River Falls journal. [volume] (River Falls, Pierce County, Wis.) 1872-2019, 1877-05-24

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lpolicy.
But is there any certainty that the
heirs of the poor man will receive the
amount of his policy! Is it not very
doubtful thingl There are so MANY
subterfuges under which the COM
pany can take refuge, and so many
methods of violating the contract, that
it becomes matter of extreme doubt
whether the dependent family of the
insured will receive any thing or not.
We think it is true of even the best
companies, that if there is slight
legal technicality, by which they can
avoid the rayment of the sum prom
ised, they will avail themselves of it.
Instances like the following are famil-
lar to almost every one: An indi-
vidual was insured for $4,000. The
company received his premiums annu-
ally for years. He died. The person
holding the policy claimed the money.
Did they pay it! No. He was not a
proper subject for insurance. they said.
A troublesome and expensive lawsuit
was necessary to compel the company
to pay Just tOhat they virtually prom
Used every time they received the
premium. If the insured was not a
proper subject for insurance, why did
the company receive his premium
Why not say, we have no intention of
fulfilling our part of the contract in
the end. No. 1t was, take all the
money you can get from the man, and
do not pay a cent to the heirs at his
death.
There are, too, in addition to this
disposition to annul their contracts
whenever possible, positive frauds
which have been allowed to grow up
around the system, and which seem
to be part of it. The Investigations
which are now in progress have dis
closed these. In short article We
cannot even refer to all of them, and
so mention but one.
The salaries paid the agents and Of
ficers are princely-vastly dispropOr-
tionate to the services, ability, or re-
spOnsibility involved in the work of
running these companies. In 1875,up-
wards of thirteen millions of dollars
went to pay salaries and commissions.
The chief officers receive from $25, 900
to $40, 900 per year. In order to de-
ceive the public these sums are made
up by what are called "annuities."
For example, person receives small
salary and an annuity of five per cent.
This sounds quite simple, but it real
ly greatly increases the salary. A late
| investigation revealed this fact: an
officer received 1000 and an annuity
of FIVE per cent. The annuity was
500 per annum for life. This the
company purchased back, paying 81 900
for it. Thus his salary was So, 600.
The next year there was another an
nuity granted which was again pur-
chased. The result was to add to the
officers salary about fifty per cent.
per annum, and at the same time con-
ceal it from the public and the policy
holders. A president of one company
by this means had his salary increased
from $l7, ZOO to $4,000 without at
tracing attention. This annuity sys-
tenn is only thin disguise to enable
the officials to receive princely sala-
ries without the public knowing it.
The stockholders also receive large
profits. In the Continental Company
the stockholders were allowed by law
only seven per cent, but by some deli
cate management of their own, they
received twenty-eight per cent,
while only seven was charged
on the books and reported to the
state department and the public.
Such measures as these take the mon
ey of the insured. In 1875 the amount
paid for insurance into the companies
was sos. 645, 0S4.49, while the amount
paid for losses was only $26, l45, 56S, or
| dUOuI OllC uOlidA III LOul Va thC hHiOuAO
received. What became of the re-
mainderi OF course a portion of it
was paid in dividends on policies, &C.,
but large amount went for fat sala-
ries, commissions and dividends to
stockholders.
The fact is, when one invests his
money in life insurance he locks it up
where it can neither be transferred
nor withdrawn, and where the hold
srs cannot practically be held ac-
countable to the depositors. 1t is just
as if we should deposit money in
savings bank where we cannot trans
fer it or withdraw it, and receive in
return promise to pay at death-say
fifteen years hence; but where the
banker is not accountable if he should
fail to redeem his promise. The real
question involved, is whether consider
ing the natural tendency to dishones-
ty, corporation can be safely trusted
with large income, in consideration
of promises given by it, redeemable
only in a future, averaging from fif-
teen to thirty years from the date of
issuing them, and besides that corpo-
ration not accountable if it fails in its
promises.
I 1t is estimated that thirty years are
required to fully test the solvency of
the system. 1t can be determined in
that time whether the company is
saving sufficient portion of the pre-
MUM it receives to meet the death
losses as they occur. Very few COM