Arizona weekly citizen., 1892-03-19
Life Insurance that Insures.

L1fe Insurance that lnSures.
 The question of life insurance at less
 than the regular rates, seems to be the
 question now uppernoSt in the mind Of
 the community. This is ar interest
 Ing question, but by no means a new
 one. Life insurance, as now pr Icticed,
 is the result of over two hundre years
 experience, during all which time, very
 able and very honest and well-meaDing
 men have devised and put into operation
 scheme after scheme by which the
 thing should be done at what they call
 actual cost" but only to find by few
 years experience that their well-elabor-
 ated and ively-demonstrated
 plans were utterly futile to achieve the
 result. There are published lists, for
 the information of the public, of over
 elght hundred of these schemes, all
 based on the same general principles,
 which have failed in the last five years; yet new ones, attempting the same thing,
 are springlng up every day, and still
 meet with favor from good business
 men-men of intelligence and sound judgment in other matters.
 | It is not intended by the writer to
 convey the impression that all or any of | these schemes were, or are, mere dishon-
 est tricks to swindle the people out of | their money. On the other hand, con- sldering the character and reputation of l those who promulgate and enforce them,
 we are bound to believe that their pur~
 pose is thoroughly honest and praise worthy. But does it never occur to peo- pie to consider the facts above stated? And that of thirty or forty positively solid "old line" companies, amongst whom the sharpest business competitor | exists, and that have been doing a safe | business for from thirty to fifty years, | the rate charged for insurance Is very | nearly the same i1 each company? 1t | is well known that if it were at all safe or possible to sell assurance for Sl00 per thousand less than the rate charged, some of the companies would do so, in order to reap the business. But no. They do not, lest their fate should soon be that of the innumerable "associa- tions" that have tried it and failed.
 To meet its obligations, every finan cial cerporation-banks life and fire in
 surance companies, trust companies and the like-must accumulate sufficient reserve fund to meet all contingencies, and to realize this reserve, every cor poration is bound to charge for it's | ual cost of doing the business. This is the result of actual experience, and every such corporation knows full we'll that it lies at the basis of all successful operations. When it is proposed to do business at actual cost, as in all mutual Life Insurance companies, this reserve, after deducting expenses, IS ultimately paid back to the contributors, but, not | withstauding this, every business man knows it must be charged and collected | for safety. It is really an over pay ment, made as matter of convenience, to secure an equal annual premium, in | order to avoid an annually increasing | premium, and its amount is determined | by the actuaries table of mortality which | is based upon we'll known laws of morta- | lity, and proper regard to the rates | of interest and expenses. The mortali- | ty is five times as great at the age of | 65 as it is at the age 9. At 5, it is | two and half times as great. It is | worth more each year, as the age in- | creases, to insure a life. It will be | readily seen that, at first, an insurer | pays more than his insurance IS worth, | and that later, he will pay less than it | IS worth, because of his over payments | previously made. The overpayments | form the reserve, or value of the policy, | and this reserve forms the principal lia- | bility of life insurance companies, and | causes the necessity for the accumula- tion of assets.
 It is, therefore, very weak and silly | criticism of life insurance companies, to | demand that their rates should be low CT. Yet very sensible men, who do not | stop to think, say this every day. It | can readily be answered that they cannot | be made either lower or higher. They | are based upon the we'll known tables of mortality, and upon reasonable rates of interest and expenses. If lowered, it | would be in violation of we'll known laws. They cannot be varied as to the laws of mortality or as to the calcula- tion of rates of interest and expenses. Under the present Tontine system, which was devised by the Equitable, limiting the payments to definite pe- riod of ten, fifteen or twenty years, the | profits are divided each year, and placed to the credit of each policy, and they are returned to the insurer in bulk, at the end of each tontine period. Thus, each insurer ultimately gets his insur ance for precisely what 1t is worth, or at its actual cost, in accordance with the success of the company in which he lnsures regardless of the rate charged.
 The table of mortality is as follows:
 Deaths per'l000.