New-York tribune., 1886-01-05
SENI-TONTINE LIFE INSURANCE. r..
AN EXPOSE OF THE sEMl-roNrIS E METHOD.
ITS ELEMENTS THE SAME AS FULL ToSTINE AND
EQUALLY AS OBJECTIONABLE.
J. u. BLITERsoS.

| To TIE Editor Of The Tribune
sR The recent discussions of Tontne have clearly
shOwn-what has not been denied-that the profits OF
pure onJne the ioreies OF the entire and
surplus OF those who lapse their policies and OF the sur
plus Of those who die, during the Tontnc period;-
that all who entsr Tontns class put therefore con-
nual hazarddurng the entiro Tontno period not only
the reserve and surplus paid in by then bu5 what Is OF
far greater pubc Importance they pIt at such hazard
the paid up insurance w5ch this reserve AMI surplus
ought to buy for their families that In fact millions OF
dollars OF such paid up Insurance are now bang lost
every year by the families OF those who lapse: 80
that pure Tontine simply speculation in the pIidup
Insurance for ones family watch mah has really pAa
for aud to which they are fully enttlel but which he
chooses to risk their losing in tho hOpe that he may
chance to got a in the reserves AMI plus OF
other insurers who have hal to e5 their policies lapse
and ma ie thoir families 1se the patdup inurance
which their reserves and surpus had paid for
Theironune companies while still asserting the moral
sOundness and proec i've value OF pure TonSlne, have
nevertheless tail ighcant stress on the fact that they
urging only the the ssm-TJntine. or hnltod
Tontine Or non-forfeng Tontlne, Reserved Dividend
Distribution policies, etc. in which it Is represented
that only III. Surplus bo forfeited in OF lapse.
and paidup insurance is to be given for the re-
serve; that q might feel that ho was rskng his
familys protection only the extent of tbs pad-np in.
which hi accumdlatiOns VI surplus might anu
ought buy them the desired Inference being th
this a small affair point Of amount, ana
harmless in point morals. The bait IN all these
variations OF TOnte Is the expectation that Oy pospOE
those who are lucky enough to and pay through VIII
get extraordinary dividends by getting those earned
honest earnings As there any other legitimate
phase of he Insurance than simply taxing poicy 70
Its proper yearly cost according to ts own snare ~
hazard to those who neei it aud have right rely on
1t aud to find in the day OF their necessity nat the
either in whole or in part.
LIMITED NON-FORFEITURE.
The partial non-forieitins element is brought into
modified TOntne schemes by way Of the New YORK
non forfeiture law. which provides that, when It's pro-
visions are not waived-as they may bo by those who
want full roatne-whenever policy lapses after max
lug full payments the holder shall be entitled to so
much OF paid-up policy the AZ per cent reserve VIII
lshed rates." prorided he surrender his policy within
six months ne pare .n pe cent re
serve they only 42 per cent reserve IN giving
poo and this difference during 2Oyear Tontine period
runs to 10 cent OF the reserve For instance
Oh a man who has been insured for years for SloO0o
entering at 30 they per cent reserve OF So9 OS
but they y per cent reserve, Silo % duerehce
tHey hold per csnc reserve 81 26j AZ they
for paid,up Insurance only S-6 3oi adherence 10 'no
OTHER MARGINS FOR ToyTIyE.
So secretly have the single premium rates OF these
companies been published that until recently have
beon unable to procure copy so as to see just what
effect on Tontnc results the actual application OF the
New.York law might expected to make The question
was the more curious snce with all the boasted equity
OF sent rOntine. s estimated speculative result was
expected to be- as stated IN my letter OF May lOth,
within about III per cent that OF full TOntine. which
would be possible II anything Ike the fuli reserve
| were really used to give paid-up insurance. .,,
| From table OF single premiums printed In this year
! we lind that these companies take margin on ther
single premiums OF just 80 per cent OF the nett SO that
using the 4a single premium oue-thrd Oh II
h,S,ro loaded their single premiums Only about 10 per
cent; a. the pai-up insurance given unuer tne New
York law "shal! not participate In the pr0hts OF the
company" that so per loading. or onethird the
! premium. is clear fontine profit A.,
entire surplus 3D. per cent of the reserves 3d. one
third Of the remainder.
THE PRACTICAL EFFECT.
Z It works this way take 10000 men insured at age
thirty for $4,000 each ordinary lfe twentyyear semi
| Toutue upon tho Eauitablos "estimate" that those
who live aud pay through the twenty years VIII get
$50 In cash. the who has To give up at the end
of Ave years would have the pool 1897 oil; OF which
Interest in the surplus the he loses outright to
tho pool 2 taken from his reserve to reduce
remainder Sll6 49, is used single premium loaded
per cent TO buy tha w not m oa m m
Sl3s 81 Slsl IL has been taken out or his reserve
o77 80 mas been actually used 10 buy nonparticpatng
Said1p insurance II he surrendered his policy In time
out OF his S937 oil. he has lost to the pool $lI 9S
over 70 per cent all had n and what ought have
given hs family about 800 o, pS&iup & ihG,s s,iy
The man who has been in years and has to lapse,
ha.in the pool 81 32l SO. OF which $l0i0 II is per
cent reserve and 81 3l1 rs his interest In surplus;
tbo latter SUN loses outright TO the Tontne fund
s3 30 is taken from his to reduce 1t to 4a per
cent reserve 1926 49, onethird OF which or S3OS ol
taEen for ontine profits by OF loading so that only
S67 go is actually used to buy pad-9P soS pa
and has lost to the pool S392 80 OF nls re-
serve and Sl,3ll 76 interest In surplus, totaI oI
sO4 OG over S per cent OF MS 600 IN 81 Ie RTo
Insurance for his family that Is what semtIontine
means for him and his famlly.
Tho man who has been In 10 years and has to lapse
ba, in tho pool S4177 90. OF which Sl663 81 is per
cent reserve 25l4 OF Is his interest u the Surplus
aud this he to the poo his per cent re-
..rye h trimmed down by $l2l 25 TO 4a per cent re-
serve Sl52 AZ one-thrd OF which IN inc name OF ioan
ing, S5l4 II. also goes to the pool and SIVzo % oh
goes 10 buy paTtic pating paid up insurance. out O
ases ms in sUrpns S5l4 o2 total Of S3 A.
Is per what he bad n and what % Mould have PAID PAD
ls what semi rontine means TO him aud his family
The man who has been In nineteen years and has to
lapse has in the pool 800 OF. OF which S2263 IA
per cent reserve and 1851 63 in his interest IN sur
plus and goes outright to the pool his per cent re-
s1rr i 90 ore into the pool leaving 81 II6 35 as single
premium from which S7O5 40 more Is taken 'oT th9
actually used in buying non-partieipang paiuup IN IN
Ssrs in surplus SO 63i 63 his total si4s4 IL
over 76 per cent OF what he had in and what would
have paid 900 Of padup insurance Tor ms
family that is the protection Of semETontlne to him
and his family.
GROSS EFFECT OF sEMr-ToNTfNE
tn nroduce the " estimated" somtTontipe result with
the same experience interest and expenses as the
last ten years. least 6.S65 mea out OF these loooo
would have to lapse producing for the pool $69o4elo
of which $2,6l3.9s7 is the per cent reserve ana ana
surplus which is lost outright to the pool
hs per cent cut down. by the loss 10 the pool
Of about S25 25s to Ala reserve OF S2.37s129 one
third of which, $792909. is carried TO the poo III tne
name OF loading that OF the per cent reserve or
~ 81 9s7 only 81 $50 becomes effeetiye IN pur;
| chasing non participating paid-up insurance, ana
SI Oos az of U the pool, IN addition 10 the
yi3Io 2 surplus total loss to the pool OF So3699o
over II per cent Of all their Interest n the semi-lo
tine fund
} AIoss OF 100000
A in han bought