The Ottawa free trader. [volume] (Ottawa, Ill.) 1843-1916, 1879-06-07
ABOUT LIFE INSURANCE.

i'nderprittr for May, 1879, with a request I,
peruse a couple of lengthy articles therein con
tanned very earnestly appealing to editors
Throughout, the country ITO impress upon theil
readers the important advantages of life insur
anCc."
The business of life insurance is, we believe
about hundred years old, and in the start is
real nature was SO little understood that i'm
mensc fortunes were realized by lis projectors
Later, however through the careful collection
land study of mortuary statistics as well a. the
IaCcumulauve power OF money the chances OF
policies lapsng, and many other elements that
enter into the calculation, the business has
been reduced to almost an exact science, so
that capitalists entering into il might tell al
ImOst 10 4 fraction what their profits would be,
lif certain other elements of the calculation,
such as the chances of easy or hard times, the
IhoncSty Of officials, &c, could be predicted
with the same precision As life expectation,
the cumulative power Of interest, &c. But Just
here alas life insurance companies like all
other monetary institutions, find their weak
| 3
ance company capital and reserves, the same
As banking capital and reserves, must be kept
in mo,ion-must be loaned out on securities or
used III speculation, trade, or IN some other
way invested" and when sudden commercial
reyusions come, no science yet invented can
tortell even approximately how many "securi
tics' may Prove worthless or how many specu
lations fail Thus there is danger that even
the most honestly and cautiously managed
life insurance companies about once in seven.
teen years, are in imminent danger of gong
up
| To lessen the chances IN this respect the mu.
tual plan has been largely adopted, that is, the
policy holders are made the stockholders OF
the concern and without dividing the profits
otherwise are supposed to pay annually exact
| " what their insurance costs, with certain al
lowances for maintaining reserve, meeting
running expenses, &c. If unhappiiy through
any sudden commercial revulsion or from 9th
cr cause the securities in which the reserve is
invested fail, the company, instead OF gong
by the board, replenishcs its revenue 10y an adj
dltional levy on the policy or stockholders
| Thus in theory mutual companies ought al
ways to be the safest as well as afford the
cheapest life insurance.
As most Of our own experience IN life insur.
ance has been with mutual companies, we have
serious reason 10 doubt at least as to their
cheapness. Some twenty years ago we took
Ipoicles to the amount of $4,000 in the Connec.
tcut Mutual, paying annual premiums at the
rate Of about 2i5 per cent. on that sum The
very oily and voluble agent with whom we
dealt at the sme solemnly assured us, and had
very scientifically constructed tables to prove,
that after paying premiums at that rate for
about ten years they would begin to diminish
plank up would entirely cease Our expert.
ence after twenty years is that instead of de.
creaslng the annual call has increased BE.
ginning with about $50 our assessment has
run up TO nearly $50 year. There is fraud
about ii somewhere
We have before US the annual statement of |
the same company for 1876 /, shows total
receipts during the year $9,Gl0, lab; total
payments on death claims, surrendered policies,
&c, $6,01S, 1856. The other $3,6000O0 went
for Expenses" &c. That is in other words, |
over one.third of what the policy holders pay
is eaten up in some way, so that it never gets
back TO the policy holders or contributors,
their widows, orphans, &c. For a mutual"
system, il seems altogether too expensive I'll
we had commenced twenty years ago to pay
at the rate of SO year into the Ottawa Build
ing Association, We should by this time have
had back at least $500 in clean cash Also
il we had commenced twenty years ago to pay
at that rate for insurance on the Masonic life
plan or that Of the A. o. L. W, our family
could calculate pretty safely on at least $1,000
when we come to shuttle off this mortal coil "
We have been looking into the figures of some
OF the big joint stock life insurance compan-
les, and find that they are, upon the whole
quite as expensive as those Of the mutual label,
and some more so.
While, therefore, we can agree with our CO.
temporary of the Indtr,rrtter as TO the emi.
nent proprcty and importance of man secur-
ing plum for his surviving widow and little
ones in the shape OF life insurance, our i'm.
preston is, that the system OF ordinary mutual
and join, stock companies he so highly com
mends is not exactly the right one. Besides
the constant danger Of a smash-up it is too eX-
pensivc-at least other ways have been devised
which seem 10 be quite as safe ana to cost a
great deal less money.
There was intense excitement last fall in
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