The New Orleans bulletin. [volume] (New Orleans [La.]) 1874-1876, 1875-10-20
THE NEW DEPARTURE IN LIFE As.
SURANCE.

oOAANSLs
In order to understand the reform in life
assurance inaugurated in this city by the
Provident Life Assurance Society, of which
the Hon. Geo. Walker, of Springfield, Mass,
is president, and Mr.. Sheppard Romans, for
many years actuary Of the Mutual Life Insu-
rance Company of New York, is vice president
and actuary-a knowledge of what is tech
nically called the % reserve" is necessary. II
is we'll known that man who assures when
he is fifty y ars old pays more than one of the
same age who took assurance when he was
younger.
The man of so who took assurance for $1,000
when he was rs pays $40 SO per annum,
while the man who begins at SO must pay
SAT Is. Both men are SO, but the one pays
more than twice as much as the other to as
sure the same amount. Now, take a thou
sand persons at 25 years Of age who "pass
the examining physician, and it has been
found that the payment of 81 70 by each will
provide fund sufficient for paying $1,000 for
every death that will occur among their num-
Der in the first year. The pure assurance
portion, therefore, of the annual pre- MUM of
$40 SO charged at rs to assure $1,000, is 81 70,
which leaves $12 10 to be accounted for.
But the policy holders do not come together
of their own accord, and make all the neces-
sary arrangements for the selection of risks,
the issue OF policies, and the receipt and in
vestment of the premiums. This business
must be done by company and the COM
panys expenses must be paid. Hence We
must add to the 81 70, which is the pure as
surance part of the premium, such a sum as
experience has shown to required on con-
siderable volume Of business for meeting the
cost of its conduct This amount in the
case we are considering is SIS SO, and it in
cludes q provision for "adverse contingent
cies," which are risks that grow out Of posi-
BILE variations from the mortality tables" on
which the premiums are based, or out of ex-
ceptional conditions of the money market,
such as very low rates of interest, or out of
causes which may greatly increase the death
rate, such as pes1lence or famine.
Now, adding SIS 68 for "expenses and ad-
verse contingencies to the 81 70 for assur-
ance we have S13 3S, which still leaves
IS 81, or nearly third of the annual pre-
MUM remaining. Thisi is the preserve" and
it accumulates year by year, compromising
interest semi-annually, to meet the greater
expense of assuring the life of the policy
holder at an advanced age, when the uniform
annual premium in itself will be insufficient,
or, in other words, to enable the company to
assure the man when he is SO years old at the
rate for rs.
The Provident Savings Life Assurance So
ciety treats the reserve" as ''trust de-
posit," which can be withdrawn in cash by
the policy holder when for any reason he
cancels his policy. The reserve has hitherto
been forfeited on the failure of the policy
holder to pay any stipulated premium, and
he has found himself deprived at one blow,
both of the protection OF life assurance and OF
all the accumulations on his policy. This by
no means unusual hardship, sometimes suf-
fered under the most painful circumstances,
has done much to make life assurance un-
popular; and of late years most Of the COM
panies have paid-up policies-always less,
however, than the whole of the reserve would
purchase-to avoid the odium of confiscation.
The Provident Savings Life Assurance So
ciety is alone in recognizing the policy hold
ers ownership of the reserve (Which grows
out of his own over-payments), and In agree
ing with him that when he frees the company
from its liability to pay the assured amount,
he can withdraw the accumulations in cash.
But the chief advantage of the reform inau-
gurat. by this society is to be foundin its
offer Of assurance at the actual current cost,
each year by itself, the policies being renew
able at the close of any year as often as the
holders may wish or need, without new med
ical examination. Under this plan there is no
reserve to accumulate, or to be liable to con-
assurance is rendered as ineligible and as
equitable ss fire insurance. You .'pay as you
g., get what you buy, and stop when you
choose" And, to recur to the illustration |
with which we began, if the 81 70 is found 10
be a larger assessment for death-claims than |
the deaths require or if the SIS 6S
provides more than is necessary for expenses |
and contingencies, the surplus for each policy |
can either be withdrawn in cash by the policy |
holder, or applied to the next premium if he
desires to continue his policy. The premium
increases somewhat year by year, but assur-
ance can be had in this way for an extended
term of years cheaper than by the old method,
and without any of its complicatic ms. This
is the assurance which the various State
Commissioners, and such eminent actuaries
as Wright and Fackler insist that the people
require, and should have the opportunity
OF obtening cit is become more
appare6s every day." says the Commissioner
for Massachusetts, :" that radical change in
the plans of Life Insurance is demanded. OF
the various schemes or plans for insurance
adapted 70 the wants of the masses, that of
Mr. Wright, and that Of Mr.. Sheppard Ho-
mans, known as Life Insurance without
Large Accommodations, are the most promi-
Lent at the present time" To which may be J