The New York herald., 1872-12-07
FaE MUTUAL LIFE INsURRNGE COMPANY OF
NEW YORK.

10 rBE Policy H0LDBHS:-
The trustees Of this company having, after
CRITICAL examination OF the thirty years experience
Of the company and on mature deliberation, unani-
premium Tor insurance, IL IL proper in their benalf
that the existing members should be informed OF
the causes which have led to this important meas
ure, and oil the effect which IL will have upon their
interests.
The rates OF premium arst used by this COM
pany We're borrowed, OF necessity, from English
companies In the year 1853 alterations and re-
auctions were recommended by Mr.. Charles Gill,
the trustees In 1868 Mr.. sheppard Homans, then
ActuaIy, proposed further corrections. many OF
investigation. were adopted on his recommends
ton
In recent abatement to the public of the inan-
cial condition OF the company on the st OF october
last, in which given the results OF some thirty
years. active business 1t Is stated that OF all the
cash premium receipts nearly fifty per cent OF the
same has been returned to the policy holders. Far
the greater part OF this large return consisted OF
above the actual cost of the assurance which the
premiums were intended TO secure.
THEORY.
To understand this it is promised that the bus-
ness of the company Is founded upon what IL called
the American table OF mortality. and four per cent
differ from others in use. except in the assump-
ton that OF given number now living at the age,
say 35, none will survive the age o.
BY the principle or life contingencies it is found
that the true amount to be paid at the beginning
ofevery year to assure sum payable al death Is
variable being smaller at the younger and greater
at the older ages. This variable ranges from 81 70
at age 25 TO S00 "a at age 95 to insure 81 600 ON
the suppOsti0n that the management of money
will be without expense. These variable amounts
are called the annual cost OF insurance But az all
business operations are attended by expenses. q
certain amount. usually percentage OF these
costs Is added, and the result is another series OF
variable amounts called ONCE premiums.
But to pay q constantly increasing premium
every year would be attended by serious incOnve-
niences, and it has become the custom. in conse.
to nav a liked sum every wear OF which the value
is such that its ultimate effect will be the same as
that OF the variable payment II Is hlnd OF aver
ut the older ages. The practice OF the company has
been to ada forty Of the net net rate % to cover %
an example. we may wrtte:-
Net premium 81
Forty per cent. "a
Annua. ONCE premium. :. $40 50
This sum is made OF three distinct parts.
1st--The amount It must contribute to death
claims for tho first year, called the cost OF
ad-Tne reserve or fund which must be held "
by the company to provide against the def
cheney in the net and uniform premium to
pay Its contribution TO death claims at the
higher ages. lIhs assumption IS that fSs ..s
.-rrdvisioS or yearly expenses, forty per = .
cent OF items Rnd 2........................ "a
oscs. ..r- ~.
Premium az before. e.................... ...$2G 80
This premium is computed In advance from an
assumed rate OF interest and OF mortality. 1t is,
e"Sloiv' enO euSVIctiC0i pIeuiluuI, Uut IuuSt
nevertheless be paid by the assured The assump-
ti0ns made in its construction call for the largest
sum which was ever believed to be necessary.
EXPERIENCE
Ia practice, however, the Mutual Lille has found
thlS premium much larger than was necessary in
every year OF Its existence. To determine what
surplus accrued in any given year the premium
was resolved into It's component parts. as above
described, and the over er-payments separately com.
puted, with the following results, namely
Fust-Only about three-quarters Of the sum
which the premium contributed to pay death
claims was needed. The remaining one-quarter
was surplus.
Sscond-The interest has been from six to seven
assumed. This excess has contributed largely to
surplus
Thiru-The ratio Of expenses to receipts during
the whole existence OF the company has averaged
only ten per cent, and during the year 1871 was
less than eight per cent and the provision Of forty
per cent of the net premium for expenses has here
tOfOre been much in excess OF what was required.
The surplus from this source has been very great.
The result is that large dividends have been
turned to policy holders from their payments.
The majority OF the members have left their divi-
dends with the company to accumulate In the form
or reyerslOnary additions to their policies.
The company mas now been in existence thirty
years. In every of these thirty years IL has
issued policy to person aged thirty -flve who IL
now living and who has paid each years pre-
MUM in full and has left his dividends or Overpay-
ments to his credit in the form OF additions 10 his
policy.
The ratio OF the present cash value OF the addi-
tiOns now credited to each oil the policies, to the
amount Of money paid by each will be found 0ppO.
site the years designated in the following table =