The Dorset County Express and Agricultural Gazette.
Dorchester, Dorset, England, 1865-05-16 00:00:00

Corr 05 poutt en re.
ASSUR kNCE AND INSURANCE.

TAP:ITER iv.
AN IMPROVEMENT Ii LIFE ASSURANCE.
To the Fdtfora.

OBSERVING that you are publishing a series of
articles on the various kinds of business done, and
advantages offered to the public by existing Inane ince
Companies, it lias occurred to ine that the following
novel feature, not to my knowledge practised by any
Insurance Office, may be interesting to your readers :
It is a well-known objection in the present practice
of existing Insurance Compass a, that if si life is not a
first-class one, that is one whose family history is
defective, or who hag otherwise some tendency to
organise disease, an addition varying from five to 15
years is made to the age, if accepted, in order to place
the life on the same footing as one accepted at the
ordinary normal rate. The premium will therefore be
considerably augmented by this addition of age, and no
reason will be given for making snail addition. The
general consequenee of this is, that the life refuses to
complete the Assurance, and in all probability proposes
to another office with no better success. This defect I
propose to remedy thns :
"If the life is not so had an to render his rejection
absolutely necessary for the safety of the office, let him
be accepted at the ordinary rate of premium correspond-
ing to his real age, and if be survive his full expecta-
tion, as deduced from the Table of MortalitY, on which
the Company's Tables are based, the Company shall
bind themselves to pay the full amount smeared at his
decease. But should he not survive the fall period of
his expectation, then the Company shall deduct from
the sum Assured the present value at compound
interest, at a given rate per cent., for the time he falls
short of his expectation, of an annuity equal to the
difference between the premium charged, and that that
would have been charged, had his age been increased by
the addition recommended by the doctor at the time of
hie examination."

For example—A person aged 35 next birth-day goes
to an Insurance Office, and makes a proposal for an
Assurance of £lOOO with profits, and undergoes the
usual medical examination, when, in consequence of
some defect in his family history, or other circumstance,
an addition of seven veers is recommended to his age by
the doctor, and the life is accordingly accepted as ore
aged 42 years next birthday, and the premium charged
accordingly. . . _

Now the expectation of alife aged 30 next birthday is
by the Carlisle Table 31 years. Therefore by the above
scheme, I propose, in the event of the life hurviving
this period, that is if he dies at any time after attaining
the age of 66 years, that the Cornpany'shall pay to his
representatives the full amount Assured ; but if he dies
at any time before he completes his 66th year, say at
the end of 20 years from the date of the policy, then the
Company shall &duct the present value of an annuity
equal to the difference betw, en the premiums for the
Assurance of £lOOO with profits, at ages 42 and 35 years
respectively, for the n.xt 11 years, being the time the
life falls short of his full expectation.

Lad.
Thus the premium er cent., with rofits I 7 4
at age 42 -------- f
Ditto Ditto • 35 215 3

Difference per cent. 0 12 1
Therefore the difference in a £lOOO Policy 6 010
And the present value of an annuity of £6 Os. 10d. for
the next 11 years, £52 18s. 7d. which is the sum to be
deducted from the sum Assured, leaving a balance of
£947 ls. sd. to be paid to the representatives of the
life.

By thus putting the equity of arrangement upon the
Assured, the difficulty at present experienced is obviated,
and there can be little doubt that if put in practice
by some respectable Company, the result must be
equally advantageous to the office and the public.
I am perfectly familiar with the many excellent plans
of Assurance advertised by existing Assurance
Companies ; but however attractive many of them may
appear to the F üblie, I am fully persuaded that not one-
half of them will answer in practice; they may look
very ingenious and scientific in print, but they are not
sufficiently understood by the public (nor is it possible
to make them understand, without they possess at
least the elements of an actuarial education) to induce
them to effect Assurances on those plans to a sufficient
extent to form an average, without which no office can
do business of any kind dependent on the doctrine of
chances with any certainty of success. Even in the
most common kind of Assurances, viz., that over the
whole of life—unless a Company do a business large
enough to get an average—the chances are against its
success, inasmuch as the premiums charged for such
Assurances are calculated from a table of living, com-
mencing with not less than 10,000 lives, consequently
I do not think that any office can consider themselves
safe till they can obtain an average of 1000 lives and the
sooner a young Company can get up to this stanlard the
better.

I have in contemplation various other new and
improved schemes of Assurance, and modi6,atione of
some of the beet existing ones, which I shall have
pleasure in sending you for publication should you con-
sider them worthy of a place in your paper.
I am Sir,