New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1891-11-24
[ eQitimate Mutual Life Insurance
Investment or TOntine VARIETY.
AND THE

Mutually means equality Of burden and Of benefit the
same cot to each man for thing there is no
favored class.
1t also means that the policy holders Of a company
are Its only members They dispense with the services
and save the cost stock capital they corporate
body control the business themselves take oil tho rsxs
themselves save all the PROFITS themselves. and do
tho business number at Its exact cost and
do It for each member his propcronate share Of the
total cost Each to pay the full, exact cost Of his
individual risk and for that Of else each is to
have his risk carried at IL. individual cost. f. c., its
individual proportion Of the total cost
No one member Is to make profit out Of any ether
premium is calculated upon assumptions and 'lOaded
with margin which the protective purpose Of capt.
tai stock his policy and the aggregate Of the
margins Of eli the members protects the business as
whole.
Each member furnishes his share Of tho protection To
the whoei therefore, is entitled to any profit out
Of any others payment
Life insurance Is simply the payment Of death losses
payment Of they occur the provision
Of for tho Of management
ana taxes, make up the total cost Of the business
Risks Differ as ages amounts and plans differ but the
premiums differ accordingly so that each mans burden
Of premium duly proportional to the burden Of risk he
imposes on the rest This premium each man agrees to
Jay.
Note carefully this each mans premium is calculated
as his entire proper share of the whole possible cost
Of all the insurance the company carrying In caeu
ating 1t the company that 1t will have certain
maximum yearly death rate. Increasing with age In GER
tain scale certain maximum rate Of expense and Will
earn certain minimum rate Of interest its reserves
II each of these assumptions just realized then each
mans full premium needed and is his exact proportion
Of the whole cost.
But If the losses less the expenses are less, or
the interest earned is more assumed then the
whole cost is less. and each mans share Of it is
correspondngly less How is the reduced cost OF the
whole business TO be adjusted among the memberss OBJ
yiously, 1t can be done only by reducing each mans
premium prOportlonatey.
If the business a whole has cost in any year less
than was assumed calculating the premiums then the
premiums were, for year. much too high each
man has overpad Mutually demands the return TO each
Of his own overpayment. Then oil will stand on the
same footing relatively as II the whole business had
cost the whole of the premiums.
II each receives back his overpayment. then each
will have paid the company for the year just what his
risk has company for the and will have pad
In just the same proportion there had been savings
from losses expenses nterest-no overpayments
as If Il had required premiums and oil the interest
to meet losses and expenses and provide the
But II these savings oveipaymfnts distributed in
any other proportion, by getting back and
Others by getting less than their overpayment
Iess nan
whole cost and pay different proportion than u the
cost had taken premiums and interest to meet IT,
leaving no surplus
Obviously ones propotonats share Of the whole cos: Of
years insurance ought be greater when there is
saving than when th2re Is none
These considerations would seem to site conclusivey
methods by which dividends Of surplus returns Of
payments should be made, either mutually fairness.
WHEN SHOULD THEY pE MADE1
Since surplus simply adjusts the assumed
cost and Of insurance. and is in effect
merely return overpayment' should be made Often
as the actual cost the overpayment
Is determined The premiums paid In and interest
collected year the losses and expenses
arc paid provided year by each years
income and outgo balanced by themselves The cost Of
Insurance is determined and and for each year by
itself. The savings surplus Oyerpaymcnts deter
mined and for each year by itself There
why the SURPLUS should be returned each year. such
portion Of it prudence Will allow why such
portion as may be safely divided should be retained for
any period Of years Especially Is this true OF any
company with considerable business and an experience
sufficient to establish safety Of its assumptions
mortality and interest. and which doesn't expect to
spend for expenses more than It's future premiums viii
provide.
The whole substance Of mutual life insurance method is
ench shall get his insurance yearly cost to
the company.
The natural course OF business, eforc. mutual
life insurance company would be to charge premium
an to be large enough for all contingencies select It's
risks carefully TO keep well within the assumed
y invest its prontaby is consistent
with perfect safety keep los expenses low possbe
ways trying TO make the yearly cost small
possible the business whole. and then each
dividing the surplus overpayments to those who contrib
uted them in the proportion Of contribution overpaymen
giving each policy holder his insurance at just what
IL cost the TO carry Rim for the year. reitheF
making him than that cost BY giving him less
than his proportion Of the division and giving the rect to
favored class. nor allowing him TO pay
less than that cost by giving him more than his
prop,tionsts share taken other policy holder
or class Thus the company receives from each policy
holder oil it has to carry him, and thus each
policy holder pays yearly than IL costs to
hin-a perfectly balanced transaction.
IMPORTANCE OF NoSFORFEITURE.
And mutually produces another important prac
cal result No man knows how long he may be able to
carry all protection his family need They
are pretty certain always need IT, Financial
or Ill health and the Of power money at
any time prevent his carrying his insurance fur
Their the able he pay the does
his family insurance they possibly get:
sAd all they can then get is all too little.