The morning call., 1892-09-19
LIFE INSURANCE.

The extraordinary development OF life
insurance in this country during the past
thirty years is a phenomenon which is well
worth considering. Thirty years ago five
times as much money was placed on lives in
Great Britain as in this country. After the
war the destitution into which families
were plunged by the loss of their bread
winners directed attention to the subject of
life insurance; the system gained popular
ity, and in 1890 the insurance in force in this
country amounted to 81. 100000 000. distrib-
uted among 100000 holders, as against
SIS, 500, 600 written on lives In Great
Britain. or the entire amount of life iu-
surance in the world, 20 per cent is in force
in the United States and England. Other
nations have not awakened to the benef-
cence OF the plan.
The assets of the companies which have
written the enormous volume of life insur-
anee in the United States amounted in 1890
TO SS19, 402, ,S52 OF which S4S4, ,234. 600 were
accumulated between 1870 and 1890. Half
of this is invested in real estate, and SO per
cent of the whole in railroad securities,
municipal bonds and stocks of gas and
water companies and other industrial cor
poratiOns and street railroad companies. A
large amount is held in cash or leash
items" and governments. which can be
realized at a moments notice In handling
such vast Sums the opportunities for mis-
management are frequent; the recent scan
dals in the New York Life Company show
how easily money can be wasted by un-
principled or reckless administration. But
it is generally believed that the great life
insurance companies handle their funds
wisely and carefully. Were it not So the
business wouldsdeeline.
That business is conducted on very simple
principles It is, of course. impossible 10
pay ST. 203, 600. 600 with SS19, ,402. $50 If all
the persons who are insured in life CON-
panies were To die simultaneously the
companies would go into bankruptcy and
would hardly be able TO pay 20 cents on
the dollar. The calculation of the COM
paries is that leo. 900 people will not die
simultaneously, and that as fast as deaths
occur new premiums will he taken In 10
meet losses That calculation rests upon
the proposition that life insurance will con-
tnue to be popular. In order that il should
be so the American companies employ an
army OF solicitors and agents, who worry
every one they know TO insure his life. One
company reports that it employs 1000
agents. Another admits that In 1891 it paid
its agents commissions amounting to
S4.227, 500 a business which can afford TO
pay so vast a sum to drummers must be
exceedingly profitable; it is alarming to
think what would happen if the army Of
solicitors were disbanded.
So far as insurers are concerned. the priD-
ciple of life insurance is that it enables
people TO accumulate savings before they
are earned. Before the system became gen.
eTal. thrifty people put dollar after dollar
as they could save it out of their income
into the savings bank. If they lived long
enough they accumulated q reserve for old
age or for their families after their DEATH
Under the life-inSurahce system they pay
their savings into the companies treasury,
and have the satisfaction Of knowing that
the entire sum which they expected TO save
in several years toll is available at any mo-
ment if they die. Life insurance is in fact
a wager between the party insured and the
company on the duration of the formers
life. Ii the insured lives to old age he loses
money by insurng his life. for his premi-
Ums, II put out at compound interest, would
realize larger sum than the amount of his
insurance. Il IS ouly when he dies prema-
turely that he gains by having insured his
life.
This is the view which the courts are apt
to take when a company resists payment of
a loss on the ground of false representations
in an application for policy. The compa-
Hies require the applicant to affirm in writing z
that he has never suffered from q dangerous
disease. They have him examined by their
doctor. who must certify that he is and ap-
parently always has been in perfect health
before they viii accept the risk But If the
applicant is fairly likely to live to the term
of common life the bargain is one-sided,
with all the chances Of profit on the compa-
ny's side and all the chances OF loss on the
side of the insured. A man Of 80 who in
sures his life for $4,000 pays something like
$4,000 for the money if he lives TO be 20.
Equity would seem to require that the CON-
pany should take more risk than it does in
comparison to the premium it receives. and
| that it should not confne its business to
| risks which are almost no risks at all.