The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1873-02-25

all correct when he insinUAtes that only
one company has adopted my plan, b
e1use Il has $50 very little margin for ex-
penso" The contrary will appear by
and.by. 1-..r7 .s
have not urged but simply offered al
u sin offering, freely TO all companies who
will take 1t, a plan founded on equity, to
which no objection has yet been offered
except this. II does not in any case give
or provide for commission TO the agent
larger than the company and the policy
holder himself can afford, and therefore
The agent toiH not ts0rk it. The present
fact is that on any other plan, in any com.
pany, the agent gets larger commission
lust about in the ratio that the policy Is
worth less to the company, and 80 large
on short terms that no man but fool or
a dupe eper takes one Why, will be
palmer by.and.by. ..-..
TIE ordinary mind commonly fails to
understand the subject am talking
about, because the law Of human mortalt.
ty extends over 80 many years and Is COM
plicated with compound interest. The
equities would be Just the same in kind II
liio were shorter and money yielded no in.
terest. Hence the easiest way 10 under
stand them will be to take . hypOthet
law Of morality confined to very small
number Of years and suppose the rate Of
interest zero. Let us for example suppose
that life could last at longest but four
years and that one out Of four will die the
first year, one out OF three the second, one
out OF two the third and the rest In the
fourth year. This law Of mortality Is ex-
pressed by the series IA, Is, 10, IL.
Now If we take a mutual life insurance
company Of four members all entering in
the first year Of age, each insuring for
81 900, the normal or natural net pre-
miums will be as follows:
Ist year $3.50.
ID year $8S3 &c.
sd year $500
4th year $1,000.
This increasing series Of premiums
would be Objectionable for reasons too
obvious TO mention. how can we make
the premiums constant or level! Obvious
" as much must be paid one way as the
other TO meet the aggregate Of death
claims which will DO $4,000. OF the lev
ell premiums, whatever theymay be, there
will be four paid the frstyear, three the
second, two the third, and one the last,
In all ten, so that each must be $500.
This will give the company $500 the frst
wear beyond the one death claim and OF
course It must be held in reserve for tho
future. The three premiums paid the
second year will leave 500 to be added
to the reserve from tho first, making It
$500 The income Of the third year will
be $500, making Unnecessary to take 5000
from the reserve, thus leaving 1t $500,
which with the $500 received the fourth
year will pay the last death claim, and
would just as well pay It, II the man
should continue TO live, in violation Of
the law. AS to the premiums and nee
essary reserve from each, under this law,
it would make no difference whether the
number entering the first year were four
or more. Each living member must then
have q reserve as follows at the end OF the
ist year $2OO,
ID year 800,
Sd year 500,
9TH year 81 CO
This Is as much as to say, the party |
paying $500 the FIRST year, compared
with one paying the normal premium Of
$3.50 for $1,000 of insurance from the |
company, really iRsures himself for 5000,
and the company only insures him the
$500 ut the normal pre-
MUM Of I or 5000. Tho next year he
insureS himself $500 and pays the compa.
nv the normal rate Of l.3, or $500, for |
carrying the complementary risk OF $500. |
The third year be ENSURES hiHlSeH 5000,
and pays the company the normal rate
OF 10 or $500, Tor carrying the
complementary risk OF $500. The
last year be inSureS himself the whole
$1,000, for II there were any number |
Of living members, entered subsequently,, |
not one OF them would have to contrib
ute dime to his claim. And let 1t be
observed that the resSr0S Of a living mem
Der never has TO be touched TO pay the |
claim OF a dead one. That Is always
made up out of the normal insurance pre-.
miums OF himself and the living. mem
bers that year, and his ,0Ion reserve, or
self inSurapco. Thisisa financial nscess'
ity Of substituting constant or level pro-
MUM for the natural increasing premium
which admits no reserve out Of the net
premium. 1t does not become any less q
necessity II legislation steps in and COM
pels 1t.
Under such statute, at any rate, the
contract naturally resolves itself into two
things very distinctlin kind, and which can
not be coniounded or left mixed up, when |
policies Of different terms and conditions |
arc issued, without making the widest
work with equity. grF.h.
Distinguishing the successive self'insu'
RANGES from the insurance by the compa.
ny, VIC have under the level premium the
two following series:
SelfInsurance. Ins. by Co.
Year. Deposit. Sum. Premium Sum
! 500 500 500 $so9
) sos 100 800 100
40 1900 % 10