The central Presbyterian. [volume] (Richmond, Va.) 1856-1908, 1869-03-31
For THE CENTRAL PRESBYTERIAN.
SYSTEMS OF LIFE ASSURANCE.

The proprietary or stock Life assurance
companies claim an advantage over the mu
tual societies in two respects. The first il
in the guarantee which the capital of tn
company furnishes the assured, for the pay
ment of their policies when due. That
small capital is necessary, in the beginning o
the business, so as to provide for the posi-
BILE occurrence of death-claims before th'
premium income has sufficiently accumulated
is agreed by all; and such guarantee funt
is usually provided, as the basis of opera
tons, by mutual companies. But they as
sert that the laws of mortality are so fxeC
and unvarying, and the principles of the bust
ness so well established, that to society
sustained by reasonable number Of policy
holders, and managed with ordinary skill
and prudence, the fund arising from premi
ums is abundantly sufficient to guarantee al
claims upon it, so that the possibility of {
necessary recourse to the capital fund may
be left out of the account, and that fund is
therefore, subject to no risk whatever.
The other advantage claimed by the pro
prietary companies has respect to the man
agement of the business. They assert thai
the pecuniary interest which the proprietor'
have in the success of the business is guar
antee of skill and efficiency in the manage
ment. which the mutual system cannot com
mand, and which fully compensates the
assured for the dividends claimed by the
proprietors.
The advocates of the mutual system reply
that the control, under their system, is in the
hands of the assured themselves, to whom
legitimately the whole surplus of the busi-
ness belongs, as by them it was contributed
that these contributions were made under
the influence of the hottest and mos. power
full of earthly affections; and their zeal and
faithfulness in the management are guaran.
teed by pecuniary interest in the entire
proceeds of the business, inuring to the
qualification of those affections, by the con-
tinual increase in the amount consecrated to
the posthumous endowment of the heirs
and that certainly these combined motives
will be more powerful and trustworthy, than
the fractional interest which the proprietors
claim in the pecuniary results of the busi-
ness. They, therefore, assert that so far
from the proprietary system having advan-
tages to compensate the assured for the di-
vidends to the proprietors, the reverse is the
case,-that the proprietary system degrades
the business from its character of holy and
unselfsh benefcence, and converts it into a
system of money making for the proprietors
and that under the influence of the motives
thus confessedly active, there is danger that
the eager pursuit of present gain to the pro-
prietors may sacrifice the security of invest
ment, which should be the first and para
mount consideration in the management of
funds so sacredly bestowed. The argument,
however, we do not propose to follow.
Another classification of companies grows
out of the questions connected with the sur
plus income of the business. 1t is that of
companies which require the premiums to be
paid wholly in cash, and those which accept
part payment in cash, and the balance in
notes of hand or charges against the policy.
The advocates of the cash system commonly
object to the other that by leaving their as
sets thus scattered in irresponsible hands, -
the "note companies" endanger their own
solvency. This objection seems to be ground
less so long as the aggregate amount of their
cash assets is greater than the cash value Of
their outstanding policies. There is reason
to fear that some of the note companies are
verging upon this line. The great objection
which justly lies against the note system is,
that it is deceptive in its character; so much
so, no doubt, as often to mislead insurers
themselves, as well as the assured. Life as
aurance is simply system of prudential
investment. And no art has yet been de-
vised by which men can invest promises, and
in return receive them transmitted into cash.
Life companies have not the. gift of Midas,
to turn what they touch into gold. And if
their patrons imagine that they can provide
for their bereaved families when they are
gone, by investments of that kind, they may
never be undeceived; but their families will,
when instead of bread they receive stone;
instead of money they receive back again
these promises to pay. There are other oh.
ections to this system, which, however we
shall not now discuss. In nothing, however,
is the maxim "Pay as you go, more imper-
ative, or the undesirable results of it's viola
ton more inevitable than in life assurance
Another point upon which there is di.
versty of action among the life companies,
is as to the mode of the distribution of divi
dends. The dividends, as We have already
stated, are the distributive shares of the
policy holders, in the surplus of the premium
fund. beyond the amount necessary to pay
the policies, as these become due. Former
ly, these dividends were distributed to the
policy holders, upon what is called the per
centage plan, that is, in proportion to the
annual amounts of the premiums severally
paid. In several of the best companies, this
system is now abandoned for what is known
as the contribution plan. The object of this
plan is to distribute the surplus as accurately