The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1868-09-19
Life Insurance.

| To the Editor 81 me Ifto"te'
Sir.-A new life insurance organization
hos been started in New York-not an I'M
common occurrence but this one is started
m new principles the cooperative plan) !,
and received notice in your journal, and
ut least one other of the papers of this city.
| A journal like yours, known as the cham
pion of all cooperative movements, should
be slow to sanction a system which will not
bear sound and careful investigation; and
life insurance in particular is subject that
that we cannot we'll afford to trif1e with. 1t
may not therefore be improbable to devote
a few moments time to the investigation
of the theory upon which it operates.
This new company or society is COM
posed of persons who, having passed
the requisite medical examination, have
paid small fee, and thereby become mem
bers of the society. The society is divided
into classes of 5000 each, made up of mem
bers of certain prescribed ages-Class D,
for instance, being composed of 5000 per-
sons between thirty and thirty-fve years
of age. Now, if member of Class D dies,
each surviving member pays one dollar
into the society for the benefit Of the heirs
ofthe deceased member, and q new member
is admitted into the class to take his place.
Nothing can be more simple. The expense
of such insurance is stated to be about
thirty dollars per year. No system can
furnish cheaper rates. But is this state
ment of the rate correct? That is the pro-
blem, and that is what has called forth these
inquiries. When the above scheme was
first presented it seemed one of the hap
-. - fo,, ii
and on consulting the books of one of
our oldest companies it appeared that
out Of 52,3S4 policies in force last year
there were hut sol deaths, which would
make about twenty-nine deaths in 5000
members, and according to this calcu-
lation the rate of the new Society seems
to be correct. But let US look further.
Take class D, composed Of members be-
tween thirty and thirty-fve years of age,
their expectation of life Is thirty-one years,
which would make an average for the
whole thirty-one years of l6l deaths, and
consequently SlGl expense to'each member
on an average each year. Or take it i'll
another way. If 5000 members die in
thirty-one years, and the heirs Of each re-
ceive $4,000, ii will take s25 900, 900 to pay
them. The same number of members, pay
ing thirty dollars per year for the same
time, would give but 81, CSC, goo; where is
this deficiency to come from? 1t is plain
that the number of deaths for the first few
years may not exceed the supposed num-
Der thirty, but all these 5000 members
must die in about thirty-one years, and the
| place Of member who is forty-tive years
old when he dies is supplied with one who
is forty-fiye or fifty years old, not with ort
| of the original age Of thirty or thirty-hve
| what, then, must be the number OF deaths
and consequent expense to each member O
this class when they reach the ages between
ffty-fve and sixty? And this presents
another feature: the rate is small an(
easily paid while one is in youth, strength
and prosperous business; but as the clas
grows older, the rate increases, until, whel
he is old and untitled for business, it be
comes burden which he is wholly unabl
to carry. Again, if at any time he wishe
to cease making payments, he cannot sci
out his policy to his association for he ha
no interest beyond what he retains by con
tiruing to meet the demands occasioned b,
the deaths Of other members. These ar
some of the objections that present them
selves to this form of life insurance. The,
have been prompted by no hostility to tn
company, but merely as the result Of al
investigation into its workings, and hay,
been presented in this manner, that if Their,
are any errors in reasoning, or any figures
to be shown by the founders of this new CO
operative movement that will correct TIT
results arrived at above, they may presen
them to the public, and prove that theil
system is truly q benefit TO the community
and able to stand the test Of a candid an(
open examination. am, &C., T. 3. S.
Ne10 Yorh, September ], 1868.