New-York tribune., 1872-12-07
LIFE INSURANCE.
TIE MUTUAL LIFE" INSURANCE CON-
PANY OF NEW-YORK.
A CIRCULAR.

To tiC Policy Holders ~ INC .da'"~ HVo !"
siranoe COapaHg Of NeS York; Ihe trustees oI ''''
Company having after critical examination Vi '"o "V
vesrs' experience OF the Company and on mature deo
r,,io, unanimously resolved 10 reduce the
r,,e of preium for insurance Il Is proper In thelr oe
half that the existing members should De ihior"o"'
the causes which have led 10 this important measure
and OF the effect which It will have upon their interests
The rates OF premlSm first used by tnis company "e0
borrowed of necessity from English companies In the
wear 1879 alterations and reductions were recommehueu
by Mr. Charles Gill; the first setuary of the Company
and adopted by the Trustees. In 1868 Mr. Sheppard
Homans then actuary, proposed further correcuonS'
many OF them reductions, in the Table OF Rates "V"'
after investigation, adopted on ms recol"ine""
ton e,,
In a recent statement to the pubic OF the nn'"''''
condition OF the Company on the iS OF OCTOBER as''
,n,h aro iven tine results OF some 80 years active
lnsiness n Il stated that OF all the cash premium re-
pipts nearly 60 per cent Of the same has been re'uneu
70 the poicyhoder Far the greater part oil TINS atso
r,rn consisted Of payments the part OF the assured
over and above the actual cost OF the assurance "h"
the premiums were intended TO secure
THEORY
To understand this it is promised that the business OF
tho Company founded upon what Is called the Amer
lean Table Of Mortality and four per cent interest TOT
money The table does not materially differ from otherS
ia USE except in the assumption that OF given nunoer
now living at the age, say will survive the age
9s
By the principle Of life contingencies, II Is found that
the true amount TO paid at the beginning o every
year 20 assure a payable nj DEATH Is VARIABLE oenE
smaller at the younger and greater AT the ouet al
THIS variable ranges from 20 at age 25' to s96l 81 at
are o. to insure 81 OOO the suppOstion that the man
sycment Of money will be without expense. These yar
able amounts are called the annual cost OF insurance
But as an business operations attended by expenses
certain amount usually percentage OF these costs, is
added aud the result is another series of variable
amounts called Office premiums.
But 10 pay a constantly increasing premium every
year would be attended by serious lcouyenences, and
IL has become the CUSTOM in consequence for the Com
pany to charge aud the assured pay xed sum every
year OF which the value such that its ultimate effect
will be the same that OF the variable payment 1t Is
kind Of average, being too large at the younger and
too small at the older ages. The practice OF the Com
plny TO add forty per cent of the net rate to
cover ordinary expenses Then taking the age s5 as an
example. we may writes
Net premium. .................. SIS 81
Forty per cent...--...----.-.. "a
Annual office premium ...... $40 80
THIS SUM Is made OF t rec distinct pare, namely
]. The amount u must contribute tO death claims,
for the first ear called the cost Of I"slr0rce dis
counted - %
. The Reservc or iund which must be held nv the
Company Co provide against the deficiency III the
net and uulfO IN premium 20 pay its contribution
10 . TSs ,..Sm1e T' 81 ,sa s9 t, ss. but @ PEI cent ae
3. Provision iOr early expenses forty per cent of
Premium before. %
This premium i competed in advance from assumed
rate Of interest and OF mortality II therefore, the
theoretical premium, but must nevertheless be paid by
the assured The assumptions made N its construction
sail .or the largest sum which believed to be
necessary.
EXPERIENCE.
In uractlce however the Mutual Life has found this
premium much larger than necessary, IN every year
Of s existence To determine what surplus accrued in
any gwen year. the premium resolved into ITS
IuneHt paris as described and the overpaymcas
separately computed, with the following results,
namely:
First. Only about threeQuarters OF the which the
premium contributed 10 pdy death CLAIMS was needed.
Toe remaining nequartcr surplus.
SecOHd The interest has been from SIX 10 seven per
the instead OF fOur cent, assumed
Ia!s excess ha- contributed largely To surplus
Tird The ratio of expenses 10 receipts during the
whole existence Of the Company mas averaged ONLY ten
per cent. and, during the 1871 was less than eight
per cent and the provision Of forty per cent or the net
premium expenses has therefore been much in excess
what required The surplus from this source has
been very great.
The result is that large dividends have been returned
b. policy holders from their Oyerpaylnents.
Tue majority the members have left their dividends
with the Company TO accumulate III the form OF rtVer
kiInaiy additions to their policies.
The Company has now been in existence thirty years
IL every OF these thirty IL has Issued policy
t0 person aged 3j who is now living, and who has pad
slCh years premium full, and has LETT his dividends
OVcrpdymentS 10 hls circuit III tne lOIh O auutODs
% his policy. -
Tue ratio OF the present cash value Of the additions
now credited OF the policies, to the amount Of
money paid by each, will be found opposite the years