The daily morning journal and courier., 1901-02-23

, suring should agree that for. say 2 years, they should have no dividends that whoever lapsed his policy during this period should forfeit to the com pany all his contributions to reserve
 and all the surplus which had accrued
 from his premiums, and that in case o1
 those who died only the face of the pol
 icy should be paid, and whatever sur
 plus had accrued should be forfeited te
 the company; that these forfeited re-
 serves and surpluses should be put in a
 fund apart until the end of the 2C
 years, and then divided among those
 then alive and still insured.
 They calculated that with 1000 per
 sons, aged 37, insured for $1 900 each, on
 an annual premium of $2S.17, the for
 feited reserves and surpluses of the 544
 lapsing policy holders and the forfeit
 ed eurpluses of the 103 who died would,
 at the end of twenty years amount with
 interest to $400,77577, to be divided
 among the 353 supposed to be then
 alive and still insured giving each one
 $1,135.34; just about double what each
 had paid for premiums during the 20
 years not counting interest. And they
 got<eminent actuaries to endorse the es-
 timate.
 The Attraction.
 It was bold scheme. The public
 had just been thoroughly educated to
 believe that such forfeitures were a
 gross injustice and hardship to the poll
 icyholder, whose payments were thus
 conf1scated, and to his family, which needed the protection of the paid-up in- surance which his forfeitures would otherwise have purchased. The injus- tice was palpable, and perfectly unne- cessary in any healthy company. The hardship was often notorious and se- were; and none had been noisier proph- cts of "equity' than these very compa- nies which now invited men to take their two chances out of three of losing all, for the one chance in three of get 1 ting so great slice of the fruits of the inequity which they had loudly con- demned as immoral and cruel The scheme was offered in the belief that, with very many, the immortality and cruelty would be lost sight of if suffi- ciently brilliant speculation in their profits was presented.
 Its Popularity.
 The forecast was correct. People could not at once turn back upon all their convictions and sense of justice. But the glittering estimates won their way, and men put their own payments and the protection of their families at the hazard of the game for ten to twen- ty years with the distinct agreement still in use-that no accounting shall be made; each is to accept as his true share, and without question, whatever is then allotted him. f
 Agents no longer presented life in- surance for the protection of families, but estimates of investments for the policyholder himself. The larger the estimate the more eagerly it was taken. Success made the companies promoting the scheme very aggressive. Instead of struggle for existence it became race for size. Hosts of agents were en- ployed to do the easy work of selling a speculation based on seemingly scien- tific figures. The scheme took so wide- ly that for time it threatened to com pletely supplant and drive out true life insurance administered to its own pro- per ends. So easily was it worked that gradually, one after another, most of the companies followed more or less completely in the wake of the originat- tors of the scheme, until investment insurance, depending for the invest ment'' on the forfeitures to be made during the period of "postponement" of dividends, is the dominant feature with most companies. Their contracts are At1 bonds" 'gold bonds," contracts of sale" "debentures," etc., etc. At bot tom they are all one thing. The div- dend is postponed on the inducement that by the forfeitures of the unlucky many in the meantime, the returns to the lucky few may be correspondingly large.
 Estimates Fail and Why.
 But the wisdom of estimates has not been altogether justified of her children. The rivalry of the speculating compa- nies in their struggle for pre- eminence, has led them to an unheard of expense. They have written an enormous amount | of business; thousands of millions of | insurance have been lapsed as expect ed; hundreds of millions of reserves and accrued surplus have been forfeit ed as was hoped, But so much has i been absorbed by high commissions to agentssby rebates and the many expen- ses incident to an abnormal rivalry, i, that the expected results have not ap- peared; to this the decline in interest has contributed something, but com- paratively little.
 Estimates and Results Comparad
 The details of their failure are ex-, tremely interesting. AS we have seen, the calculations in 1S71 in the example taken, promised a dividend in 1891 of S1. .135.34. But the 1891 result was only b433.70.
 In 1873 they. somewhat moderated their estimate, and put it at $S317O but hey paid only $3797O at the end of the 70 years in 1893.
 They continued to make this same es- innate until 1878, when they again re- luced it to $623.70; they used the same $e23.7O, in 1881, and are paying n 1901 only $297.70. The differences be- ween estimates and actual dividends in he 10 and 15 year postponements are 'till more striking.
 New Stimulants Needed |, Obviously, such wide discrepancies between estimate and result, between brilliant prospects and comparative fail- Ire, pointed toward the ultimate break l ( Town of the speculat tive attraction, and