
tinent were started without a dollar of capital, and solely
tlirou<>h the i' erj.'y, popularity, and re(;litude <d' their otli-
eers their assets are now nund>i'n'd l»y tens of milliotis.''
I'he ahsenee of a i.ir<;e reserve does not render '.ipital
more necessary for the security of the insurance eontract; for,
if a Company have millions of rcsei-ves. and a policy-holder
die whose contributions to that fund aj^;,M'e^ate but lifty dol-
lars, not a dollar of the reserve in excess of the tilty he him-
self had contributed can bo taken to ]»ay the claim occasioned
by his death.
The safety of the system, — the security to the assured, lies
not in the cai>ital stock or in the I'esci've, l»ut in the ciiu^taney
of naiui-e's laws, and the mMlluMuatical accuracy with whieli
their future operation may l>e deicrinined from past expt--
rience, whicli enable the (,'omjiany lo pi\'-c;dculate its de;ith-
losses and create a mortuary fund sudicient for their pay-
ment.
>
S .K)
\
i
The }i(Uural System of Life Inaurancc.
-if
Sernntt !*riiirinli\ — Tlio assured trrst cntor in ^kkI lu'.ilth
;iti(l willi(»iil tlic inlit-ritJinci' of special disease.
The ellect ol iiiedical ^"Ii'clion ii|i<iti tin- iiiurtality i-xpc-
rieiH'c (»!' a eonipaiiy is viTV iiiarkid, ll ti((t (inly i-xcliides
tVoiii the ranks of the assured those of impaired health, Ixil
all who are prf-di><poscd lo any special disease from ci»nstitii-
tional or heiediiary tenilency, though at the lime of exami-
nation they may he in ^'ood health.
Third Principle. — A Mortuary I'lind for tlu payment of
di'ath losHes must lie created and maintained, and each tiMist
contriiiiite to this fund in propoitinn to the risk o'' his own
<leath creating a claim upon it.
The Mortuary I'nnd is made n|t of tlie itidividual pay-
intMits as cost itf liisiiraiici\ a term with which tlu! reader is
familiar, and the lirst juinciple ri(|uires that the whole ^um
necessary to maintain this fund nuist he paid hy the a.ssiu'ed.
This third principle does not refer to the (iinuuiit hut t(t the
relative jinnnirlioitu in which meirdiers of the several aires
shall contriliule to ihi- maintenance of the Mortuary I'und.
It re»|uires that the contri/mtioiiti at the Hceerul (U/en >fh(ill he in
l)ri>j)i)rti>)h til the rish of dritth at Kiifh tiijca. This principle has
lieen shown to he a ritdhtm'; it isemhodied in l'!li/,ur Wri'^hl's
" eauentidlH tit the peniKiuencc and proxperitif of a cmnpany ; " ami,
thouj,di the ilefenders of assessment insurances have denied
its soundness, and mystilii'd themselves and, too often, the
pid)lic, hy x'a.LTue discussions upon the etlects (»f the "eominjj
and yoiuLj" ol' memhers, (heir " average a^e," and tin>ir "ex-
pectation ol" Hie," yet it /V thi Joundntinn stone of ercnj sonnd
si/ittcin, — (he one element of perpetuity which has saved level-
premium insurance fnxu indiscriminate ruin.
Tile following
TAIU-K OV RATIOS ^
J^Jxpresscs the relative ris/:s of death in one i/ear, at the several
(Kjex, as determinedbij the Actuaries" Table of Mortality :
Age. ' Ratio. I .4*76. i Ratio. A;/e. Ratio. \\,Age. \ Ratio. Age. ! Ratio
21
22
23
24
25
2(5
27
28
70
71
72
73
74
75
76
78
29
30
31
32
33
34
35
36
1
80 1
82 i
84 1
86 1
88 1
90 i
92 ,
94 ;
37
38
39
40
•11
42
43
44
96
98
.100
102
101
10(5
108
113
45
46
47
48
49
50
51
52
118 '
53
1 124
04
i:50
00
137
r)(5
145 :
57
154
58
163 1
50
173
fiO
196
209
223
238
254
272
2't2
'>-^*^4^'
i
■?
.1
A*
hr
\
— ^a^:t^
health
I'Xpf-
(-hidcs
ill, Itiil
nstitu-
xaini-
t-nt (>r
1 liillsl
s own
1 |»!iy-
kUt is
(' MUM
siiri'd.
to the
1 !i;;i'.s
I'liiul.
he la
Ic h;is
i^'lil's
aixl,
en in I
1, the
•minx
" ex-
(uniil
lovi'l-
eirnd
nmii).
IIK)
'im
254
'272
2>.t2
S
l*rinciplc6 oj the Safety Jt'und Syatem,
31 §
}
I ' Lt't it lie cU'arly nndcrstnnd tlmt thr altovr lahlc, (tC itstlf,
] I givt's no intimation of tlu* (tfiMtlnti: risk of flt-ath at iiny imv
i' (a siilijiM't yi't to lie i-xatiiilicil l, Itilt mily tlir nidtirr rinks
wlit-n on*t n\i>' is coinpart'il with aiiothi-r. To ilhistratc : it
(h>fH not iniiiiiati' thtt risk of <li-ath at n^v 'Jl, hut it show
thai thi' risk at that ml,m', whiii »«iiii|tar*'(l with the risk at a;:*?
!_M>, is us 70 is to .S(i ; and whtii roniparrd with the risk at
a^c ;>'.•, is as 7<> to 100. To i-xpn-ss it dilliTtiitly : if of an
(•i|iial nninht'r at liu- three a^'es, 70 die at au:e 'Jl, hO woidd
he expected to die at a;;e 'J'.», and 100 at a^je 'i{).
In ohedienee to tiie (h'niaiid of oni third prineiph', wiien,
an<l as often as, a nieini»er a^ed '^1 pavs 70(', lo the Mortnarv
Fmid, another theti ayed '2\K shoidd pay HOe., and another
then aj.^ed .■')!>, shonhl pay .*1.00.
Assessment socit'ties, whose rates are uniform lor all a;;es,
or ^'raded only hy the a^e at entry, iynnre these proportiuns;
and, in their attempt to ^ave insuranee "at eost," they ehar^'e
the yonnu niort' tltun ihe roxt of their risk, hecanse the nhl puij
/(W limn iliv rnst of t/nirn. In the earlier years of tlie life of
the foeiety, wluii this ineipiity is hut sli;;hlly felt, the yonn^
are rec(»n(ile(l to tln' injustice liv the di-liisive hope that when
they have faithfully home their >elf-im|)oso(l hurdeii, paid the
death-claims of their older associates, and have themselves
lii'come ((Id — ynuiiix uieii of pliilani hropic sp'rit will he found
to it^nore the fact that the hui'dcn of lU-pendent old ai;e has
increased, and uohly come forward to hear their hurdens as
they did the hurdens of the old who preceded them.
l*rof. Seth ('. (handler, of Harvard Coile^'e < )l)servatory,
evidiutly has studied Life In>uiauce as well as astronomy,
for he forcihiy states this whole ari,Miment in two short sen-
tences: ''There does not seem to he room for any diversity of
intelli;^ent opinion that in any association whose current i
death claims are to he met solely from current assessments, '
the anioimt of contrihnti(»ns from memhers of various ages
.should he piDporflfnKil to t/te (tctnal ris/: of dcnf/i. Any plan of i
ojieratioii in which this is not accomplished, not only violates
the plainest principles of equity, hut caiUHd loiij;; suhsist ; as !
in practice, the over-assessed memhers in a society thus organ-
ized will Ix'fore long discovir the injustice, and retire, and i
new ones will refuso to enter." I ,
As the delusion we would dispel is a common and a
dangerous one, we shall give one more indepen<lent and un- ' i
hiassed ojtinion. I'rof. J. J!. Wheeler, of West I'oint, says:
"As to the propriety of making continuous assessments for
•u^ death claims, as at the original age of entry, 1 am fully of •['
The. yalural Synlna nf Life Jufni'imrr,
llic itpiiiioii tliat <>i|iiity and aiuti] )titls;inciit r(M|iiirc the vnU'
n( :txM>s><ini'iit mIiiiII .HlvaiHi- with llic au't' uf tin' prrMdii iri-
Min-il. Ay a tiiiiM ;.'ru\vs oldfr ihr ii,|< n! Iiin ilyin;; iiicn-aHt-M,
and it' lir ilncs not pay tin- intTi'a.scd coHt due to liiis ta(*t,
Hoin*' lUH" ''Im- will liav«t t(» do if lor liiiii. I iiLTcf with I'rof.
iSartlfit in lu-ini; iuMuiri ni of anv i;iw (if vitality, or prin-
cipli' of iMpiitv, that would jii>lify iinifonn rati> withoiil
ri'Hpect to ani'."
Fniiiili I'lliiriplr.-- i \ ) TIh' paytucniH to the Mortuary
l''und shoidd Ix' made in advann-, or licfoi'c ihr claiins arJM;
for w'liirh ihi'y provide, i "j i Thcii ainoinit should he dctijr-
niiiK'd hy the avrram' rtcpumiu ut- of pa>t fXpt'iii-nix'.
(.'{) Any surplus ari^'in;; from a iiinp«>rary rate of niortality
for tin- M'vcral a^'rs hclow that avnatri' shoidd rcinaiu in
liind lo pr-ovidc for a fulun- t-xcfssivo mortality to ri'ston-
tlu' avcraj;*'.
This principle involves three essentials to perinaneiice
and prospeiity. whi( h, hi-ini^ i!U»'r-depentlent, ran he l»est
ex;!iiiiu(d lom'tlier. They have always lieeu observed in
tlu' main hy level-ptciniiiui Insuranee, hut are always ignored
hy assessment plans. Tlu* hilii-r ii-^nally attempt to do husi-
ness with an empty treasury, to furiush insiu-anee on credit,
waitin;^ till death writes the invoice of its actual cost hel'ore
its price is col!ec'tCHl.
I'ikKm' suih a system, a Policy tjivinv: a detiMile promise to
pay a di liuil'- sum at ileath is impossilih-. .\^ the payment
of the *' iM'iielit ' is coutiuiicul Upon its colUction after death
occurs, the ( irliticate of .Mendu-rship, which takes the place
of a i'olicy, can oidy protiuse to make an asses>menl upon
the liviiii; mendters and to pay the amount so cidlected. " not
to e.xceed " a certain sum, to the heiieliciary of the dead. If
any ret'use to pay, tlic hfnijirinrti oiii.it l<>.-<r ///<// (iiiiniinl, nr the,
nirinlii'rs vhn iln ptii/ iiiiiAt itxike. up ihr /»i.s,»t, fn.<iili;'( pojiiiirf for
their own inidiravcc. This plan is claimed to h" necessary "to
furnish life insurance at cost" F.el ns sih- I
^1 .s7/.^7«■/^l can juxlhj ddiiii '• /<> furnish lljr iii.-<iira)ici' nf coxl "
onli/ whcu its (h't<iil.-: are m tiiljiisti'il Ihitt its abHily, fur all tirni\
to furnish any member, of vhntercr affe, and nhrlliir a nrv
entrant or an, ohl, one i/cars insnranri' for the normal mst of his
Tishjor that //'"/', eon he ninlhnii'illcalh/ ili nionslratid.
This proposition cannot lie denied. A system that i;ives
one man insurance at less ihau the normal cost of his risk and
eharncs another r <' than tlie normal cost of his, or that
charges .all its met. jrs less than the normal cost of their risk ^
T^)( this vear and collects from all, includiiiL: new entrants, more i.j
I
^^
'fi^
'^4h^i
^^
^
if hi'^
X
• »
r
Prlni'iphH of thr Sajdy Fnud SyMtftn.
tlinii tliut normal coHt some tutiii-t> voiir, rantint justly cluim to
h'wj " insiiiimcf ill cioi.'' 'I'c jiistifv this claim tlHMlourMofiho
Morii'ty miiHt alwity.s Ik- -.pen tn lU'W I'ntraiils, aii<l wIm-ii llit'V
liuvc cotiu! ill no liiinlrn must Ik> im|)os«'<i upon ilu>m liut
their own th«'y must Ih' rcquirod to pay tor no risk i)iit that
which tlicy asU the society to assiitui' for them, consiih-rin^j
that ihcy have cotuc to stay thiouu'h a serii's of years.
Otherwise they eertainly tjimot ^et tlieir " insurance ut cost."
The normal cost of risk ai the s«'veral a^fcs has already
hci-ii written in tin- actual practice of American insurance,
an:l that i-xperieiice demonstrates that /or (he mine lu/tn ifir
odiutl ntxt (hiiitiij tt fe.w jfiitrs (ij'ft'r tin' intmiiKition m much lean^
(in<l iiftn- (I j'i'ir i/tnrn In tinif/i (frratcr, (haii (he, iioriiuil.
Let us examine tin- ri'cord, as furnished hy the cornhiued
experience of thirty leading' American (Companies, whose im-
nu'iisc husiness is distrilMited over the whole continent of
N<irih America.
Of the .'{li.'JdCt men who enten-d those CompanieH ut "^e
IV.i, hii( live, per (honxniiil ilifl ii'i(hin one ijenr afler (heir exdininn-
tioii. There were lO.OS'.l etitratits at au'«' «'^'2, and those who
pi'rsisted atl.iiiicd tn/i' IJ'.t Hi'ren jirnrx offer (hejf inre ejomined.
< )f these tU'aily rleeen per (housand died a( (ha( ai/e. TIiuh,
the rate of morialily for the aiitne oijr more than (loui)led l»y
an advance in the aj^c of the I'olicy fictm one to seven years.
K.Ktendin^ tiiis invesiiiratiou, keeping' the aj;e of ohservatioii
constant, hut varyiiij,' the aye at enlrv from .'IS to 21, so that
a;.--'' .St* is reaclu'd one. two, three, i\:e., years after e.vamin-
ation, we have lifleen ufoiips of risks all at a^e Mit, hut each
^roup one year farther removed from examiuation than the
one preceding; it. (omhinim; the mortality experience for
each of those years of iiisiiraiice, from one to lifteen, the
aver.i^e is hut ei(ih( and o half jx r thoiit^ond.
Tims, the actual c(ist diuitiK 'he ///•>•/ year of insurance was
;?o, durinu the .-I' rt ;i^// year it was •'pll, wliile the average at
that a^'e diuins; lifteen vears of insurance was hut $8.o0 per
>>1,()(M» risk.
A youiij; society of li.OOO memhers. t'ach as.sured 'or
•T>5,()(M), has I'lUered upon tlie slru^^de for existence. It would
win pre-i'minence over its comjieiitors, and loudly proclaims
that it ^ives insurance at " actual cost." The lirst year the
avera^'e cost is hut s.") per thousand of insurance, and the
managers herald the tact throunhouL the land. An enlight-
ened iViend points to past experience, and warns tliem that
hecaiise they did not collect an average of 8S."»() — the normal
i'ost- — ihev have placed a niortiiaye of SSo,(.)0() on their
\
\.} future, whieli death will surelv foreclose. Thev close their i.;
►^M,„^Ji-
The S'lUuml Syittnn of /.iff Innurnno'.
-l
II ciirH l'> the WiirniiiK, iii)«l liliiiflly hope for iin "cxcfptinnul
«fX|»«rM'in«'." TIh' im'xI yrar tln'V fairly HiiNtiiiti ilu'ir rr|»iiia-
tioii fur rfiiiijtntsM ami inrrca-'C tin' aiiiniiiit of flu- niortL'UiKt*.
So vt'ar iifUT yrar till tin* miniinf mxt h nurhnl, ujirii tjh'Ii
nayiiiu that normal coMt-no aiUlition W iiiailc to the i|«>l>t.
riir s«'V('tith yvnr i«« rcaclu-d, wlirti llir <l»ltf li.i^ in imrl
liiaturrtl. It inii^t now rnljcrt frtMii itn i)li| iiiniilMT^ aixl itn
IM'W aliki' !i*.S..')tl - ilu" tiorriial roMt - and iti a<l(litioii )?<*J.r)(» an
ati ill <taliiH*iit on that iiiorl(rau<', which wax th«' price of a now
i)Xplo<li'<l r<|nM;ition lur rlniipinn^.
Thosf who lapse anil those who ili»» hcforc their ri>k has
rciicheil its liorinat cost alone have ^'ailled liy thesyMleni, per-
histiii;,' niemhers lose (he at;i,'n';;!ile iA' those yaiiis, and new
i^ntraiils are lairdeiied hy a liahilitv (iiev ilid not create.
Thev Hri> charged !|>11 for wliat H)ionl(| vimX tln-tn hiit
Is this life insurance at cost ?
The dillerence between entering such a H«»ciety in after
years and one in which (he, normal cost had heeii paid, and
the surplus accuiuulated tor the discharge of the deot, is the
dillerence ln-twci'ii Iiuyin;,' a hoiist- that is heavily morluaj^ed,
and one of e'pml valm* for the sanu' price whose title in clear.
A>;e 31' is selected as an illustration, hut the •-anie record
shows that till' same law applies c<|Uidly to all ai;es. I- this
a nuire e<iineidence or the tiperation of a fixed law of ii.iturc?
" Hut," says an «)hjector, "yon reason as it" all tiie iiniiihers
were of the sam(> a^e, and all insured in llic same year.
Take a society euiiiposed of alt a^es, and a uiiiulier eiiteiin^'
and reliriiiK eai-h successive year, and the law will not
ope rati'."
This fallacy i-^ almost roparded .as an .'ixiorn l»y m.any
defenders of assessnieiif insurance - it is a hasal principle in
the system, and to exolode it will he to sluitter the slnietufe
that is r«'are<l upon it.
As already s»'en, takiny any niimher of any aire, llu'ir
vitality diminishes rapidly for several years with the aj^^e of
their policy - or as their examination ^'rows m<»re remote.
Till' memhcrship of the companv is composed of a mimi»or
at each of the several a;,a's. Taking; those afji' sets separately,
the law is proved to o|)erate : the contention is th:it when
these sets arc shullled toi'cther into one society, without re-
j^ard to a<i;e, in some mysterious way nature is cheated — she
can't re-arrauife them into a^fe sets, and in the contusion her
law is dolcated ! Airaiii, the law will o|ieratc when applied
to all the entrants of this year, taken as. a set, and when ap-
li^
•T**
'7^
■"1
r
l*r!nriplm nf ihf Stifrhj Fmiff Sjf^lnn.
Tl
M 6
»*t*'^VS
pliftl tit all lilt' •titnuilH III' iii'Xt vctir tiik<>ii :in a H«>t, iirul no
with ili«' cuiraiii'* of (Ii< tlilnl yvnr, ami of \Uv fourth vi'nr,
aiKJ of tile liltli, ami nicl, Hiii'ci-tHivr yi'iir. Hut jiHf Hhiif!)i« ii|i
tlif ililliTfiil year xvtn into oii<- Morii-tv, atui iiatiin> will au'aiti
ItccoiiM' t'oiit'ii^ti'il slit' rati't ir-ari'aiii{c iIm' <««>tM, ami Uvr law
will Im* ili'fi>iiti><| !
'I'Im' Miali'tiH'iif ofilir Tillacv ix itx own n-fiitatiini.
It !» triH', that ir I liavi' a <li'lit of s|.(i(iu to pay. i'lxl Himii'
fharitalilv <liH|MHr<l frimil nunrK forwani an«l uixyn half «if it,
my liiinli'M U inliiri'il to .**_•. (lOU; it i^ nm. ih.-it if tin- litst
yi>ar >«ft. ami ihf >'t'cori(l year Mct, tiiid tin- third, and I'oiirth
roll up II dfht wlii<*h tin' lil'lh yi>iir nrt and the sixth and tin*
Mi'Vrnth hi''|i to |iay, tlii' liurdcn is li^diti'iird to thoH«> who
fonirariid lh»' dilif. lint liow of tin- tit'tli yrar srt, and tlu'
sixth, and tin' srvi-nth ? Tlu-v an- payiiiK the nrtmil ntsl of
ihi'ir inru rink, and lirsidt's, art' Iud|ii5iij tin' «>arli*'r I'litrantM pay
till- drlit on their-, whih- th«>y lli< insidvi's an- rolling' np a
i!iortv:aLr«' for ilnir own tiitiir<-! hy > liaritalily ptM-miltinK thiir
payments, in fji't'im nf thf nfhinl lutM of their rink in the fiirlifr
ijt'iir* of' thi ir i)i.'iiriin<'i\ to Ac iijijilii'il to tin' pai/nifnt of nthi'i's^
(h'htu, in.'itiiiil of I II ml i mi llnm tit itixrhnvifr ihfir oini lU'ht to tnnr-
t".('t}f, which will noon imitnn . And this is "payiny as yon ^o?"
TI'H t'lli't't ot iiieriiluTs ri'tirini; without haviiiK paid the
normal ro-i of iln-ir ri»l< while iiiMired. has liecn swu to in-
ereasf the Imrden npoti the fninrc. and l»y no process of reas-
oning' can this element he shown to defeat the ext'cntioll of
n.atiM'e's decree.
I.est some reader may still elitiL' to this fallacy, wo shall
"Hhnflle" the a^es together, and a^ain appt-al to experience.
Of the whole mass of lives, of all au;es, insured in the
thirty olliees whose records we ipinte, xix per ihoiiAiinil iliid
ihirimj llir jirnl ijiiti' of their insurance, yoMr<tV7i dial fhiriiif/ the
lin'll'lh t/tiir, ir/iih thr nn rii'ir iiinrtnlilj/ iliiriiir/ thirtij-nini' ijfarit
iriix hut tfii pir limn. niil.
This record, from the field of actual exjifrienro, whore
"romiuv and L'ointj," "average at;e." "expectation of life,"
and every other ilemcMit which the theories <if assessment in-
sijraui'e recoLTui/.e MS re<jridatiuL' the eipiities of juiymt-nts, Iiave
lia<l their p.rtect a« tiou, comes into evry otliee that i.s nt-
tcm|itin<; to irive "lif'' insiir.ince at cost " hy collecting ordy
the III fii/nitiil, i)i.^fi'iiil of till' iiorimil (■■isl f>f their risks, and, like
the hand on tin? wall of Helsha//.ar's palace, it writes the in-
evit;dih' doom of their piM'pose, if not <if the company itH*. If.
The " vMullinLT andtiti'iii " of ;i>sessriient systems to tjivo
lile insurance nf cost, '" oV-r leaps itself and falls on the other
)
\
f
^
'7^
'M
Thi' S'lttiinil Si/ifrm (>/ Li/i" Inmrunce,
1
Mi(l<>." riic wunliii^ of till' toiilrurt iiiiiki'H it tli'luiliiM*'
wlirtlur llii-y civr iiiHiinnii*' :it all ; tlifv iKiinic mir iliinl
|»rin<'iplr, iiikI iliii«* roiiiprl viMiiiu "icri ami tlir Inter •■iitniiitM
to pitv ii)on> iliiiii ili<> i'liNi fur tlifir »\iv Imt.'iiihc ihr nltl tiini
itml tlic I'iii'liiT ftitriitits pay N'^h limn the iohI for lIn-irN;
tli«>y i^iion' ili(> lirMt n'i|iiiti'tiii>nt of i»ur foiirtli iiritcipli-, ami
lliiH ntinpi'l p«r»i"»tini; iiu'iiilM'r«< to fijiy iiiur«' tli'iii tin- inHt of
tlu'ir rixk Ik'i:iii-«' hipHi-*! iiHinlM-r"' rfliiHc in pii\ tlic (''Ht nf
th('ir«< ; tlicy i^iinn* the Ncroiiij anil thin! ropiln'riurttt of
our foiirtli pritifiplr, a(i<l \\\n> rmnpfl new nitnitilH in pay
more than ilie imrrnal <'o>>t i>t tlieir rinks Ixran'^e llir rarlier
eiilraiilH paid lens lliati the normal comI of theirs. Ami this
is fiiriii.shiii(< life iiisiiraiiet> at coMt !
That our lourih principle U not only nountl hut enM,niinl In
prriii'im'iirr mnl rtnitinii*'/! in'onfurlfif is ilemonxfratetl not hv
our reasoning - hut hy ihe iuexorahle reasouiiiK ••! nature
through the laws she has written in past experieneo.
We have stateil that this principle has always hecn
()hserv»'<| ill Ihr imiin hy level-premium companies.
Tliey invariahly collect for iIm' Murluarv l-'innl more
than the normal <'ost of their risks, hul <io thev alvvavs retain
thu natural HiirpluH to iiu't't ilAaycil Ionscs ?
The lirst consideration of the mana^crmnt is to pay ex-
penses on >Mch a scale as shall littiiiudy maintain its dignity
as an " oM puhlic functionary." The se<onil is to supply its
agents with as tempting' hail, hv way of dividends, as does its
competitor across tlu' way. There is a constant temptation,
not alwiys resisted hy the nc-t prudently mana;;ed couipa-
nies, to appropriate to these purposes the natural surplus
arising from the mass of their risks heiny; recent ly examined,
as well as that arisii ;; from charnin^; more than the normal
cost.
We have already st-en that "the whole system <»f divi-
dends is a vicious one;" and a system (tf insurance which
wouhl ohsi'rve the lessons the past teaches will avoid, if pos-
sihie, this source of daiiju'cr to the I'ompany, and of disap-
pointment to the assured.
In the followin>i tahle, colunm \ expresses, in even inim-
hers, the annual c(»st usually collected for 81,(^00 insur.ince,
at the Several a;,'es. 'I'hesesumji invariahly produce a surplus,
which, as has ah'cadv licen seen, is one of the sources of divi-
ileiids.
'I No company dealinj; in life-insurance as a specidation
ft I'ould lie txpectcd to char).;;e only the net cost as determined
-[.f hy i)ast cApcricnce. JSuch naturally wish lo furlify tlicuisclvcs
kJ . . , , ,
B^-«^
\
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i
1
III
Ittllll
hfi'll
•n
"M
,1 (I
1 vi-
lli. 'h
I my <*x-
diiiniiy
|i|ily iiH
(lues ilH
litMlirtll,
»ii-
<iifiiliis
:uMiii('<l,
Duriiiiil
i I 1 •< »H-
|ll IIMIII-
.iiraiKT,
IsiirplnM,
lol" divi-
MllMlllllt
riniiu'il
linst'lvt'rt
s»
r
(
/^•itin'itli* of iht Stiffly Fnnil Sylrm.
k:
1
iitfiiiiiHt ftiU* Itv cidliM'tliiif iiiori* tliitii tioiiiiul (-(Ml for tliu
inoriiiiiry I'iiimI itiitl ii niiiruiii lor prulit, lM>-«iiift ••xpciiNrrt
Itiii \\)iv\\ iti«> u-Hiiri'tl I'lilly iiii<li>r<<iui)<l tliiit iIm' inortiitiry
fiiiitl i-> ilii'ir own iiti<l iimI the rniiiiuiny'^, that it in to lii>
iniiiiii:iiiM'il only l>y llicir piiytiiriiiM, ilmt every <li>|lar pni«l
I'nr lliat |)iiitl riMirlii'<t it» ilcNtinaiiuti iiihI ri'tn.'iitis tlicr<> until
it i«« ni'«><|i'(l to tiiiiiixtrr i<> ilie tift'i"<Miii«>*^ nf Hoine widow
wlioNf ImihImiimI IiimI «'oiiiril»iitcd to it in liiM litV-tinn', the
I'Xfiisi- for roMecliiiu more than the horiniil rout ei>ii<4«'H to
exi^t.
If that eiMt he tweiitv per eeiii. U^s than that iisiiallv
t'olh'rted. t/if n.'Miii'fil nrriiin n ilin'ihutl nf hmihf jur nnf. in
iidvnuci'. Should a eontiiiyeliry ever aiiM- that Is iilireeonh'd
in the pa-<t experience of Jit'e-insuranee in these latilnth-s, :ind
more than tlie reeorded normal eooi, with the aeentnnlaied
xnrplttH, he needed for a time to mairitain iIm- mortuary liind
in a healthy toudiliou, he !>< in preri^t ly the '.www position
iiH if he were insured umler the old dividend system, hiH
advan Iivid< iid would he rediiied for a time to meet that
eoniinuetny. 'I'hat conlinnenty i* not -o lialde lo arise as
under the hvstein that vear after vear uivoH tliv eompanv tlu>
handliiii; of larye sums in e\eess of the normal eo>.f. with
power (o withhold what it will every year, and to weaken
the mortuary fund hy divertim; from it the natural surplus
|o provide for delayed mortality.
We must premisi' our investigation into the normal eost
of iiisiiivince at the s«'V»'ral a^'es hy the remark that the hiisi-
nessof this Association is eonliiuil tn I'lritish Noiih America,
whose climate, soil, draimiL(e anil other conditions atli'ctin^
tl
le pulijlc Ilea
Ith I
lave made it no
te.l f.
V lt>
saiu
hritv
It
IH
olivioiis tliat oli-ervalioiis made in oihir <'limates. wleic the
assured are exposed to less favorahle conditions, must ^ive a
rate of luorlaiily hij^f her than ( a n.idian experience will vet ify.
I iiforliinately, thi' volume of liu>iness done hy the thirty
Ameri(*an compaiiieH in Canada, thoiiuh comparatively lar^v,
is not of itself siillicient to furnish a safe yuide. The report
of our <-ompaiiies to the Insurance hcpartmcnt of ( aiiada
furnish us no availahle data. Those rc|»orls indicate an
k
avera;;e annual death-rate amomist insured pi;rsons ot ahoiit
nine per thoiisMiid, l>ut not knowinu the nuuilier of risks at the
several ajres, we can make no Use ol' that fact. It is not tin-
average eost for all ajjes, hut the actual normal cost for each
separate aifc that wt desire. If the assured in Canada were
all a;,'ed oU, nine deaths per thousand would he a low rate of
mor
must seek of the " Thirtv Oflices" for our ilata
tyc-
wu
tality, hut if all were a^ed 40 it would he high. We I
t ^..ai- r.f «i... orri.:^^,. rwi:,...^ " «'... ^,,^ .i..f.. a
3
^^
{
I
38
jjf'/je Nalural Si/devi o/ Life Innurance.
But s))iill wv ituliKlii the tliita fiiniislu'd by their experierice
in the Soutln'rii as wi'll as in Mu; Northern States?
Kor tlie purpose of eiiahliii'^ rouipniiies to vary their rates
according' to the cliniatic. eoinliticnis of the various sections of
that vast country, and distrihiite even justiiH! to all their
members, the results of past (xperieix-e in the <linerent .sec-
tions have been se[)arately taltuJaled, and {^reat divi-rsity is
exhil)ited.
Thus, of 1<M),()(H) men livinj^' in the four States wliosc cli-
matic conditions are probably most likt' tlioM' of Canada, —
Michigan, Wisconsin, Minnesota, anil Xelnaska, 1)77 deaths
are noted, against 1,70.") deaths of an e(pial mnnlu'i' living in
the ten S(tuthern States, -North Carolina, Sdiith ( antlina,
Tennessei', < ieorgia, I'lorida. Alabama, Mississippi, ArU.iii'^M^,
Louisiana, and Texas. The moit.ility of the same numliLr
living in the New I'lngland States and New York was ],Uo3;
in New Jersey and Pennsylvania, l.(»7]; and in Ohio,
Indiana, Illinois, Iowa, and Kansas, 1,01.").
This experience demands that in seeking the noinial cost
for Canada the experience of theS(jnthern States ite rejected.
The observations in British Amerieti alone are upon a
volume of business equivalent, in round numbi-rs, to an insu-
rance on 5,000 '"ves of 81,000 each, for twenty years, and the
normal cost which that experience has written lor thesevi-i-al
ages is but (17 per cent, of the cost uusually collected for the
same ages.
This cost, for the purpose (>f comparison, is tabulated in
column V>.
Extending our investigation beyond C:niad;i to the iidjoin-
ing States anil T»'i'ritoiies -Maine, New Hampshire, \'er-
mont, ^liehigan, Wisconsin, Minnes(»ta, Dakota, Montana,
Idaho and Washingtim, we have a volume ot' business cfpiiv-
alent, in round nund)ers, to an insiwance on .■>.S,000 livi-s, each
of 81,000, for twenty-live years ; and the normal cost wliieli
that experience has written for the several ages is but 7(» per
cent, of the cost usually collected for the ■^ame ages. This
cost,'for the purpose of comparison, is tabidated in colunni C.
Again extending our investigation — to New York, Massa-
chusetts, Connecticut, Rhode island, Pennsylvania, West
Virginia New Jersey, Delaware, Ohio, Nebraska. Illinois,
Iowa, Wyoming, Oregon, Kansas, we havi- a voluine of
business etpiivalent, in roiuid nundjers. to an insurarce on
8o,0U0 lives of §1,000 each, for lifty years, and the normal
cost which that experience has written tor the several ages is
but Slo per cent, of the cost usually collected for the same
I I
,**»**-
^'
*-^:^^
(erience
■ir rutt'H
tioiis of
II lla'ir
L'Dl SCC-
.'i-sity is
lust' cli-
iiatla, —
(loaths
ivinn in
anilina,
rkansas,
iuiMiln.'r
,s 1.(1'):; ;
II Ohio,
iiial rost
n'ji'ctcil.
upon ;i
at) iiisn-
aml tlu'
several
I for the
latc'd in
adjoin-
e, \'er-
ontaiia,
s ('(|uiv-
cs, eai'li
t wliifli
7(1 per
. This
iiiiui C I
Massa-
1, West
Illinois, :
nine of •[
iiree on j
horinal |
I
ages IS &
le same a,»
S^"'**'
I
Principh'!^ of tin' Safely Fund Si/stem.
•diiVH. No aei'ount is liere made for inter<jst aeeumnlation,
and we have >eeii liiat hy payinj,' the normal cost year l)y
vear :• surplus to meet delaved mortalitv is inevitahle, mak-
ing this t !"ment an impnrtant I'aetor in th(> cahulation.
Assiiiniiig that the interest on this natural surj)liis will be
eipiivalent to the interest on the wh^le i'und for six months
at I per cent., I'njJitu />''• nut. nf tin rii.<t n.-mitlh/ rvUtrlnl for (fir
><fri'rii/ (Kji's irill iiiiiiaUiiii thr. Jfortuitri/ Fund in a hcitltlii/ con-
dilimi, iiKiiwiiKj for an avtviuje laortaliUj <i( the sevciud (V/rH eqwd
to that t'.rpi'n'citvcd hi/ the " Thirtij Auurivou ('mnixniies^' from
till' it*xiie (f their ji rut polieij up to /S~ /, in llriti.^h America and
tuiiitij-jirr Xortherii »S7a/»>' and Trrritories. The cost of insur-
ance written in this vast exj>erienee is tahulateii in eolniim I),
and this i-; the normal <v)st of risks which prinhMiee demands
siiall lie ri'Lrulariy collected, without reference to the acci-
dental inorlality of any jiarticnlar year, to maintain the
Mortuary l"un<l — to give jtermanence to the system and secu-
rity to the assured, and to insure the ahility of the system
for all time to furnish all its members, whether y<»ung men
or old, whether reci'ut entrants or entrants of the earlier
years, all the insurance they desire at the normal cost for
their respective ages.
It will he (thserved that the table of age ratios hy which
the re(piirement of our third principle is secured, lias been
recognized in these columns. (Jiving those ratios a money
value in the denomination rc/f/x. the cost for cacii age by col-
umn D is eight times the ratio tor such age.
It may he oitjecled th i we have gone too far from home
for our data, and have placed the normal cost too high.
Our reply is, that in the al)seuce of a larger mass of ex-
perience ill Canada we were driven to the experience of our
neighbors, and unless we are willing to sacritice mathema-
tical certainty f- ' the insecurity of mere conjecture, a lower
estimate is imii' ssilde.
What if we should make the sacrifice and reduce the cost
an average of a dollar ]»er thousand ? — • that saving would be a
poor return foi- the resulting uncertaintv and iusecuritv of
the insurance. The over-payments, if such there be, are not
at the disposal of the com[tany, to divert, if it will, from the
mortuary fund, but remair there as a iiermanent security to
all the insured.
Though no provision is made in the calculation for divi-
dends from this fund, if experience demonstrates that a
surplus is accumulating in ex<'ess of what prudence demands,
it will then be reduced by eijuitable dividends to tliose whose
s^-^.
-•^-"Pti^
i [
The Natural Syslnti of Life Insurance.
<^»-:^
^
)
niiynuMits created tliiit excess, l)iit no jij,'ent is expected to
hold out Jiny such possilde dividends iis an inducement to
business. Those rates allow for a (fivi'lni'l in ndraiicr of
twenty ner cent, on the usual cost, and this is the only
dividend
COST OF INSURANCE.
f
I
u
<
9
s :i'.'
41
S 4.S
42
8 tU
i:!
!l 04
44
i) 44
4")
y y2
4i;
Id 411
17
10 9t)
48
11 tiO
4'.t
IJ .!•-'
.")()
i:i U4
.11
i:; 84
02
H 72
5;^
15 (;8
-A
t; 72
").")
7 84
")G
;) 04
■>7
!(i ;5'_'
58
1 76
'59
;j 3G
,60
'A
\
\
Princlptt'S of the Safety Fund System.
41
RESERVE-THE SAFETY FUND.
Fifth J'rlitrli>lf. ~- Pn'sidi's tlii' natuiiil siir|»liis in tliu inor-
tuiiiy fund, tlifiv should 1m> m rcasimulilc " n'scrvf." to secure
persistence of payment as a primary olijeet, and to reduce tiie
iidvancin!^ cost to pcrsistint; nicinlKTs as a sim ondary ohject.
This principU; contains Mlizur Wri^'ht's third "essential
to the permanence and prosperity of ii company" already
noted.
Wt! have seen that a reserve of ton dollars on each
thousand of risk is suilicient to secure its primary ohject ;
wherifore each policy-holder is re((uired to deposit that
amount as a l»ond to continue his payments. To secure the
two-lold ol)ject of this principle, all who com})lete this de-
posit in any year constitute a sei»arate class for that year;
and, as regards the management of the fund created hy the ir
deposits- -called their Safety I-'und — they are iiulepend-
ent of all other memhers, each of whom hclongs to the
class of the year in which ht» completed his own di'posit.
I'^or five years after the formation of any class the interest
of their Safety I'und accumulalt's, and thercafti'r it is appor-
tioned regularly to the i-redit of surviving and persisting
members. When the amount of insurance in force en the
lives of memhers of any class has heen so reduciKJ hy death
and (liscontinuancc that it does not exceed the amount of
Safety Finid for that class, Tiit", suin'ivrxG .\Nn per.sisting
.mi:mi5I-;hs auk i'aid i in-: full fack nali'E of tiikiu pol-
icies, AS AN KNDoW.MLNT.
While the management of this I'und is purely Tontine, it
is not open to the ol»jecti(»ns rightfully urged against Tontine
systems of investment insurance. The forfeiture is not
ri'(jnir<'(l for the i^nkc nf pmfit to pcrxistiiKj innitherx, hut is
necessary for the stahility of the system ; and, l)eing small in
amount, does not involve tlit hardship attendant upon
ordinary Tontine forfeitures.
The dividends resulting are not made from moneys lirst
collected from tlu- assured for the puipose of afterward
returning a j)iirt of the over-payments, l)ut from the interest
earnings of tnoney deposited foi- another and a neci-sary pur-
pose; and when the fimd itself has accom])Iishc(l its mission,
the principal — no longer ncce.ssary to secure the i>ersistenee
of thos(^ who deposited it — is distrihutcd to those who, hav-
ing faithfully disi'harged the ohligaiions of membership for
a series of years, iiave made themselves its owners.
Instead of attempting to secure persistence only by the
1.^ pains (jf a forfeiture which grows heavier as the vears pass,
S5^M.a»j>
fi 42
J
The Natural Sytilan 0/ Life In-virance,
wo mid to the {K'niiUy of a small loi ruitnri; tlic linpc of tliiH
rich iTwartl.
I low I'ar the naturally advaiiciii;^ cost of insurance will
be rcdnccd hy the (livi«lcn<ls of intorcst is (k-pcndcnt on the
actnal cxpcricnct' of carli Safety I'^iind Class.
The fact that under every form of iii-<nrancc llier" is ;i
hirye volume of ' onl;;«)in;^," has already been shown, and
we have (|uoted the assertion of .laines I-', j'.uiiis, ( (insulting
Actuary, thai " the expfiienri' of the best lile eompanit-s on
this ('( .ilinent shows that not more than ten out of every
one hnndre<l insurers keep their policies in f(»rce for twenty
years."' With this experience, and a<l(lin;,' the deaths dnrinn
that period, it will be seen that eacli persi-;linLf member's
original coutrii>ution of ten dolbirs will Mien have nndtiplied
miiny times, and the regular dividend of iiitere^t must be
a considerable part of the natural pri'iuium. W'e have the
data by whii'h a mathematically accurate calcidation of the
amount of such dividends and (»f the period when the enrh^w-
ment would mature nuirhf br made, on the basis of past ex-
perience. Mut that experience was under an entirely (lilliMH-nt
system of insurance, and it remains to be di-monstrated by
our own ex[)erience whether the rate of lapses under a system
where nothinu: is concealed, wheie the insurance is furnisbed
at cost, and Ahere tiK're is no heavy penally for forfeiture,
will be ^reate^ or less than imder the (dd system.
Hence we hesitate to raisi' expectation by calculations
from the experience ol' other systems, wiiicli our own expe-
rience may disappoint. We <;ive an obli;^ation to appoition
the interest amon>iSt persistiny- members of each class, accord-
in<r to tiie aj.".- ratios by which their cost of insurance is pai<l,
and it remains for t'xperience to dev(do]i the number to
rei-eive those dividends, antl conse<[nently their amount fur
each.
Sixth Principle. — No larjj;er "reserve" than will secure
its primary object should be collected, and all payments to
this I'lnid should annually be placed beyond the control of
I ' the manaijfement.
I The first demand of this principle has been fully di.s-
' cussed. It may be asked \\\\y we advocate a jxissible
j accumulation in the mortuary find and object to the accu-
mulations of high reserve.
' Our answer is, that the one is nutiiral, essential and hi(/hly
^ expedient, while the other is artijicial, non-essential, and wholly
1.^ inexpedient ; and this has been fidly demonstrated.
Jg^r*..
I
'? i
»**♦>-
ijf ol' this
met' will
lit (III tlir
lirp.; IS ;i
own, 1111(1
iinsiihiiiy
[taiiii-s on
ol' (.'Very
• r (wt'Dly
IS (liiriiii;
tiieiulicr's
iiiltiplicd
iiiiisl In-
liMvc the j I
1)1) of the I
V eiidow-
p:ist cx-
(iilll'rctit
Irntc'l hy
;i system
furnished
trfeiture,
I'lihilioiis
vii t'Xpe-
|>|Kirti(iii
;, accord-
is paid,
iiulier to
tiiiit for
I secure
nicnts to
lutrol of
illy dis-
lossihle
I ,
ic aeeu- I i
! I
d hi (/lily '
wholly I ?B
a^'**«
i
Principles of the S(tfili/ Funil SyMi in.
43
The second demand is iiii|iliasi/,rd l»y the ruin which has
overtaken so many lev»d-|iit'iiiiiiiii ci»iii|ianic^ ihii'iii^h the
di-'lionesty and ineoin|tetency dis|dayed in the maiiaLiciiicnl
of the " reserve."
'I'he c()uti iliiitioiis to this luiid, unlike iho-e to the mor-
tuary fund, whivh are Iteinjr constantly disii ilmied, are liahh-
to indelinite aeeuiniihitioii. No iimount of sei-urily oilired in
advance Ity an auuressive nianaL'cnieiil. for the iioue^l and
[irudcnt dischainc of a trust which is lialde to iiecoiiie so
jffeat in the t'ntini', could he rc^aided as certainly adei|uate.
We may have ahsoliite coiilidence in tin* wisd(tm and iiitc<,M'ity
of the manai(ciiicnt of to-day, and he willing; to trust it
witiioiit ade(juate, or any, xcurit* ; hut who will he the man-
agers, and what their cic. racier, In In re tin- moneys we con-
trilii'f.' to resiM've have ac'-omplished their |iur|»oseand found
their way to their rightful owneis?
If the seeond demand of this |>rii)ci|ile had heeii ohservcd
in the |»ast, even if the lirsi had iieeu iL'nore(l. hosts of cdin-
IKinies which now till dishonored graves would he healtliy
and |»ros|>erous to-day.
The |toIicy issued hy the Do.AIIN'KjN" SaikIY i"lM> i-lIK
Association gives t'llici to this ]irinci|)h' hy an oMigaiion
to (h'|t(i>it the eiitiri' Sat'ety I'lind of each year's class in the
])omini(jn Treasury, suhject to the provisions of the I )ominion
Insurance Act, iiMjuii'ing it to remain on deposit until the
Cioveriior (leneral in ('ouncil shall determine that tlu' con-
ditions iiii'ier which it was coiitrihuled, and which ar«' stati'd
in that poli(;y, liave heen I'uliy ohservcd hy tin- company.
THE MANAGEMENT.
Seventh I'rincjple. — The management >hoiild hii-iiish
j security to the assured iii pro]»ortioii to the amount of trust
funds they control.
j ; This princi|de is a demaiMl of >iiiiplc hiisiness prudence.
I ! It has alv.ays heen applied to l>aiik< and other tinancial
institutions seeking puhlii' conlidence, excepting only life-
j insurance.
When it was discovered that t'apilal was not necessary for
the siiccessfid operation of life insurance wh.eu prudently
managed, men of al)ility and eharaclei constituted themselves
managers, and without pretending to give any security for
the contracts they wrote save the funds lirst collected from
the assure(l for that purpose, they succeeded in ins[)iring
\ puhlic conti(lenc(.j in the M)undness of the system and in tlieir
\
integrity of purpose ; and now, when the management t,;
*"€*«»*
:s=fs
11
1
44
The Xatural Syntein of Life ^ isurance.
M in other and too ot'icti Irsn faitlit'ul liamls, tin* aci.iiniiila-
tionH of trust funds a^^'ri'^atc luauy inilloiis.
TIm' faithful aud cnicipul di-* liaryt' (tf such niorrnous
trusts (ItMuauds a di^Mcc of wisdoiu aud iulryrily seldom
vouchsufi'd to men, yt't the oidy security oticrcd th(»sc whose
payuictUs ■•((ustiiutc the trust !uuds is the iicci(h'Ulal iute;,'rily
of the iiieu whose fortiuie it is to he the uiaua<;crs of to-«hiv.
These scatter throuKliout the huid, aud hauu upon the
walls of every piihlic ofKee, lUuniiuated statements of the
aiuounl of tlicir trust funds, in cohunus aud lines of Arahie
characters cx|ii-es>iiiL; values <if whii'h tlu' finite mind can
Hcarcely conc»'ivc. The piihlic eye is da/./.led aud men
point conlidently to the tMuhla/.oned tahlcts crying', " Here is
wealth I lu-re is seciu'ity I When 1 insure it shall itc in a
c'C/Uipauy that has lifty or a hinidred millious of dollars to
back up its contracts I "
If the porter whom I hire for twenty-five cents to carry
my valise contniniu'^ sio.doo eiiii he said to li« wealthy <»n
account of the trust I ri'pose in him, s(j can these comjianies
be said to he wealthy on account of the enormous trusts they
cotitrol ; if the porter is more worthy of credit by his tailor
on account of the satchel he carries, so do these companies
better deserve to have the interests of (h'pendent women and
helpless children conuuitted to tlu'ir can- on accoiuit of those
accuuudatious «»f trust funds; Imt if the porter is more li.dih'
U) l»e missing when the satchel is wanted, by knowing the
rich treasure is in his power, so those companies are more
liable to be known oidy in story when the widows anti
t)rphaus of the future want fnv bread, by knowins; that those
trusts were created without proper icstrictions and without
security; and, lastly, if the porter nuu/ he Itttnexf, pay his
tailor, aud faithfully discharue his trust, so mnj/ ihe mauai^ers
of those companies be honest aud faithfully (lischar^n- their
every obli<^ation. »
Thou^di capital is not necessary for the successful opera-
tion of a soiuid system of insurance when efhciently and
honestly manayed, it does seem reasonable that it should
he y:iven as a guarantee of such managt'inent. It is not tlu'
risks incident to the system that have strewn the wrecks of
life insurance companies all along the shores of the past, but
the risks incident to the management of that system ; and no
nuuiagers should be trusted, no imitter what their reputaticju
or integrity of purpose, wlio are not willing to expose their
capital to this risk, and thus relieve their system of tlie only
danger threatening its safely.
acciinmlr
ciiorinoiis
ty Mi'lilotu
use wlio^c
I iiilf^^rily
A' t()-il:iy."
Il|)(lll tlu>
Its of tile
of Araltic!
iniiid can
:ni«l 111**1)
" IIiTC is
II i)e in ii
ilollars to
s to carry
kcaltliy on
L'(»tnpanieH
rii>^ts tlioy
his tailor
•onipanieH
omen MH<I
it (tf those
lore liable
(wint; tilt'
arc more
Inus ami
ihiit those
1 without
, |iay his
iiiaiiai^ers
r;;<' their
III o|i(>ra-
ntly aii<l
t -hoiiid
s not tiie
wrecks of
past, but
: and no
jiiitation
INC their
he onlv
»^^i
i
8^'*^
Prinnplen of the Safety Fund Sifntem.
"^1
40 A
I
7i
It has been seen that the Safety Fund is placed beyond the
contrul ot' the nianaucinent at the end of each year, henci- no
Heenritv bevoiid otie vear's aeentunlatien is reiinired on its
aeeoiint.
The payments to I be mortuary fund are otdy the normal
costs of in'^inance, an<l a larire accinnnlation there is possible
(»nly by an exceptional experience.
( 'uiisiderin;? these facts, the company's capital of one
Innidred and twenty ihonsand dollars is abnn(lant security
for a faithful discbarn'c of the trusts reposed.
" Hut," says an olijector, " that capital is iKd all paid up,
and is not all security I "
Wiuit woidd you think of a law re(piirin^^ a county
treasurer, instead of «;iviny: a bond for liis honesty, juatiirinj;
only in case of defalcation, to deposit his security in cash
in the county vaults? It would he under his own control,
and should be abscon<l with the ccjunty funds he woidd carry
his security with him 1 1
The l>anks, unlike insurance companies, retpjire a fully
pai<l up capital for the transaction «tf their business; but here
the law protects the puldic ajiainst the eiiilie/./.lement of d<>-
positsand paid-up capital as well, by creatitijja second liability
on the part of every stockholder; and this un-f)aid capital
is the real security for honest adnjinistration. Tlu- paid-up
i-apital of this Association is in the I)oniini(tn Treasury as
security, under the provisions of Insurance Le;,nslation, and
thus beyond the control of the managers, while the un-paid
capital is in tlu' estates ol' the siockliolders, and theie be-
yond the risk of embezzlement. Thus is every dollar of the
capital the most elective st'ourity.
We liave now the insurance purely mutual, while tlie
risks of inanajjem«'nl are assumed by a stock company as
trustee, thus reiievinj? tnutual insurance of the only danjicer
whii;h threatens the system, and mniardinj; it from the only
evils that have overtaken it in the p:tst.
Eighth Principle. — The nianaiiement sboidd be limited in
the amount of moneys contributed by the assure<l that it shall
consuuie in expenses.
Assessment insuianc(> has almost invariably recognized
this [»rincii>le, and thereby removed from its contracts the
source of many of the evils which have attended the [tractice |
of level-premium insurance. •{.}
^
The Niil'irtit .V)/,»^ ;/( nf fjff [iiKuronrr,
W tlicH' is li> Im- :i )iorf<'rt iitKlrr^trinilinir Ixlwini tin-
A'<si)ci.iii<»n iiml r,u^\^ niftiilifr, fli'- liiilir inii>'t kimw tli.it
cvt-rv <lull:ii' h"" |»:iy«* lor tlit* mortiinrv I'linil p-.h-Ih's its drsti-
iiiiliuii Mini rciniiiii^ llicrr iiiitii it U i'i-<|iiii'('i| to ilisdiMri;)' n
flitiiii ii|H)ii tli;it I'mi'l ; tli;il rvtTV (loliui' lie pays lotiif Siift-lv
l''iiinl ivaclit'^ tli»' I >omiiiii»ii Tn-iisiiry — ■ ilicrr to rotiiiiin iiiiiil
its iiijs'^ioii i< a<ci»ni|ili>liii|.
'i'lii^ cniiiplt'lr iiii>lcr>tati)liiiL' WDiilil lii> iiii|Mi'.':ili|«' if tlir
iiiaiia;;*'riM'iii lia<l tli<- ri-^lit to (ii|) iiilo cilliur I'liiid as its
ni'cessitirs ur i apricc mijrlit dictat*'.
It calls lor cxtraDnlinary rdiirnhiicc in llif intf^rity ami
st'ii>^i' of jii-^licc of allot litT to r(»iili(|c ill liiiii tlic iiiaiia^;«'Mniit
of one's tsialc, L^raiiliii:^ liiiii tlic |tri'roi;aliv<' of Wrcidjnir,
witliDiii I III' riu;lit ofaiipcaj, linw niin-li hr shall rctranl as his
own, and lnr iiuw iiiiich In- >liall rmdfi' an account.
This r niipaiiy. as tnistcc uf the assured, makes ;i liaiuain
ill ailvaiiee to cniidiiet the liiisiiiess for three duljais per vear
\'nv eaeh thoiis:ii)d d(dlars insurance, after tiie initial prc-
niiiiin In cover initial expenses, has hec-n paid.
rhi» provisiuu makes it possiolc for the manaucrs to
siK'cify, in taeh iioiict' of premium due. to what |iiirpnsis the
p.iyineiil is to lie applied, :iiid the amoiiiit lur each, ins(ea<l
i>f Iiim|tin,ti all to!;etJier, leaving it lor the company to .Mppor-
liou as it will,
Xiiilh Pi'lnviph, -TUv maiiaLrcinciit should comply with
the provisions of the Dominion Insurance .\ct, re<piiriiii!; a
Dominion deposit and olliiial inspection.
This principle has heeii eomplied with iiy lliedfposit of
s^od.OtiO with till' lieceiver ticneral of Canada, and that
deposit must he increased I'roin time to time as the compaiiv's
lialiility to the assured on aeeoiint ol' the Safety Kiiiid in-
creases. The iiisnraii'c lejj;islation of ( 'aiiad;i is iiitcnde I in
some measure to protect the insured from imposition, and if
they encoura<;e companies to violate the law Ity patroni/.iuLj
such as do not comply with iis provisions make their <lepo-
sit and olttain a liccii'>e -they i<.oiorc the paternal protection
of their own government, and should expect to sutler htss.
Ti'itth J^rincipli'. — The assured should h.ave an effi-ctive
voice in the maii:i,ueMieiit, and should rtuularly he informed
of the condition ol' their husiness.
KHect is yiven to this principle hy tli" constitution of the
annual ineetini;. at which each [lolicy-lioldi'r has a vole, 'i
either in per.sou or by proxy, for ouch thousand dollars insur- -j.;
ily
<
1
u\v tli;it
its (|r«ti-
•lijiru'*' ii
If Safety
till until
Ic it' the
(I as its
rrity ami
la^'citiciit
it'citliii;^,
I'll as IiIh
I Itar^ain
per yi'iir
lial |>i'o-
lam-'i"^ t'»
|iusis the
I, iiistcafl
to ai)[>()i-
)lv with
liriiiU a
•|>(i>it of
iii'l that
»m|>aiiy"s
"iiiul ill-
riidi' I in
1. ami W
[ I >>iii/,in<f
■i r ijcpo-
rolcctioM
!' loss.
■Ili'c'tivc
iiit'ofintd
111 of lilL'
; a volt',
?l,
us iiisiir- •!,»
r
f
Principlf* nf the Siifitif I'lnt'l Synfrw.
47 /5
jiiH't'. At earh iiif«tinu a ilftaijcd rr|iorf of the coiKlition of
lh«' hiisiiu'rts is rrLTiih-irly iiia<lf, ati<l a |iiiiitr(| C'liy ts M'nt lo
llic M<l*li'i'sM of *>at'h iiicinlM'r. Thf iiit't-tiiiu' aiiiiiially t>li-cts
Ht'Vt'ii ilirt'ctors- thi'cf liy iin' vnirs of mh'IiiIhts ajoiic, thrr»'
hv thf votes of >«t<M kholih'l'' alum', whih' hoth llllile lu cl* et
' llir srvt'iith.
Amlilorw lire lik«'wls(' t'h'ctt'd, whose IhisIiu'hs it is to amiit
thi> ai-coiiDls of th«> Association, aiitj nial<e their ie|)iii't at the
next annual tneetiii};
In conchision. the Safety Vwut] system Is a ticvejopment,
ami not an invention. Its ten prineiples :iie hut verhil
fonnnla- of the teaching's of the pa-«t. ami to that wc have
appcah'il for their jnstilicalion. As the reconi in written in
tll« experience of level-premitiin anil of assessriieiit insur-
ance, \V( have lieen coiiip4'lle(l fu examine the princi|iies
and practice of tho«c systcnis, not in malice. Init for the «.olc
purpose of leaniin^r the lessons their expeiieiice should
teach. We have t'onn<l that to admire aiul that lo condcnni
in Ixith; and, casting aside thespnrions, we have trained tire
^.'cnnine into a syst«'m whose every detail is ailjn'^tcd to act
in perfect hartiionv with nature's laws. It "occnjiio the
true middle ^Moniid hclweeii the I wr) extremes of expensive
insurance l»y Icvel-premiuins, and the uncertain or iiKhlinite
in->nrance }»y post-mortem assessments," avoiditiLr. alike, tiu'
dangers and detects of the old reserve plan, and tiie weakness
and uncertainty of assessnu'iif systems. It j,dves edect to
the motto. " Pay as you ^^o^ jiiid i^et what v<iii pay for," as no
other system docs.
In solviny the vexed proldciii ol '• life iiisuranc<' at co>i."
we fiave used only the recoj;ni/ed mathematics of lit'e iiisur-
anct*. If the reailer is not satislicd with the solution the fault
is in the mathematician — not in the mathematics; if he is not
convinci'd of the soundness of oui- principles, the tanlt is
with the writer who has attompt-d their vindication, — not
in those primiphs, which are ,i-, riiduiiui,' as the laws of
nature that ;;ave them lii;tli. I'uMowin^ ^o implicitly the
teachings of the past, our system cannot Inil l)c as entlurinu
as time itself, capahli' oitull'llinir it> one mission to provide
siistenaiirc t » the widow, and home coml'orts, with the mians
of winoatiun to fatherless children — throiiyh all the years lo
come.
I
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•J
TA«! Sfttiirnl Sifitirm n/ lAJv Inmirnnrt,
• !
VIM.
(•o.MpAKiN<i Ki:sn;rs.
Till* Moiiiii|ii«>s>4 ui' llio S.'ifrly KiiihI HVMtt'in linN iH>i>n «'stiil»*
IihImkI liy rccotiriliity: ii>« pi-iiici|)|t»« with llir iliiiiiiiMlM ofiiiHiir*
iiiii-c ••(■ifiirc, .'iii<l )*y titr (•'Htiiiiiiiiv III' till* liiLrlx"*) iiixiinnirv
tiiilhorilM-^ <M) tilt' Atiirtiraii I'ltiiiiiiciit. 'I'lmi oiir iiKirtiiui y
|irrMliliniM, IIH KIVCl) ill ciilllllill " h" nt' till' llli)|i> oil IMIKU 40,
ill'i' !|)li'i|il:ilr is xlmwii liy tin- ('0||-iilii|:tti>i| *'Xpi>ri<>lii'«> itf
iliirty Aiiii'rifMti oliiccs in ( atiinlii ami Iwfiity-livr Nortlii'in
Stiiti"« iiinl 'rmiinricM ; tiiiil wlitii we roiiMitJi-r that that i*X|)0*
ririiiT iiicliii|r<l triiialr ami lia/anlitiH risks, tor wliirli WM
cliar;!;!* rxira |in-iiiiiiins. ami lh:it tli«' ^«alllhrity ot' <'anaila
In iiDtiirioiisly {.M'ratcr than wlii'i'f tin* ^rrat iiia.ss of that
i>\|)i>rii'tiri* acciinnilati'il, thf aiioinacy ol' those |imi)iniiiH
is |)lai'i'«l lii>yoiii| i|iicstioii.
'riu-rrl'trc. w«' can coinpan' ri'snll'^ with the lu'st h'V«>l-
|ir«>iniuiii coiiipaiiy. withoni tiH.^umi>i;/ that oiir systi'in ilt
I'ipially soiiml,«»r that our prciniiiiiiH ari* a(l«><piuli! — hatli have
hi', II ilnnnii.'ih'dti'il.
It may Im- ihiit sonw roadrr, atltnittiny; the liiuh rrs».rvw
to hr artiticial and iioii-cssfiitial, is not yi-t conviiu'cd that it
is im>xp«'dit>nt.
NVf ask such to carcrMlly rrad what follows and Htiidy the
cahnlalions hy which wc compare results.
The (■;tiiada Life is the oldest and lar^'est Canadian level-
premium company, and has latterly heen wiiunnu a reputa-
tion over its competitors l»y the eomparativr richness of itH
ilividends. Ii iiirnishes us the means for this comparison hy
advertisiiiL' the diviilends awarded the holder of policy No.
Ml. issued in IS IS. which we m.ay fairly assume is as i;(K)d a
showinj,' as that ( ornpaiiy can make, llavin;,' received his
dividends hy " hontis adililions" to his policy, he has paid
thirty-seven inn'i'urm premiiiius.
lU' "honus additions" is meant that the dividends, instead
of heini;; paid in i-ash, are ap|>lied to the purchase of fully
p lid-up insurance, whii'li is added to the j)olicy and payahle
therewith in case of death. 'I'he Company sayH : " It ninnot
hf fiH) plnlnh/ nUttiul tliat cnrJi lunilf is tlir t'tjiiii'nlriit of t fir atlier.^'
Aecordin;;ly no exception can he taken to our selection of
this mode for a comparison of results.
The next ipu'siion to settle is the value of money, lM>r
the purpose of ;i fair comparison we must make a Safi^ty
i
t • 9^9
?rts
1
I'M fsllllt-
of lii^iir-
iixiir;ii)t>t>
iinriinirv
ft
pnuf 40,
r'u'in'*' of I
Nortlii'in !
ml rXpi" I
hull y/v '
f ('iiniiilu '
4 of lliat
iri'iiiiiiiuK
t?Ht U'Vrl-
yMtt'in in
hi it It hitve
'\ rt'siTve
.•<! tliiit it
^IImIv lllf
ail Icvrl-
if|nita-
'ss of its
iii><()ii by
ilii'V No.
'^ootl a
iv('(l liis
la-^ paid
>, iiistoad
of fully
|iMyal>U'
// ri I It not
}„■ other:*
■ctioll of
ly. 1m )r I
a" Safi'tv -k;
(hmpnring RntUta.
"1
Fntid policy n*iii(>iM|M)riiiii<oiiM willi No. •'M, wli<mo iliviiJiiiilN
wiri' inii<l<> ii|Ntii ilif iMrtiinuM of lnlt'r«i«t hy I'Amt raliN.
NVIiai liavi' llii-y ln-rn? In Ixm;{ (|ii> aviTauc iiilfrrol •'iiriiiiiuii
ill iitl lite ( atwiiliiiti roiiipaiiii-s untilnl it\x aiiij a half |M-r
ci*nl. — >ti» Muy« I'mf. ( lurriiiiaii in hit report t«) l*arliaiiii>nt.
MtMiry liMH not IniTi'Mxcil in valiu': it hriM ilri>r«M'|iil<><l.
!l is a Wfll known fart ihiil mhkIi Imu'Imt rati-w navr pr»'-
vaili'd in tlir pant -thr con^cifiirr of thr «-apiliili«t hcinif
prariically the liniit. Many men hnviii^ larK<> NiiniM hM-knl
Hp in lifi- in<«nran(-«- havr paid a hiuhrr rati* on rnonrv
cMiployrd ax I apiial in ilii'ir IniHinrHM; and rvcryiovvn and
villajfi- throiiuhoiii th<' coiintry han iiM " promini-nt riii/.r» "
who liaM an'tinmliiti-d woidlh liv ilu> inauic of roinpoiiiid
intfit'si at the hi,. Iicr i:itrH, ( iivini; the ( 'ornpany tin* hrnt lit
of th<- rxcfoH, WT >iiall Mrh'i't Hi\ and a half p« r tint. a rati*
Inurr than tlw avfrayi' for IHH'A.
Winn in ihr fiitiii't> the coinpaiiy fnrniHlicH \\h its rcsidtn
worked out l>y a lower rate of interest, we Mhall make another
ealriihition and >ee where We stand.
The hnhhr of I*oli<'y No. .'J4 iiniMt have hiM-n a voinm
man in l^*!"*. .\> his airt', .iiid the amount insured, can make
no prop) lion.al tiillerenee in the result>^, aeeorditiv' to the
eomp.any^ method of aw.irdinu dividen<U, Wi' shall assume
\w was twenty-live years of au'e and insure*! for :*'),0(M>, thf
)U'emiuni on whieli hi th:it eompany is >(>"> pi>r annum.
jj't us siippoxf that every year when he paid ^\)'> to that
(Mimpaiiy, In- laid aside another SD.'i for !i<r>,tKlO insiirane«- «»n
the Safety I'lind system; |)iiid from it the natural premium
hy column "I>," |)aue 40, (addinu the initi.-il premium the
first year, and the stipulated e.\peu>fs every year); and
invested the halaiice where it was not heyond his own vnn-
trol. The sMvinus have :i('ei!mulaled, and had he died in
any year, their llu'ii amount would have heeii realized to his
estate in addition to the ."^.'),(Mi(i insurance upon the Safety
Kiind I'olit y. riieiefore. tlio acniiiiiilatctl .savintrs out of
<|i<> >t,\Kt |M'i' .v(Mir, ahcr payiiiu: the natural pn-iniiiiiis,
an> <'qiiivalciit. In <'a><' of dnitli, 1u ** Itniius .Vdtlitloii.s"
to tlio SalVty Fiiml Policy.
As we have no data from which to <ietermine the amount
of " I'xtnus .\(hlitioiis" to Policy No. .'M during,' the lirst
seventeen years of its life, we have taken up the residts at the
«Mid of that time, and. iu the followini; talilc. thev are com-
jtaicd (luring' the last twenty years.
Sc-^
.(
pfn
S' 52
'«*":ya
{
The ynturnl Syslem of Life hmirance.
Rosprvo Systoni rx. Safety Fiiinl Sysfcin.
WHOLK liilK I'OI.K IIS. 1><I i:|i A. I». IMH. .\(,l AT C.NTIIV, '.'.").
$5,000 Innaraitrc by Lwd- I'rtiaiiiin of lii*'") per autiuin, with profits
by " lionuH AflditinvM,"
vs
$5,000 IiiHurnncc by Xtttiind I'rt'miuni.t, irilli >'c///(/,s /rom $!Jo
per annina hirrste>l by Insiiml.
IB
S - J2 - •«
/! a '"
O
7)
o
X
<
I « c
,2 «
tt It y >-
: * - i
.£ « 2 ■"
■*- i ~ "j: ± :.' "
2 .„ *"
a — 'I -r
.Si)-'
*^ 5 tr
<i- . 5 -
= 3 ;
Si*
aa - ; --
£ 5 a' = i
ID
«-2 5
A.D.; S3
M
^865
]&67
1868
1869
1870
1871
1872
1S73
l^■74
1875
1876
1877
1878
1879
1880
188i
1882
188;?
1884
9
5,000
■"),noo
5,0()('
5,000
5,000
5,000
5,000
5,000
5,0()()
5,000
5,000
5,000
5,000
5,000
5,000
I 5,000
5,000
l'.:i
1,74.5 Si)
1,748 35
1.748 ^5
1.7 J8 X.
1,748 3%
2,373 3.5
2,373 :Jo
2,373 35
2,373 :«
2,373 35
2,098 35
2.008 .^5
2, 008 ;;.".
2,!)08 ;{5
2,!»'.)S 35
;\,i\-i:\ :',5
a,»)23 :i5
3,623 35
3,(;l>3 .'io
3,(;23 ,S5
l,5aT 36
1/MWJ 08
i,8it ;n
l.fXJJ) 30
3,133 13
3,303 00
3, t83 01
3,670 83
3,8(»7 8.-I
3,073 86
3,380 43
3,514 73
3.750 00
3,005 45
4,351 33
4,517 86
4,705 .{3
5,084 03
5,38.? 81
5,«>04 57
2? 3^.
= u -
U. 4. -^
:<•/:■ =
r- ^ Z 2
f> 8
0,748 3;5 6,537
(),748 .35 6,(566
••.,748 35 0,8! 4
6,74.8 .35 6,060
6,748.35 7,133
7,373 35 7,303
7,373 35 7,483
7,373 35 7 670
7,373 35 7, 8r)7
7,373 35 8,073
7,998 35 8,380
7,998 .35 8,514
7,998 35 8,750
7,998 35 8,095
7,998 ;C) 0.351
8.6-_':! 35
S,(;'J3 :'.5
s,i"i'.':i :'.5
s,r,ii;5 ;r>
8,1)2:; 35
0,517
0,705
lo.ysi
10.3S3
10, (»U
36
68
21
30
13
00
61
83
85
86
43
73
OO
45
33
8«;
33
02
si
">7
Eh
O
."4
36
— /. -.
4 e ^
.2? 5
r. z;--
r. .s, r - ^
.t * ^ - -^
Ik ■- —
.^ - C Yrs
— '220 99 i 18
— SI 67 ! 19
65 86 ; 20
330 85 21
383 78 I 22
— 70 26 \ 23
100 36 24
307 47 j 25
' 26
27
28
29
30
31
Average,
404 50
700 51
301 07
516 38
751 10
;>;)7 10
1,353 07 32
804 51 33
1.171 08
l.4<}0 67
1,760 46
3,071 33
6 53.3 4
IV, W.
't pmlits
{
'dill
$<)0
^ a
r. —
,2
- ,' Yrs
!ii Jt9 :
18
-1 (u i
19
5 86
'20
1) 85
21
;', 78
22
ti 'jr.
23
) iG
24
^ 47
2o
I oO
2C>
) r,i
27
1 07
28
) :j8
29
1 10
;io
r 10
.■•.1
i {>7
32
51
:W
08
:;4
> 07
:;."")
40
Hi".
'2'>
;.-
.34
•••^J-i^J^
»^-
:^
^
1 1
CompariiKj Rfxulls.
53
Rich as were the (liv'uli'mls imkUm' I'oHcv No. ?>4, the
nssiiretl \\:\<^ rnjoycd, (liiriiii,^ the years of ('(Hii|»iiris<)ii, an
siveraire ft' ^0»'»Il.;J4 ii'-r iiiiinun — over 13 per cent, of
oviiiiiial pohcy — more insurance for tlie s:une expenditure
nnder the -Sdjilif Fnml Sijxtv.m with savin.us invested.
lint till- idfilf h'lls imlij half flu- xtiiri/. The assured is now
si.\ly-onc years df aire. Tiie purpose of his insurance is
accomplished. His family are no longer dependent, and |)er-
chance he needs iijs accuiuidation to prt'vcnt hei'oming depeii-
dtiit himself. For >^U') per .iiimim he lia^ had assniance under
iIh' SuH'ty Fund System, with invest iiu'iit of saviiiy:s, iii-
ercaslnir IVoiii S5'k<><>^> <<» J^IO,(}J>4.'»7, aiwl now he has
his Policy in Ibree, which he may surrcinicr or not as lie
eiiooso, and >5.>,(;1>4..'>7 in easli to uso as lie will. For
80"> pel' annum he has iiad assurance under the Levd-
Pifniiinii Sjisi'iiii iinri iislin/ jroiii .'^."),(l(l(> to SS,(1'J3.3'"), aiul
now he has only a policy, tiic terms of which make no just
provision for his ceasing' to pay premiums and withdrawing
liis ueenmuhitions.
We shall suppose the company to be liberal, and give him
as ;i surrender value seventy-live per cent, of his reserve on
oiiijiiial poliri/ and bonus widitiuux. (Many popular companies
give but from twenty-tive to fifty per cent.)
On this liasis the comjKuiy woidd give him, on siirren-
dei, SU/jrto.itO, a!,'-ainst a cash accumulation for the
other .SJ)o |K'r annum of $."».<»04.57 — a cash diftcrence
in favor <>f the Safety Fund System of insurance, with
investment of savings, of $2,4:38.07 — an advantage of
over 75 per cent.
Is the high Reserve expedient ':
Even should the company do what none pretend.s tO
do — yive the full reserve value of this policy and
**honus additions "in cash; still the policy-holder would
receive ^ !,:$'»:{. 7 7 less than liis cash in hand resulting^
from tlie same annual expenditure on account of his
Safety Fund Policy, whore he did his own banking'. —
(Am. Fx. Table, 4'. [ler cent).
Is it expedient to waste even $1,350 that, in the future,
may be saved by insuring in the Dominion Safety Fund
Life As.sociation for protection, and leaving banking to the
banks ?
We shall now ask the reader to go with us beyond the
domain of definite calculation, but not beyond that of reason-
able en(piiry, to examine the feature of the Safety Fund
I
r
r>4
37i«; Ndtural Synlein of Life finfunuice.
•^K**,
1
System omitted lV<»in tlu' jiliove couipurison of results — the
Siiffly Fimil its.-li".
The (liridi ikIs on IIip lift^rrvf Sj/xfnu nrr iiirJtuh iJ lo the forr-
(joiiKt comjitiiixon, ns \vi' liiul the data tiiniislii'd l»y aitiial
results t(» determine their atnoiiiits; hat the <U ride ii(l.< from the
Safrti/ Fluid irere vol ineliidrd, as their atnoimt is to he deter-
mined hy expeiience yet in <nir fiittirc.
The poiicy-hohler paid from the 5*9;") per annum the
natural eost ol' eaeh year's insurance, as that insuranee was
delivered, and invested the savings. Thuu^di that eost in-
creased consi<leraltlv in the thirtv-seven vears, the reftnlln in
di
those yeai
th
It of
amoiiiil oj iiisuriiiice nuriiiii inotfc 7/e«/«, ana in iiir (lino
cash realized at their clone, is xhov;ii to overwhelm the rorrespond-
inq reaidta under the xamr erpenditiirc in level-premiiini iiiHiiravee.
Instead of hiirdeninii; the earlier years of every policy-
holder to pay for insurance to he delivererl only in the
diniant fntvre when it innii not he needed, the Safety l''und
system re(]nires all to make a sinj^le deposit of ten dollars
for eaeh thousand of their insurance to help the few who
mat/ then need protection puij its then increased cost.
TIk! |)rinciples re,mdatin<j; the mana<,'euu'nt of this fund
have heen explained; and, to imderstand its eflect upon our
comparison, we shall supfxise 1,000 men, including the holder
of No. 34, all insured for the same amount, formed the Safety
Fund class of 1848.
The principal of their Safety Fund is $r)0,000, which
amounts at end of live years to #^()8,'")00, and thereafter over
$4,000 per annum woidd be apportioned each year to the
credit of jtersistiiif;' miinhers of the class — to reduce the
naturally advancinj; cost of their insurance.
When their numbers are leduced lo one Inuidred, which
by level-premiinn experienci' would be insid(> of twt'uty
years, tho divi<I«»inl to each would oxjmmmI $40; when
minced to fifty tli(i dividend to cjicli >voulil exceed $S();
and when lediiced to twenty-five the dividend to (acli woulil
exceed ^1(>0. If the class fund is composed of deposits on
but one million instead of live million of risks, the amount of
interest would be !)Ut;?800; but the policy-holder in (]uestion,
having five thousand of insurance, woidd receive Hve-hund-
redths or live-lit'tieths or five-twenty-fifths of that am(»unt,
makinsr still $40, $80, or SKIO his dividend. The nund)er
c()mi)osing the class makes no })roportional difterence in the
re.su Its.
The compound amount of all these dividend.s in excess j
of the compound amount of the fiftv dollars the policy-holder t,^
__.^: ^
, I
■f
A"
)i
^
Is — tlie
(he fore-
y attiial
from the
>(' (Ictcr-
iiiiii the
uu'c was
cost in-
;«'.sm//.s in
mount of
•rrspoiid-
'isiirtivre.
polu'V-
in the
y l-'imd
I dollars
feu) who
his fund
poll our
V li(tlder
Safely
which
tcr over
to the
luce the
|, which
twenty
when
[I ^SO;
would
hsits on
ount of
jiestion,
hund-
JtiKMint,
iMunhor
ill the
excess
Iholder
*x»
9
^
> I
Compnrin(j Reunite,
6-")
hinisclfcontiihnted.slKMlM bo n(1<l<><I to f lie S.'),(){)4..'»7 cash
ill hand from acciiiiiiilatHi saviii^^s, to lnMl^• the com-
paiison a tair niic.
A;,^•lill. how many of the original class of iSlS, Itesith-s
this policN -holder, woulil he alive and payiim in ISS-I7 If
there is more than i^'jO.OOO insurance in force on the jtersist-
ing memhers of a class formed thirty-seven years at'o (?)
find out when the total will he icfliiced liy death and la|tse to
that atiioinit, and then a<l<l ^5,00010 the Sinn of 8'>J>'.M^.r>7«
and acciininlated dividends, to deteniiine the wiiole ad-
vanta;?e of the system <d't lie nomiiiion Safety Kniid liife
AsNoeiation over tliat of level-])r<>iniiiin insiiraiiee.
AuJiiii, we ask, is the hi^di Reserve ixjiedieiit ?
Endowment insurance.
The |irect'din<,f compdrliiiiii, of /•('x»//.s is hased upon past
rates of interest to correspond with the rates hy which the
dividends of tiie level-premiiun policy were made.
We shall now vary the comparison, ai^ain leavinjif out lh(^
Safety l''und, and compare results with an I'aidowmeiil iVdicy
hy level-premiums, and four per cent, iutei-est.
Insurance (Commissioner Tarhox, of Massachn.s«'tts, in hi-^
Report for 1SS4, says: '" 1 am moved to expri'ss ;i regret, shared
in, 1 believe, hy the i-onservative and most sagacious nun in
the business, that our insurance establishments have adopted
schemes of insurance wlifiehv thev have become
1;
irireiv
institutions of investment. Twenty years aLfo endowment
insurance constituted less than one-twelt'th of the business of
the companies. Now it is fully one-fourth. ( )f tlii' present
funds of the companies, not less. 1 judLie, than a hundred
million dollars is accumulation on account of eiulowiiieiits
and Tontines. This may be legitimate, in a certain sense,
but //a.s /(() just relation to life ///.sfuv/z/cc 'J'o unite, more
than need be for the assurance of its contiacts, the proper
business of an insurance company with the functions of a
savings bank, makes a combination both incongruous and un-
wise. That the ordinary short-term I'lidowment, which is a
little insurance and a great deal investment, is not desiral)le
as either, /.s capable 0/ mathnuntical dc)uoin<trafinu,, and' is
alike impolitic for the comjianies and unjuolitablc for the
policy
hoi
tier.
Th
e elo(|uence (»t the so
licit
or, insiure(
hy
n-
that character, with some regular savintrs institution wluwe
I I
the hope of a liberal commission, may deceive the uni
structed, hut cannot impeach the fact. A judvident person
will do wiser to buy his insurance of an insurance comi»any,
s and make his deposits, if he wishes to make investments of 9
a3K-,*t«
irf^f
f
otl
The yatural Sy»tnn uf Life Jnt^urance.
■4
8<»k' business is llu' adiniiiistratiiin of trust fiiii<ls. The
oii(in\v)iU'tit Jissiiii'd, if lie lives (jiil liis term, realizes no mi-
vanla^'e from the eiHlowmenl part of liis eontraei, ami if he
(lies within the term he loses on the insurance part the (lill'vr-
ence between endowment and insurance i..'n.^. As far thf
conipdnif It'll irii (IkiIh In fiidrDrnicnlx, it tlnrdnj in'cilhssh/ (i.^xiihu'h
til*' ithli<jntiiiii>i null ii'-<i)i>iisiltililii,-< iij tt hnii/.i'r in (hiililion In lln:
ohlii/atiiins nml rt'xixtnxih'litieH of an insurer^ nnil pnjnilin'H itn
if'tji'tji «.s an in. '■■lira net' inntilnfion hij < rpiisiirf In lh<' iliimicrx inri-
dvnt to its hankinij iiperalinns. if these |iropusitions ai<' well-
founded, it results that soinxl policy hoidd reyard with dis-
favor the inventions of investment insurance which reeent
practice has iniwisely grafted on the (Miyinal system.
"There is a moral as \^-ell as commeri-ial and politic side
to this matter. The only leiritiniate income of an insurance
eomjiany in the nature of profits is the jiain tVom its limds.
All of its other revenue not iiseil (av payment of losses and
expenses is justly due to he returned to those who contrit)Uted
It, not as profits, hut as overcharge on lost of insurance.
2^liut an irisiirnnir cniiijuinii e<iii hi' ri'licil on to innniKjc fiivfls
io better (i(lraiil<if/r tluin urdinari/ instilntinns 0/ incestnunt in
not cri'ilihli'. From these clear premises the conclusion is
inevitaide that an insurance company can realize su]ierior
prcjlits for some of its investment policy-lioldcis only at
the expense of its other policy-holders. What >omeho(iy
ffains someliody else must lose ! ^rassachiisctts has si^nilietl
by Just lejiislation her disap}irobation of such mercenary
commerce, an<l sought to divorce insurance from speculation."
Why shoidd the divorce not he Ljrauled ? Who ev(;r
lieard of Endowment Investments, or ol' Tontine Ixttini; on
ability and willinymss to pay Annual Premiums in the same
coinj)any for a term of years, beinu attached to Fire Insur-
ance; or, who woidd claim that such a coMd)iuation would
strengthen those companies which now apply .all their skill
and energies to furnish protection to thi'lr patrons against
loss by fire? Then why should so l)enelieent an institution
as Life Insuranci' evei' have been deuraded by au alliance
with gand)ling spe*idalions?
Tlie reflecting mind will do \\v\\ to ponder the tiuudy
words of ("omuussioncr Tarhox, and ispecially theM-: —
"A provident person will do \vis«'r to buy his lusnrancti
lif ;tn InHnrunee <'<»nipan.v. and inaUe his d«'posUs, if he
wishes to make investments of that <'l»iira<'t«'i-, with some
r«'fjulai' Savings Institntion wliose st»l«' business is tl»«' a<l-
iiiinistration of Trust Funds,"
and then t-arefully examine the following ealeidation, which
fully establishes his position.
>
V
V
/
i
w<
1
Illy III
irlxidy
cciiarv
atioii."
(I ever
iiii; uti
same
Insiir-
woiild
skill
lUiiiiisl
itiitiiin
liaiicc!
liinclv
irunce
if he
some
!«' ad-
wliioh f
M
i
f
Comparimj jResnlls — Endowment Innnrance,
57
1
Makiii}; tli-pusiis in a Savii!;;s rii-^titiiiioii aloiu' is not
Kiilliciciit. TIk' risk (»f" dyin^' before the deposits aiuoiint lo
an atle<jiiate provisitdi for depenilent ones is ever impending,
aiul can lie provided for oidy hy IJfe Insurance.
riicii. yoii who want I'lndowment and Life insurance, com-
pare the New Way sujU'tjested hy Commissioner Tarhox with
THE OLD WAY.
The Annual Premium, at aj^e JVJ, next birthday, to secure
an en«lowiiienl iNdicy of SoJKKI, payahh' in 1"< years or earlier
(lealh. varies in Lcvel-l'riinium Companies fr<»m ^'A'H) tu
^'M')'). Take the smaller sum and see how It works out by
THL NEW WAY.
Deposit the same amount. ^'.i'H), annually in l^ank. and
(du'ipu' out each yt'ar the premiums riMpiired for >^o,(»(l() in-
rai.ce in this .\ssociation. addinij initial premium the lirst
year. Your bank account — endowment — and your insur-
ance will stand each year as in the followin^j
COMPARATIVE TABLE.
)
"'
"~
'" 1
2
3
"
ins rt
:5 S-^ ^
' ® .=■ J3.t
© ^
Si pZ -^
*Z* -^
YEAH.
S.2
>. C
«_2
U Oj Cn
ills
•5'' «C
w = a> V
YEAK.
£6_-
i - _, o
r Z ij i~
3 E ^ "'
> n'O
V a s
'"fcS^
■iil
^-(
^ i^V
&
s
9
«'"
■ • 1
1st \
OH r.
5,U()t) 0(J
*^.-)K :i4
5,258
34
5,000 00
1st i
'ear.
•2nd
5,000 10
r,r,o 10
5,550
10
5,000 00
'-'nd
((
3id
5,01(0 00
85 « 70
5,852
70
5,01)0 00
:jra
4th
5,000 00
1,100 o7
0.100
57
5,(100(10
4th
5th
5,000 00
l.lSJ'i 1«
0,4!>2
10
5,000 00
5th
H
6th
5,000 00
l.K'iJ* 94
0,829
94
5,000 00
Gth
u
7th
5,000 00
3.180 40
7,180
40
5,000 00
7th
a
8th
5,1 '00 00
'^,.-.44 05
7,544
05
5,000 (JO
8th
ti
<Jth
5,000 00
2,921 41
7,921
41
5,000 00
9th
It
lOth
5,0tt0 00
3,313 03
8,313
03
5,000 00
10th
*t
nth
5,000 00
3,719 49
8,719
49
5,000 (JO
nth
(4
12th
5,000 00
4,141 37
9,141
37
5,000 00
12th
((
IHth
5,000 00
4,579 29
9,579
29
5,(J00 00
13th
l(
11th
5,000 00
5,032 05
10,032
05
5,000 (JO
14th
(<
15th
5,000 00
5,502 07
10,502
07
5,0(J0 00 1
loth
(C
rff^ —
"
^^^M^>t>
r
'<<ii»
9 58
}
i
The Natural System oj L\fe LiHurance.
The two Wiiys of [irovidin^ ai» Kiidowment, coiiplfd with
Insunmco, ('ost'thf saiiie — ij^.'i'iO ptT yviw, hut the advan-
tag'eB of the New Plan appear under all possible
conditions.
I. — Should you live, and perHist to the end of 15 years:
(1) Hy the New Wiiy you liiive ovur SodO more ]']\\-
d(»winent than hy the()id. (See cohinin 2.)
(2) liy the New Way you have $'),00U lusnraneestill
in force, which you must forfeit hy the Old, and
he re-examined to re-insure,
II. — Should you li'-t', hut from adversity or heeause your
cajtital can he hetter invested in your own husiness,
you fail during the 15 years to make an aniuuil
deposit :
(1) On the New plan you are not compelled to enter
upon tedious and one-sided net^otialions for the;
sale of your i'olicy, as on the ( )Id, hut can ilraw
your wiiole "reserve" (coluujn 2) hy writuig a
ehefjue.
(2) On the New plan you need not forfeit your Insur-
ance hecuuse you no longer make Kndowment
deposits, as on the Old, hut (.-an continue to
protect your family when they most need such
protection, — in adversity, or when your capital
is involved in speculation, — hy small j)aynicuts
from your Bank account.
III. — Should you die during the 15 years:
On the New plan your fan)ily would draw not only
the $5,000 Insurance (column 1) as on the Old,
but the liank account (column 2) besides, which,
as shown in column 3, is a most valuable ad-
vantage.
It may be objected that our comparison is not a fair one,
as a Level-Premium Cou»pany would make rich dividends
from profits.
With any profits to the few long purses by losses from the
many short purses, as a result of Tontine gambling where a
considerable part or the whole of the Endowment Fund is
the wager, we have nothing to do.
Regarding legitimate profits, we answer: — with a pre-
mium relatively so low as $320 ; a rate of mortality as high
M
(
•>
'??a
'**^2yB
Insiir-
)\vnK'nt
iniie to
.'(1 SlU'll
cKpitai
IVIlnMltS
>t only
w Old,
whifli,
)lt ad-
iir one,
,'i(lends
oni the
'here a
und is
a pre-
s high
)
i
i
CompnrlrKj lieAultx — Eiitlowmeiit fnnnrnnce.
r)9 ^
as is provldi'd for in the premiiun -eale of this Association;
and money worth (»idy 4 pfr cent,, no ri»'Vel-I*reiniinn ( 'oin-
!>any would make any divich-nd whatever. It is expensive
tankinir when the agent receives from twenty-live to sixty
per cent, of tie.' first <lt'posit, and from two and a half to Mcven
und a half of siK-ceeding ones, as commissions I
If m(»ney is worth six per cent, yon can realize it by ns
safe investments as in, the hest company, and your gains
fr»)rn this sonrce would he e(pial to a c;ish dividend at end
of live years of >^!»<»; another at end of ten years of ^27*J.<)0 ;
an<l another at end of fifteen years (»f !}^4U'J.'")(). A company
making as rich dividends would he landed for liheralitv.
The magic w.-md of compound interest waved over your own
money does it all, and of that wand no insurance coni[)any
holds exclusive possession.
The accumulating power of compound interest is wonder-
fully iniderestiinated [»y the insuring puhlic; otherwise, en-
dowment insurance, — aye, the level-premium system itself —
never would have had an existence. The trained agen* of
that system can take the most inade(|uate results for the pre-
miums paitl and ast(»>»ish his patrons with the munificence of
his company ; hut when those results are tested hy cold cal-
culation, as in the [jreccding tahlcs, the astonishment is that
such companies ever for an instant held a place in popular
favor.
We have seen that the boasted results of a boasted con>
l)any are over two thousand four hinidred dollars less thar;
the deluded policy-holder shouhl receive for his expendi-
ture; and the (piestiou is forced u{)on ns. What has become
of his money? We shall not attempt an answer,
()ur task is finished. We have taken tlu' reader through
the lal)yrintlis of level-premium mystery, and dispelled many
of the delusions which those companies have fostered ; we
have laid bare the foinidations upon which their dogmas rest,
and exposed the many fallacies of their creed.
We have pointed out the weaknesses of assessment systems,
and shown how alone they can hojje for permanence.
Yet, those systems, with all their weakness and uncer-
tainty, and the level-premium system, with all its injustice,
all its inconsistencies, and all its abuses, have been ati untold
blessing to our race.
l*\)r generations they have sweetened the sleep of millions
of devoted husl)ands and fond fathers, as with throbbing brain
and wearied lind)s they have laid down to rest beneath the
\*f] aegis of the life insurance contract; they have softened the
SJ'
S^,.^: J Z
ft 60
\
The Nntural Sy.ilem of Life hi»nrance.
'^"'^
pillow ol'tfii thoiisarul siifien'rH, and rolilM-d tlt-atli itself of ilK
Hliarpi'st i»auK ; tln-y have «'ntc'iH'tl tli(»M> lidiut'H in ilicjr darkest
hour witli lilt' liulit <>l liojn- to llic widow's lieart and tin-
(•arnt'si of continued JMMnf cotutorts to Ium' fatlicrUiHS haltrs.
VVImmi we «'on.sid('r liow noldc is this ono mission of lite
insurance, we are ain.i/.cd that i^'iiohle nieims ever have lieeti
deemed necessary to ^e<'ure ii popidar favor, that it ever
should have heen allied with the vice of ^'ainhliii;; specula-
tions, — that it ever should havu fallen the victim ofgras|)in^
avariiM'.
The j)ulilic have heen cducal<'d to rcLjard lift' insurance
lan
,h
at It
Ti
deh
what It IS not, rathei _ ,
sions, — to remove the dross which too loni,' has concealed the
pure jrold of life insurance as protection of the unity imd
comforts of home after the arm which iijiheld it is |iaralyze(|
in death, — to redeem this most henelicent of human institu-
tions from the ijrasp of error and of evils, is a task worthy a
more potent pen. i-lrror, lon;^ rooted, is slow to die ; evils
protected hehind the hulwarks of inordinate yains are hard
to dislodj,'e; hut "truth cruslud to earth shall rise airain,"
and in its rising' we shall wittiess the triumph, ail over this
hroad Dominion, of the al)i<lin^' principles of the
Dominion Safety Fund Life Association.
I
t
i
«
.-I
i
I
>
•*i«-'?iH
f
Al'l'KNDIX.
j
hi TAILS or SAFKTY I- I'M) SYSTKM.
Tmk Association* f'lrnlslu's aMsurmu-o it) tin- lollowinu'
atiioiitits :
Appliciiils (ifttfn, liiit not iiiorc tliini fifty yt-ars (if a^e
at laHl Itiiiliday, fioiii (iiic to live tlioii^iiiHl dollars; til'ty-oiio,
but iir»t luort' than firty-livc at last liirth«lay, iVorii one to
tlirrc tlioii-aiid dollars ; (ifty-iix. l»ut not iiiori' than sixty at
last liirthdav, oiii' or two thousand doMars.
TIm' prcsont limit in tht amonnt of assurance ofil'rcd will
be exttMuU'd tVoin time to tinii' as the Association grows older,
m prudence shall permit.
Kach application must he accompanied hy the !
INITIAL PREMIUM.
«10 for Sl,<MX» Assurance.
814 " ??'-',000 " I
S17 " ?;{.noo " I
«20 " ^»,()00 " ' I
!»23 " *i,ooa " '
This premium is payahlc oxci: f)Xr,Y. and is in addition
to the rejj;ular premiums indicated l>y the lollowiny table,
which are payable iVoin the issu»' of the policy. It is to be
collected l)y the aijent wixt receives the application, and it«
amount, less cost of medical examination, will be returned if
the risk be declined.
The renidar premiums, as per (altle, are to be remitted to
the Home < )ilice, uidess a special notice under the hand of
the SecretJiry direct their payment to be made elsewhere.
Quarterly j)remituns are regularly due on the tirst of
March. June, September and Decembir of each year, of I
which thirty days' notice will regularly be given. i,^
Cfit) »s
\
02
Apju'm!
IX.
To Krlntf tlip prrini M.. «»f tin* whole rncmlu'rHlilit dm*
itU tlnsc «liiys, thf jiinf ntu- '/ uiit hr tin t'lrn tjiuirtrrli/ pn-
miiim, liiit Hiicli II |iru|K»rli"i 'icrcnr um will rany lln' [Mtliry
to next n'uiiiiir <|iiiittri- diiy, wlu-n tlu' HrHl full iitiartcrly
prcinitini will In- iliu'.
If, huw«'vt'r, tlu' tliitf of isHiii>JM> williiu lliirly <liiys uf the
next rcmilar ipiaiur day, the fractional pmiiiiiiii will he
adilcd to the next full quartrrly itri'ininiii.
TIm- atnoutit of this lii-Mt |>ri>rniuni, «l«>tcrniinf*l hy tlM> ditto
of iKsiif, will lie cinlorsi-d (m the hack of each policy, and a
notice (hci'ciir will ht> mailed to the addrcsn of the entraiil.
Its payiueut iniiHt \>v ntJuU* hefore the |t<dicy will take etl'ect.
Should any prefer to rei,'idarly pay iitunial instead of
(piarterly preniiunis, the proportion for the fractional <|Marler
will he addeil to the lirst prcrniuni so paid, and a discouul of
two luxl oncdialf per cent, allowed.
No discount will he allowed (»n serni-aniuial premiums.
In order to a perfect understanding' heiwecu the Associa-
tion :in<l all its p(»licy-holders, evi-ry notice and receipt for
prcmiinns sp<'cilies what part is I'or Sa fit y Faiul, what part for
( 'i)Hl of fiiKii I'll lire, and what part for F.xjivuxi' nf Mniiiiiii'iiifnl.
Thus the policydiohh-r can always know what is heinj,' doui'
with his money, and if at any time he desires to test thu
accuracy of the lni<iU-ki'i'|>inLr, he can do so l»y en(|uirinir the
amount of hi^ crc<lils to all or any of the three funds, which
must corresponil with the amount of his receipts.
The Siifcitj Finiil payment Is ti'ii dollars for each thousand
dollars insurance, and is rcijularly payali'e out' dollar per
tpiarter per thousand: whererore tlu- noti<'cs and receipts for
the first ten quarterly premiums will cont.iiu an item of $1
per I?], 000 insurance, for this fund.
The a.ssured maintain the Mortnarv Kinid hv their pav-
niciits as Coxt of IiiHumnce.
The principles re;;iilatinn' the ratios of cost of insurance
at the several at-cs, and the amount constilutiuu' the normal
cost of risks, have heeu clcirly presented, and the following
tahle is hased on those principles and that amount.
The notices and receij)ts for every premium will contain
an item for CW of Insurance, the amoinu of which will he
1
7>M
rd
A
rb
"1
Ills;
s;m1(1
I lis tor
1 of U
lir.ilUM"
|onu:il
owing
liDtaiii 9
|ill be ^^
rp
f
DttniU nf Sufrty Fund ^ntrm.
63
1
1
(l{>t('rriiin*'<l by llir iikc, at last Itirtlxlay, when \\\v iioticot
aro wriUcii.
TIm* fiiltini Pirmlinn haviiiL' 'mtu paitl, tlu' KriuMfnf Mnti'
nifriiifiif i>« liniilr<l lo tlin-r dolliirs [mt aiitiiiiii, or Hi'vi'iity-Hve
LTiitH |>i-r (|ii!irti-r, on rarli tlioiis;iiii| tluHnrs iiiMiitiiKr ; wImtc*
fon> rarli i)oti<-<* aixl r(>(('i|il I'ur jirfiiiiiiiiis will coiitaii) ail
it<'in of Tor. |MT .*<I.O<M> iiiHiiranci' for lliih |iiir|ioKo.
Thus, for trn (|iiiirlt'rs, or iinlil llic Safi-Jy {•"iiml dcpoKit
of .*l<> |"'r >>l,(H»0 insiiraiiiT is nitii|>lt'tr<l, tin* noticr- and
r('<'(*i|)lH will contain tlirrc iti-ins, and lliercaftor lait two.
Aflrr tli<' policy has Imm-m rciri-tcrcd as of a Safety Fund
claM tor livt; years, anoilu-r item will lie added in the noti(*i>N
nnd receipts, Htntiny the anionnt of r;v*/i7 «-» Stifdtj Fund
illri(ltii<l. 'I'liis dividend may not l»e large in the earlier
years of the policy, hiil will increase as the policy growH
older, and in time will lie very valiiatde tu [terhisting mendtcTH.
With this (h'tailed explanation the reader can readily
an. dy/i' the (piarterly premiums stated in vlie following
talile, into their component elements.
Take age oD, >*l,()(t() insnrance, for example.
A policv holder reaches tlial age before he hiw completed
his Safety ^nnd deposit. His pri'ininm, as stated in column
A, is $'A.7'), and is analy/.e<l thus: —
Safety Fnn'l Deposit
Cost of Insiinmc
Kxpousc of Man
Totiil I
e
«•
2 (
nRement,
•rpmliim,
S.T
1 0(1
00
liy
.Another reaches that age after he has completed his Safety
I'^Mid lU'posit. His premium, as stated in column B, is
.152. To. iiiid is an'dvzed thus :
Cost of InsuraiK't',
Kxpciisu of Miinaj,'fm<'nt,
Total Pn niiuni,
82 00
75
Si
l!>
The table gives the premiums for one, three, and five
^ thousand dollars insurance, from which that for two and for
ilji four thousand can be readily computed.
a
jj^...^ .
OW— '*->^
3
ej<-''
rC (;t AniHntlir. i
s
1
j
<
TA-BI-iE
illU
Of Nntural Quarti^rly Prmiumx, indu'iin^' Exp'Uiso of NaaafMIMi
oVtT
iM't'-J
1
TlllHTY Ornrh*' IIXI'KMIt^Ml-K IN « .\!«AI»A. *M» TWKN T V-I'lVIC
1
1
NulllMIIIN '^T\'t'« \"XI> Tl IIMII'Ultl »
IMtl'll
Tlic Hiit« ty FiiimI l>«'|ioHlf ol' Hl» nil riii'li 141, OOO liiminiiii'ti
1
wnultl li«* <'oiMpl«'t*'*l '•> |i)i>lni( ii«'«'or<lliiK tii roliiinii* licutlfd
1 k V ' ^
'•,\" f'OK TI'IN {ir \llTi:i(*i. iilli<r uhli'li |mi> iiiciitN uuiild li«<
1
iiiH<l«« u«'«'<ir«lliii{ >o roliiiiiiiH Ii«'U(I«mI " II."
IIMN
«l,ooo
9.1,000 il.%,oon
A(>K.
— .V«»K.
>
^ 3 A. B -A. 13
|>«'r"««
— . . .^ -
i
••till'
into 21 «:» ift •-•1.1 §!»».•. ^51.1 vi:, 7.1 911(7.1 Mioji
own
'.'; .1 17 '.'17 It .11 « .11 1". H.1 ID Hrt v;
IIIOII
1
2» ;i ii> 2 10
.17 .17 11 01 10 0.1 'j:t
84 K21 i 2 21
0:i tt ti:( 10 0.1 11 0.1 '.M
2S 3 w a 'in
Oil on 10 M 11 1.1 ^.1
E
2A :J IM -J '.M
'.» 7.1 , <! 7.1 10 JI , 11 -J.I •J»l
I
27 :» '.^7 '2 '.'7
V m Ml 10 ;«.i 1 II ;t.i 27
,
I
'
n -i :!i •.' :il i» ii.'i » i»:i m .n II .v» :'s
2i>
.*{ :li '.» :w 10 0.1 7 o.i lo 7.i n 7.1 20
1
:«)
« ai» 2 :ii> 10 17 7 17 10 01 11 01 :io
llV»'H
81
8 4U i 2 43 10 'J.I 7 JO 17 H IJ 11 :il
■■!
of X
H2
8 47 i 2 47 10 U 7 11 i; .U I'J .'11 :»'-'
(j, (.||
88
3 ni -J .11 10 .-,:l 7 .i:l 17 1.1 l-J .1.1 ."..'J
84
3 .V» 2 .1A 10 I'hl 7 Cm 17 7.1 l'.» 71 'U
Vt'UI'
30
3 00 i 2 00 10 77 7 77 17 0.. IJ 01 :i-1
,s
86
3 63 ' 2 «3 l<i Mil 7 .V.I IH M 1:1 1,1 :»•'.
W 1 1
87
:» 117 'i 07 11 01 s 01 H :ii i:» :t.i :«7
^ TT 1 1 » .
88
3 71 'J 71 11 i:t H i:i is .1.1 \:\ m :',•<
|)U<*t
1
89
:i 71 'J 71 11 'J.1 M 'J1 lH 7.1 1:1 7.1 :!'•
40
;i 70 'J 70 11 .'<7 « .'17 IS ;c. i;i '.»,-» 40
41
.S h:» 2 «:i It 4!t •*< 40 !'• 11 14 11 41
! ^
42
K M7 'J «7 11 f.l « 01 I'.i :M 14 :11 4'-'
48
;i 01 -2 01 11 7:( N 7:1 10 .1.1 u r.ft 1:;
tiifii
44 1 01 ;{ fti IJ (i;( i» ():t .'0 (t.1 M (M 41
VIICC
45 Ml :t 11 I'J 1:1 '.»:<:< '.'0.1.1 i.i .1.1 -1.1
will)
46 4 l.i :i '-M 1'.' i',;i .• f.'.t .'i M \n M 4'".
; 47 4 :« :{ :ii i:» (•:. \n 0,1 -Ji 7.1 ' h\ 7.1 »7
fiiiti
4« 4 40 ;i Ui i:i 47 !•• »7 • 'J'_' |.1 17 4.1 4H
tliiit
49 1 11.1 :i i;.i i:< '.».i to ;i.i 'j:i -.m t,s 'j.i -jk
50 4 .s.'{ :i X,'! 11 i;i 11 !!• '-'1 K' 10 |.1 | ftii
1 .
Bl .1 01 4 01 11 o:! I'J 1.:; J.". 0.'. -2i\ 0.1 j .11
.12 n -jl 4 'JI M o:i I'j r,;i 'jti o.l 'ji o,l .v.»
f>:{ r. 4:{ 4 i:! Pi 'JO l:t '.i) '."J i.i .i.'i
1
.14 .1 <>7 4 r.7 17 01 1 1 ol "j:; ;i.i .14
1
M .1 0:t 4 O.'t 17 70 1 1 70 •-'» C.l .1.1
1
so f. -JI .1 JI |H ti;{ ir. ♦« 'jf. 0.1 .-.i;
i
87 f. ,11 .1 .11 10 5;i 10 .l;t 'J7 .Vi .17
(
TiH ti s:', .1 h;i 17 40 'JO 1(1 .I''
(.
ftO 7 10 , (i 10 IH 'u UO 0.5 "'0
1
1
60 ! 7 .10 ' fi R» 1 lU 77 :« 9ff 1 Go
1
1
1
N. B. — The ext't'ss of coliimti .\ over coliinm 11 for itn
i '
f (liiartcM
•8 <'()ii8titutc.H tln'Saf«'tv l''iiinl. fidin wliith ever iiirrfas- i
.>
...... _ K
5
ir*
5-»
nlr*um.t^
K.
^s.**"**
• »»^»-^»
1
*
^ip
fansi^emflot.
WTV-I'IVK
I lll<«M|-||M« «•
)ii^ Imm<Ii>4|
AOK.
7rt
M
ii:.
in
w
1»A
I.*.
I
|1 to .'I
•/,'
27
21»
:{f)
:<t
:«
:v.\
.<«
;n
.V'l
:i7
•.\'<
:i't
(•I
(I
r;
II
I.'.
!>'•
17
IS
t.)
r.ii
M
• •I
.'.4
.'ill
rr,
.".X
.'lit
fitr It'll
ilK'l«'!IS-
hthtih nf Sifih) h'uinl Sl/nhm.
1
iim <li\ii|rii)l« M ill Im> iiukIc Mil itll |)«ilirii'<« ri'tfiMicri')! in iiin cKfx*
over iivf vc;ir», wliit'li will hrufly r<**ltii'i< ilii> |iri>iiiiiiinN to
{H>r«i«iinu lurnilirrM. 'I'Uv |>rini-i|itil of tin* Sufcty Kiin«l will
Im> hm'iI to |»;iv iiti ctiilDWliii'iit <(ii (III* liiMt |Niliry in force of
I'iU'h Milt' liiiinlri'ij rt'ifittcr'i'il in miy i I:ihm.
hi viili'iitlx from lhi« ftiinl Mill lie ri'iichcil two yi'iiM i*iirli<'r
l>y i'uiii|ilt'iinu ilif •IfiMi'^ii ijiiriii); tht* y«>iir of iMitry, uidI (Iiih
iiiiv ini'iiilM't' iiifiy ill' it" III' ili">ii«'N.
INSURABLE INTCRCST
No |M»liry will lu' wriiii'ii in fiivor of or iis<4i|fn»'»| to jii»v
|i)-r<<on ti"! liMvin^' a Ii'umI Iii^iii:iI)|«* lnt«-rr>«( in tin- life of iippli-
iMinl. Miiri'iril woiin-ii will In- insiiii'il only in fivor of tlicir
own rliilijrrn, fxi'«>|>t wlifti tlic lu'iu-tiriiiry lia>« an actiiiil
niont'yi'il intercut in tin- pro)>o«i'il life.
Extra Premiums on Hazardous Risks.
Thi* exiitTifnoe of tin* " Tliirtv ()lH<'i;s " ^hows bevonii an\
qiicHtioii tliiit tli<> rink on fciniili* in ^r«*itt«T lliitn on male
livt'H Wlii'ii'luii', to |iri'si'ivi' »'i|iiity. iin i-.vtra pn'niiiiin
of >t'Vfniy I'l'iit-' |H'r i|uart<T [u-r thnii^anii ilolhirH iiiHiiraiu-t'
In chiii-^'ni upon all woiiirn iiiHiiri'd, until pa»t the a^r r( 50
ywarn.
Save in fxrcptional casi'^t, iiniiiarriril women ami women
who huvi' tu'ViT hail any i-hililri-ii will not ho iiiHiirt'ii nnlil
pttMt •*»<> yean* of u^^v.
VaC« I NATION.
No link of ilcath hy nmall pox will In- nsMiinuMl I'xcepi on
iMi'iuhiiw who have ht'i'ii t'tH-rti vi'l\ vaciinati'i!. Ihosf not
vaci'inatfil iit tiiin* of aipiicalion can ohti'.in vaccination
within iMi days, or thi'y will Ik? reipiircd to relii-v** the Ahho-
ciatioti III' lilt- risk of <lc:ith tVoin >^inii'! pox hy a claiisc to
that cited iiiMTleii in ihc policy.
lAini OF KXTKA ^I'AKTKKI.V I'llKMItMri, KOK KAi li IHolSiANU
iMil.l.iK.S KISK, I OK IIA/.AKI>iil > oeCC I'A I H l.\ .
I
HanKiiKf Mn.iter <»u TriilU"* »1 <w
HoHtiiiiui «-\tii( I'ri'iiiiiiiii.iti-li-riiiiiu-ii b\ iiulurt'ot' riHk,
< iK'tiiiMt (iiiunuracliirlnk;) i
I 'iri'uiur i»r Hii//. Sawyer, 2
( oinluctoi on l'u-<mMi^{ir Tiuins, I
(oiHiiiitor on I'rclLrhi. Mixi it or i'<iii.«truitlou Tiainii, 1
Krii|ili'y»' or l^ahortT on (oiistrui tlun Tiuiim 2
I'Jik'Mifcr on Kiver, liiikf, liull, nr Hay Sii'Hinurs, I
Kiiniiifor «»r titlifiOnkur of St'a i^leuiutTs i
Kn^'irn-er of Stutlonury Kni^lne — t-xlrii Pieinluin, deter-
iniurii Ijy !spei;iul cirouiiiHlHnci^.
(JO
OJ
(X)
50
uu
i
I
f
■^»«^
GO
Appendix.
; I
TaUI.K ok KXTRA til.ARTK.RLY PREMU'MS. — Con^inu^J.
Kxprt'ss McssenuiT on Tniiiii,
lUliermuii (iii'^liiirf or liiirluir;,
I'iruiiiun (City oaid I'irc Itipaitnu'iit)
Kininnn on Itivir, Lake, Oulf or liny Steamurs,
Liinilxirnian ihilxnitiii),
.>tuHt<r or Milt" "f Hiver, Lnki', (itilf, or Bay SteanierH,
Master or M'llf 11. MM-goinn Vessil or HlfaniiT,
Mall Hoiitc AkciiI,
Mint'rs in noii-fxplosive MIuom,
NiKlit Watelinian,
I'ilut,
I'ulici'nian,
t^uarryman,
Uaitsinan,
Stiwanl on Liikf (.r S'H Vessels,
Switchiiiaii,
Yard Master on Railroad
Extra I'reiniiiMi on other llH/.urdous Risks lixed by
special circunistances.
KI.SKS Nor AH Kl'IKli.
00
(M)
m
m
(to
00
00
0(»
00
mi
00
00
on
00
00
00
Hrakenian ou.Uiiilway Trains.
Ha r- Keeper.
I'rewer.
Huer-wanon iJriver.
Car-Coupler.
Cartridge-maker.
Dry (irlnder.
luijiineer on Locomotive.
I'ircman on Locomotive.
Furnace-man in Iron Foundry,
I'ouiiderin Iron Foundry.
Fisherman (deep sea).
Furrier- worker.
Liciuor Dealer (retail).
Powder .Manul'acturer.
l*yro»e(liiii>t.
F*eri;i. ~ion Ca[> Maker.
I'itman in Iron I'oundry.
Inuldler in iron Foundry.
Sailor (cumiMnn).
l'nder;,Monnd Miner (explosive).
White Lead Manufacturer.
\\\ other Fxtra-Hazardous Occu-
pations.
sy t»**»
•*'»»'l!Sl?|3
I
f
Continued.
1 00
1 (H)
'1 00
1 00
2 00
iniers, 1 (wj
2 00
1 (m;
1 00
1 no
1 50
1 00
1 00
2 Oo
1 m
1 00
1 0(1
il by
urer.
ulc»»r.
Hiiidry.
oundiy.
f r (explosive),
facturer.
[azardous Ocou-
•*«-»JS^