The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1891-12-04
INSURANCE.

I've lace OF the policies, will have large amounts
oi oVefpayments and surplus, which win be left
WIN the companies. They calculate that in
twenty years at least ESQ out of every 1000 will
nave died or lapsed
90 Tue plan Is to forfeit TO the Tontlne pool all
the oVefpaymeDts or surplus of both those who
ole and those who lapse, aud such part of the
reserves OF those who lapse as Is nor cllled for
under their rule. II man calls for a paid.up
policy within six months after he Ianses liza mus
gets Dack the value OF portion of his reserve.
but loses all the surplus he has earned If he
doesn't call for it W thin that time he loses the
whole The Old Tontines take the whole. both
reserve and surplus.
So the pool is made up OF all the dividends mr.
oyerpayments of these who die and of those who
lapse and from one-thrd to the whole of the re
serves OF those who lapse. And this is called
investment insurance"
Each man bets all his overpayments and other
surplus and all or q considerable part of what
ever he may contribute TO the reserves and the
paid-up insurance 1t Will buy that he Will both
live and pay all his premiums during the period
Two points are obvious: those who die and
those who lapse Will have paid for their insur-
ance while 1t was In force more than 1t has cost
the company to carry them by Just the amount
OF surplus and reserve which they forfeit to the
pool, and those who live and pay through their
respective periods will have had their Insurance
at just so much less than it has cost 10 carry
them as the surplus and reserves forfeited Dy the
former class exceed the surplus properly earned
on their own payments. If the theory of tile
scheme is in any degree realized. the uulucky
class will pay excessively and the lucky will be
greatly favored. Whatever this is, IL Is not
mutual life insurance; it is not the certain full
and complete protection OF life insurance to each
mans own family which his own premiums have
paid for, and at just his own individual cost to
the company.
And yet three of the four great Toptine com
panies, the Mutual Liie the New York Life and
Inc northwestern Mutual, are by charter and
organization purely mutual companies. founded
10 treat all exactly alike The Equitable Is
stock company, but files mutual flag In solicit
ing. The New York Life and Equitable began
the speculation twenty years ago, but as late as
1882 the Mutual Life said OF itself: s'But It does
not issue Tontine policies nor encourage any one
TO engage III The TOntine game The principle
OF the game Is to rob the unfortunate by cancel
Ing their policies without consideration when it
Is found impossible to raise the money for pre-.
miums, and the object OF The game is alleged to
be tile opportunity for companies which pay very
small dividends to conceal the fact Tor a term OF
years, called 'Tcntne period We advise
every man to beware Of any company which en-
cages in the TOnIine game" But in 1884 the
Mutual Life engaged In the "Tontlne game" aud
now presses 1t with remarkable vgor
Evidently 1t Is "game" for rich men only
The profits are to come out OF those who are or
who become too poor to carry the load.
THE ESTIMATES.
The inducement 10 the speculation Is presen ted
by estimates" or illustrations" Of what thu
dividends may possibly be II one lives and paws
through the period OF pOstponement, saying
nothing OF course OF what he will lose by dying
or lapsing And these estimates" eIc are
fortified by the statement that they do not exceed
the actual settlements now being made on Ton
tine policies issued teD fifteen aud twenty years
ago. The argument Is that II those policies
yield present results, then equal results may be
looked for ten, fifteen or twenty years hence
DECEPTION PRACTICED IN PRESENT ESTE
MATES.
TWO great facts are carefully concealed from
the public about those present settlements OF
former Tontine policies and their use as "estl-
mates" or illustrations" for those now Issued
LIST. The present settlements OF surplus or
results" on the Tontine policies issued ten fif-
teen and twenty years ago are only from 40 to
521s per cent OF tie estimates" of surplus on
which men were then induced to take them. The
speculation has literally not turned out half as
we'll as II was represented.
For instance, the man who. fifteen years ago
was Induced 10 take $4,000 policy on an estl-
mate of S4655 cash surplus at the end Of the
ffteen-year period, gets now only S2O94 10 sur
plus which is also the present estimate Oh like
policy now issued with dividends postponed
until fifteen years hence; the reduction from es-
Innate to result on like policy with a twenty
last sum is now used as an estimate for the next
twenty year period.
I'd. These "results" on former TontIne pol-
ices, Disappointing as they are are an entirely
different thing from the results" on TOutiues,
"consOis," bonds" or other ike schemes now
being issued, and for which the former are now
used as estimates" and illustrations"
The Tontines now being settled are not the
Tontines and consols now being issued and lhs
use OF the settlement Of the former as an eli
Iustration" OF the latter is entirely misleading.
The Tontiues now being settled are Full Ton.
tines; that is, person IapsIng forfeited not
only all his dividends, but his entire reserve
The Tontines, conS0ls and bonds. etc., now
being issued are In reality what are called semi
Tontines that is, a person lapsing, though for
telling all his accrued dividends is supposed OF
to forfeit his entire reserve but only part OF it.
These forfeited reserves are the backbone of
the Tontine pool. To use pool containing full
forfeitures OF them as an Illustration OF one TO
contain. say only one-third OF them, Is a per-
formanee each can characterize for himself
And II tuil Iontlne results in only one-half the
estimated" surplus. how near to that same re-
suit, now used as an d" estimate" can a semi
Toutine policy be expected TO come?
THE EXPENSE OF ToNTINE.
The attraction of tile Tontne policies bonds
eon5ols. etc, being the profits expected from for
FIXTURES, It follows that f0rieitures Will be Guilt
waited; that the managers Will reach out after all
the forteiable material possible. The greater
the volume of business and the higher the pre-
MUM people can be got to pay for II, aud The
more II is forced-the greater tie number that
can be induced TO take chance In &" the game"
and the higher each one can be made TO bet-the
greater the number Of probable forleIrures and
The greater the profits from them.
Two things would naturally follow from
that. These companies would adopt very high
premium plans, with very plausible features to
apparently oyerbalance the preniums-as If any
thing could be worth more than it cOsts-and
would pay commissions that would enable them
to employ vast body of agents TO promote 1.-THE
game"
And precisely these two things have followed.
These companies have taxed actuarial Ingenuity
TO present novel plans, with features of apparent
extraordinary advantage, but ALL In fact fully
covered by The novel and high premiums charged
as II they could give anything at less than It's
cost-and each calculated 10 furnish as much
profit possible IN case OF death or lapse.
And they have put up commissions and ''ia-
ducemenIs" to agents TO point that lew years
ago would have been considered mcntce OF
trouble, aud would be to-day were not the Ton
the surplus just as available for expenses now
as 1t is for dividends twenty years hence.
They have covered the world with agents
selling, not pure life Insurance simple pro
tection, but estimates" and illustrations OF
the many forms OF 1.-The TOntine game" And
they arc getting an enormous inflow of new
business, which they boast OF and strive for
the sole substance and evidence of success. But
the truth is. they are compelled 10 get q great
volume Of new business constantly In order TO
get the foffeitures required by The Toutins
scheme. The thing depends for Its success on
an enormous inflow and an enormous outflow;
they have made the In flow very expensive. but
they have got 1t for the present; the profit |, IN
the outflow and what 1t leaves. They are getting
that, too. Several OF these companies have In
FIVE years "marked OFF, more, by many millions,
than they had In force five years ago The great
inflow must be kept up, no matter by what de-
vice nor at what expense in order that The great
outflow with its rich forfeitutes may not cease.
Plenty Of grst must be had for the forfeiture
mill.
But the expenses are gaining on the profits as
is evidenced by the steady shrinkage In Toutine
dividends, aud the difficulties OF Keeping the
new business" far enough ahead of deaths.
lapses and surrendArs incrensa aunr,. =.