The news and herald. (Winnsboro, S.C.) 1877-1900, 1880-12-23
Facts About Life Insurance.


lar at diftcrcnt times, as tho necessities
Of the people seemed to demand some
such provision for tho families Of men
who die without leaving them the
means Of subsistence. Since the war
life insurance has attracted universal
attention in tho South. Most mon had
lost their fortunes, and cagcrly sought
a chance TO secure their wives and
children from want in the future. This
opportunity seemed to be presented
by the many life insurance companies
whose agents filed tho country. Poll
cics almost numbcrlcss were issued,
and thousands Of dollars went into tho
Golfers of tho companies and the pock-
cts of tho agents. That most, if not
all, of this money has been wasted, is
but too well known. Most Of tho
companies have gone into bankruptcy,
and those that survive have managed,
in one way or another, to take the
policy-holdcr's money and his policy
tool 7'ho whole thing has resulted
very disastrously.
A writer in q recent number Of Har-
pcr's Monthly Magoginc very ably
discusses this subject, and shows some
fucts that will startlc all but those who
have themselves been victimiZcd.
Since 1861 thirty-siX insurance compa-
,,ies have started in Now York State
alone. In March of this year only
four Of them remained. This Of itself
will serve to show tho loss cntailed
npon policy-holdcrs. OF tho sums
paid by tho insured, somo idea may
be formed when it is stated that in
1873 tho thirtv-four New York COM
panics had on income Of eighty mil
lions Of dollars. The question natural
~ arises, How havo the companies
como into possession of this immense
sum Of money! Their methods have
been at once peculiar and varied. The
writer in Harper gives these:
Flst-Thcy make large profit on
receiving interest at n higher, and pay
ing it (whcn they pay iO at a lower
rate. They calculate tho interest
which they promise to pay at four per
cent; they receive six or seven per
cent.
Sccond-In computing the risks of
their business the companies use ga ta-
bic which gives death rate, Oh the
which it expects In practicc." Having
computed the chances below the aver
ngo, they then pick out the lives that
are above the average, and most of the
companies refuse to insure any other.
A man can not 60 in from the street
and claim life insurance at the average
mortuary rates; he will not be accept
ca unless he can satifsy the medical
examiners that his health and strength
arc better than the average. This Sc
lection of risks is another source of
great profit. One New York compa-
ny reported its gain from this source,
tor eleven months OF the year 1869, rs
$649,00O.
Third-Evcry premium on life
policy is composed of three distinct
elements, First, tho net premium,
calculated more or less cqlitablv from
the mortality tables. That is intended
cd to insure tho risk Of death within
the average Of lifetime. Second, tho
reserve, or sclt-insurancc; it is the
yearly payment which will amount,
ut four per cent, to the fHce OF The
policy at tho time of the average life
time. This is the policy-holdcr's own
money put out at interest for him.
Third, the loading; that is guessed at
by the companies; it is tho charge for
expenses. These three items make up
tho gross, office or load premium; and
all three arc legitimate items. But
how great is the third charge, the
"loading" for expenses? Instead of
computing it, as they should, upon the
net premium, they make charge
amounting to one-third Of the gross or
office premiums thirty-threc pcr
cent. of the many millions per annum
which they receive directly from the
public. This would seem, indeed.
cnongl' to conduct tho expenses of the
Dnslhcss. An expert estimate gives
eighteen per cent. rs sufficient, even
under the present lavish system, to
pay all legitimate expenses OF manage
lncnt.
Another source Of profit has been
the buying up Of policies. A witness
i'll recent investigation of the affairs
OF the "Contincntal Life" of New
1ork describes the method as follows:
"Ihoy sent agents out all through the
West; they would call upon Door
nnsuspecting policy-holdcr, and by
telling him the company was insolvcnt
induce him to give up the policy for q
small amount, nEd then pocket the re-
serve" In other words, if the reserve
was 5000, they would buy up tho poll
cy for small amount, say $40, an(
pocket tho difference.
a fifth source of profit is in tho
conflscation. upon various protcxts, O
the vast majority OF the policies. I,
1871, lapso and surrender swallowed
up ninety-threo per cent. of the nun
ber Of policies that wore terminated i,
the New York business. IN 1875 one
company conliscatcd about 1900 poll
cics--ncar]y the same number that Il
issued during the year; 1881 Of then
were absolutely forfeited, tho holders
getting nothing for them. In anothc,
cOmnanv 1urintr tbo co,,o ,,,o,, 49,,