New-York tribune., 1901-02-23
70 death the most correctly organized concerns
and they died by the dozen.
Motive

Conspicuous among the competitors Of that time
were certain companies which trying 20 tight
their way 10 the front hy such high commissions
and other considerations 20 agents : should draw
them away from the more conservative companies.
Sage fb o4 eaid up assney t9rees that should dom-
low dividends where those equalling the better
CONF Eanies had been promised that no agency force
6 noo tneir poltcy-holders. and their business
ossan 70 decline with alarming rapidity.
without losing the agents There was for them no
vttneF attraction Therefore the only escape from
least a long time such scheme soon found
scheme BASED Forfeftnres-
The basis Of The scheme devised the very
tarfeitures which the companies had Wed with
each other in getting rid Of in the OF equity
'Ineduity'' was revived for the sake Of profits,
Iabulated and exhibited the lapses OF their own
amount OF money their contributions 70 reserve
would amount to " What great si5 sun y these woTs
how how few would Be left The end Of ,he period @ Land and
get If il we're tii,sTi' then divided among them
Illustration.
For a typical example. Taking 100 persons. IN
surins age OF 81. they calculated that in %
years. 81 would time another lapse, and
loS would die leaving only s53 still insured at the
END Of the time
So it was proposed that persons insuring should
agree that for say % years. they should have no
dlyIdends, that whoever lapsed his policy during
this period should forfeit 70 the company all his
~ q assr9sd from MS premiums ahd % t1at N os oaIs
% paid, and whatever surplus had accrued SHOULD
reserves and surpluses should be put in fund
apart until the end OF the - years and then divided
They Calculated s ted thar te With @ Loo persons aged
insured for Sl:o,o each. on an annual premium or
81 apsn pocy-horiers and the forfeited surpluses
amount our II win interest isT T05' to 500 & 70 divided
'e ayn @ aeRoee saeR Sea s. g. just about
what each had paid FOR I5 ie1 quT4s Tni ene1 h
4rfU Z estimate
The Attraction
II a bold scheme. The public had just been
thoroughly educated believe that such forfsitures
gross injustice and hardship 20 the poiicy-
holder whose payments were thus coniscated ana
10 his family. which needed the protection OF the
pad-uP Insurance which MS foFIsliCgeS sTi wgg pa
pahIe and P~rfecty GnHecessaFy IN any nsaisS sS
severe and none had been noisier prophets OF
equity than these very companies WI VIE s ,bss
Of losing all for the 90 one % m N three s Gr sWhe
they had loudly Condemned as imnota! aIe caasI. @
The scheme was offered In the belief that VIII very
sisEi of II snffnsntiy brilliant speculation In
their profits was presented
Popularity.
The forecast correct. People could not AT
once turn back upon all their convictions ana sense
of Justice But the glittertng estimates won
,her way and put their own payments ana
the protection Of families the hazard OF the
game FOR ten . twenty years. with the distinct
b- made. each Is 10 accept as his true share. and
Agents longer presented life insurance for
vestrSe1ts ylss FOR the policy holder himselt The
larger the estimate the more eagerly u was taken
very aggressive Instead OF struggle FOR existence
II became race FOR size Hosts Q, agents t7, were
tion based seemingly scientific ngurss Inc
s6e ie Sopey S92n G S sa4pan and dive out true lie
Insurance administered 70 It's own proper ends ,Ss
another. most Of the companies followed more o,
les- cVmpetely IN the wake OF ne sIsn
irg FOR the investment on the forfeitures 20 2e
end. dqI'nf E e 'f SonSat HfiS1 teaars Win
panic T5ST S contracts 5s are ES1a nG ba- con-
tracts Of sale 3debenturss' eic.: etc Az bottom
on ,he ndGcement Jsat BY the forfeiture. q the
unlucky many IN the mean'ime the a returns 70 'Ne
E-timatgs Fail and why
But the wisdom ~ estimates has not been alto
Eether iustined OF her children The Rivalry OF the
s7eculating companies in their struggle Tor pre-
ersiner-e has led them % unheard-of expense
They have written an enormous amount Of bust
ness thousands % millions Ot Insurance have oeh
-,.l - a.crIsd .ur1Ius have been forfeited as
VS. hoped But so much mas been absorbed hy
,v nan sxp@nses incidenl 20 an abnormal rivalry.
that the expected results nave roy sIpp,1 npps1I %
thing but comparatively little
Estimate. and Resuit. Compared
TIE details OF their failure are extremely inter
esting
A. We have seen. the calculations In ls7i. in the
-xaroIe taken. promised a dividend N 1891 Of
s. .i85s4 But the 1881 result was only sfs7o-
In ls7s they somewhat moderated their estimate.
and put IL at ys2l7 20 but they paid only 1910 al
They continusd 70 make this same estimate until
ess , M ms sane s-,inste % 70 n Issl and are pay
iug IN 1871 only S2s7 70 The differences between
yssI To- oon~rnsnts are sin more striking
New sttmuIsnt. Needed
Obviously such vide discrepancies oet"een esu-
mate and result. between brilliant prospect ana
comparative failure pointed toward the ultimate
br.,kioun ~ the speculative attraction. and other
novelties OF plan and practice began TO appear by
which 10 fncite agents and draw the public
Conc-aIment of F"Tfettures
Much criticism II The forfeiture investment
schemes as gross injustice alike 10 policy-hoider
.,5 baneaciarv. has led the companies 70 adopt
forms % contract as remote as possible from life
insurance policies IN form. and called by every
sort ~ name Su-Eestlns in'es'rnr"' iiis'eau VI
Commissions and Rebates
AGENTS. have been attracted and stimulated By
commissions and allowances from two 20 nVe tunes
what they were thirty years ago. and nave IN
their turn. used these tu stimulate the public by
giyi,g s-vav in -rebates' TO new blood whatever
V1s necessary 70 secure II. until N many OF @ Ine
companies insurer can set-lf ne slthIs 1us Si
9]e5ium 5ro1 his policy at end Of The year. go
~ another rival ana repeat the process each year
So ionr as be Is willing 10 take the risk of being
able 10 pass new exam.n@ sey ~ get but hard TO
kee7 as the Iapses Of such companies snow
Competition ny Liberality.
Another means Of stimulating business mas nee"
the rivalry in 'liberality." II began IN dropplns
more or less ~ the defences against fraud Fraud
may he committed in two ways The applicant may
deceive the company by false statements 20 his
family or personal history, habits Of life. present
coDdion &c. that il issues its contract when u
issues IL AZ q different rate from what 10 would