New-York tribune., 1873-03-15
LIFE INSURANCE.

DOkSED UPON 1T WHEN ISSUED
70 the Fdffor or TIE Trtbune.
SIR: The existence of life insurance in the
country Of its birth after than century Of trial.
aud Its remarkable prevalence In this country, su
clent evidence OF its vitality, Our country specially
proud OF its in this business its buildings are
the marves OF otes its accomplished work OF
dowing widows and orphans amounts already to more
than twenty millions annually, With fair prospect Of
increase. Yet there clouds about 1t. More
any other business probably it Processes equity
and oftener violates it, and almost always with i'm
punity IL has always been covered with what bears
about the relation to Its eproy docs to
the human organism, which worry little careful oonsid-
GRAFTON will show.
rsURABIE INTEREST
Legitimate insurance of life is for the benefit OF the
person persons to whom the death of the indVdua
assured would otherwise peeuniary loss. Its
lmi. naturalization Of such loss and u mas no
business to go any further The law OF Great Britain
does allow policy to be issued on any NE IN iaVor
of person who has no "insurable interest" therein
or in other words nothing TO lose pecunary by It's de
cease But IL does allow and our law does not lOiou
and this the fountain OF half the trouble that mas
afflicted lie insurance-the policy TO continue in force
after the insurabe interest has ceased to exist After
an insured person has become too old TO labor pro
ductveIy 1t often happens he becomes dependent
for support upon the benedciares OF his policy; that
irrespective of the claim the policy, his death would
be pccauiry gain 10 them The insurable interest has
Dut become reversed 1et, 10
say in law practice has any provision ever
been made for the timely and equitable cancellation Of
the policy this account Thousands Of policies have
been and continue TO be- surrendered on tins accounts
but the surrender has never been regulated any
tOna scientific principle. Thus policy which was
perfectly legitimate and exceedingly useful at It's incep
tioa may continued until it degenerates into sheer
bet or, what worse. into premium for murder 1t
Of this abuse of it, perhaps, that the old
French Law prohibited life insurance altogether
Our companies seldom issue policies on lives over 65
aud Dcycr one over IS 10 would be contrary 10 law
In ordinary cases. because there would be no insurabe
interest Hence the proper for life insurance Is
mainly between the OF % aud 75 aud policies should
beyond the latter age The evil Of their cover
ing the period Of second childhood little felt yet in
this country account of the recentsorgn OF the bust
neSs here In the mother country IL Is something ter
rlGc.
THE NATURAL PREMIUM.
Apart from the expense OF conducting the business
the cost oi rslring 81 OOO for year at given age
will be :iluy dollars there Will be deaths in one
year 1000 persons nsurng that SUN at that age
The average fact is that not 10 will die out OF
1000 at - in year. and nearer 100 out OF the same
number 35 that the premium to insure $1,000 one
year be than 10 times great at IS as al 25
the lives being equally uaCXcrptiOua6le. Hence If
company agro insure person the same sum, from
year to year from % to IS. the annual premium
must naturally increase from year to year in the
an average fact, this natural premium
VIII h, exhausted ny the cost of the
the end Of every no reserve being left
or needed This is on the face OF 1t. very simple and
nice method OF insurance, and at the West people have
gone Wild about It, having much for their
Inadues, the defects Of the old system But If the
company to carry such insurance for long or
indefinite term irrespective OF the health OF the insured
the OF each succeeding on the re-
cep Of the natural premium due to the aee the healthy
subjects. discouraged by the increase Of the premiums
and having nothing forfeit by discOntnuanCe, will
drop of the company and leave dspropOrt!onate
number Of sick to be insured that the company
must inevitably fail
THE ARTIFICIAL OR LEVEL PREMGCM.
The coutriyance by which this difficulty is obvated is
IS substitution for the series OF natural increasing
premiums Of equivalent constant level one, regard
being had TO certain assumed rates Of mortality and
interest Tais, OF course must be 50 much more than
enough first that the overplu being held in reserve
with its Interest will make up all The deficiencies Of
the later years Of the term.
Two cases arise: First, of term insurance when the
company to pay the indemnity If the insured pays
the premium annually in advance. aud dies within a
specifcd term, bat nothing IL he survives it, Here
moderate accumuates during the first part of the
term. which is wholly exhausted during the latter part
But few persons. however long the term wish to be left
with nothing worthless expired policy at the end
OF IT, that insurance, any terms, is little
sought for.
The second that where the company, in cOnsd
GRAFTON OF the level premium paid annually IN advance
agrees pay full insured whether the person
dies during the survives it, This, far the
company is concerned is just the same as If he were
sure die in the last of the term in which case
the natara premium Qn advanceJ for that year would
be the face of the policy discounted for one year. This
Is called the endowment insurance policy. For this the
equivalent level premium for short term Is far greater
than for a term insurance OF the term, but for
very long term it is inoOnsideraby greater What is
called "whOe life policy is always calculated as an
Tor 10 New-Yok. at 96l The net level annual premium
to insure 81 900 payable at 100 or previous death
k4 72 aud for payable at IS previous DEATH
i, only So sc, difference OF 81 cents per annum Here
is reason enough why whole he policy should never
sought by young But II grieves one 10 say
carefully this reason has hitherto been concealed
from young men.
the natural increasing one has two very Important |
effects OF which is. that reserve fund has to be
created on policy This necessity has been mostly
ignored the other side OF the water, aud the cOnse
Guenee is that certain Lord Westbury, in London, at
ton OF forty life insurance corporations the process OF
What il called liquidation. Some years ago MT Giad.
he instituted the benefit OF people or slender MEANS
Government life insurance 10 limited amount thr0ugh
failure but the premiums being high, no surplus return
ing aud proper surrender value stipulated the peope
IN American insurance has any superiority over
British TO stability, II Is because the necessity ora ol
scrbed has been fully recognized mere
and haS 10 some extent been enforced by law: -,
Another equally important effect which, tIll lately has
moi been recognized anywhere. Is that II necessarily
analyzes policy into two distinct Kinds OF insurance
one which done by the company ana the Other may
l,e denOminated gensurauce. Tue latter Will be hrst
sRLFINsURASCE.
r, the natural premium to insure $1,000 one year at
given age is So aud instead of for certain termwith
e,aowment level premium oflsiO is substituted, OF
ch say S2 must by deposit land interest be n reserve
of the end of the first year. the person payng this