The morning call., 1891-01-18
INSUR RANCE.

feited besides, all of his reserve unless he
applies for paid-up policy within six months,
| in which case lie forfeits about One-third OF
| his reserve in addition to all his surplus.
This is the speculation; and for the sake
| OF 1t the insured pays each year more than
| the yearly cost Of his insurance by the amount
| OF surplus saved or earned, and runs the risk
OF losing 1t all if he dies or lapses; and he
| also runs the risk of losing ALL or a consider
| able part Of the paid. up insurance which he
| would otherwise get for his family in case of
lapse, IN the hope that he wont die or lapse,
| and VIII share the forfeitures of those dying
and lapsing; and in the hope that these for
| FIXTURES will be large that he will make
| money thereby.
Evidently this scheme is totally opposed in
| spirit to true life insurance, and could not
be Understandings engaged in by any man
solicitGus for the thorough protection of his
family, or at all serupulous about stripping
other families of their protection. or eyone
at all careful 10 pay for his Insurance only
what it costs, or DESTROYS OF knowing what IL
is costing year by year.
But granting mans willingness to specu-
late with family protection, for the sake of
result which, if realized is only 4. 80 per cent
annual interest on his payments,
WHAT ARE THE PROBABILITIES OF Sue
CESS ?
We can judge only by the past. Two Of
these companies have been engaged almost
exclusively in this speculative life insur-
| ance for twenty years already. For nearly
all that time they forfeited all the reserves
OF lapsing policies as well as all the surplus.
| But they are settling now the surplus on
| policies which have received, or are sup
| posed to have received, the forfeitures of the
| entire reserves and surplus from lapSes for
| the last twenty years. aud the surplus being
now. paid Is only about 80 per cent of the
estimates" of surplus on which these poll
| cies were sold twenty years ago. Either the
| forfeitureS have been much less than was
| estimated, or else the expense account has
| overcome the speculation; one or the other.
But these companies now profess to for
| felt on policies now being written only
| about one-third of the reserve instead of the
whole of it as formerly. Yet they are ''esti-
mating" that the results of these policies
| twenty years hence. which can share in the
| forfeiture of only one-third, will be as great
| as are the present results of the policies
| which are sharing in the forfeiture of the
| whole reserve for the last twenty years.
! They estimate that part will produce
| as much as a whole. The old Full Ton
tine" p0licies-in which all reserves as well
| as all sur lus on lapses were forfeited-lre
| yielding only 30 per cent or less OF the est
mated" surplus. And this 80 per cent re-
| suit on Full Tontines Is now used as an
estimate of the probable result of the
! Semi TOntines-which are to forfeit all the
surplus, but only third of the lapsed re-
| serves. For all these investment policies.
''bon0s," .iconsols," or whatever else they
| may be called, are merely varieties OF Ton
| tine or Semi-Fontine.
| How Semi-IOntine is expected to accom-
| pl1sh as much as Full TOntine has never
! been explained. The expenses are increas-
| Ing; the torieltureS can hardly be eX ectsd
| TO be greater, and nucn less proportion Of
them goes to the pool; and certainly the
| rate OF interest is not likely to increase in
| the next twenty years.
| Ihe true question would seem to be this
| III the old Full Iontlne estimates based on full
| forteltures have received only oue-half the
| eXpected surplus, why is not an equal
| shrinkage to be expected in the results of
| present estimates" or illustrations
which are themselves the disappointing ra-
! suits OF the old Full IOntines, and which
must be realized, if at all, from only par
tial instead OF full f0rfeitures?
How can partial forfeiturrS produce as
| large surplus as full fOrfeitures?
-, Aud 1t Is forfeitures alone that can make
| these policies an investment to those who
| don't happen to forfeit, for the expense ac-
count kills the interest account.
Or, apply the test of history to this very
policy:
The old Full Tontine estimate was that
the entire cash value at the end of twenty
years would be S23, 500-a surplus over the
face OF the policy OF S13,500 But the actual
surplus settlement in sight iS-if no further
shrinkage takes place. such as has been con-
| stanily going on = $1,000 Instead of the
| SI3,50O promised to the hope. And now the
| $1,000 result of a S13500 Full Tontine estf
mate is used as Semi-Tontine estimate for
twenty years hence. Ii it has as good luck
! as its predecessors it will settle at about
$500 instead of $1,000, making total settle
ment of the policy S13,670 instead Of ST. $50.
| lhlS Is less than 81 per cent on the prrmi-
| ums paid IN; and to attain even this the
companies must depend on forfeiturrS equal
TO 2R per cent compound intereston the pre-
| miums paid.
Is that speculation worth hazardng all
or any part OF what one pays for Insurance.
and making his family hazard losing it all ?
| JACOB L. GREENE,
President
HARTFORD, October Is, 1890.
The Conn. MUTUAL LIFE ms Co.