Mexico Missouri message., 1902-09-18

increase each year until at age As
| the cost of insurance would be
$10.27, and since the member
would continue to pay only 80. 81
there would remain I cents to put
into the Reserve Fund. AT age
10 the cost of insurance would be
! SlO.S2 and since the member
would only pay $lO.34 the cost
would therefore exceed the rate of
assessment by Is cents, and con-
sequently it would be necessary to
draw this latter amount of As
cents from the Reserve Accumula-
ton in order TO provide for the
| cost of his insurance for that year
And so the cost of insurance would
continue to increase with each
years advance in age, until at 40
the actual cost for that year would
be go. 60, while the member would
only pay $lO.34, leaving differ
ence between the cost and his pay
ment OF H43.3l, and consequently
it would be necessary to draw the
latter amount of $43.3l from the
Reserve Accumulation i'm order to
pay the full cost of his insurance
for that year. There is no way Of
stopping the increase in the cost Of
insurance so long us the member
lives and gets older, and hence if
| that member were to live to be 80
years old, the cost of insurance
during that year would be $3GS. 70,
while under the level rate plan he
would still pay TlO.34, and it
would therefore be necessary to
draw from the Reserve Fund
%3JS 10 in order to supplement his
rate of assessment and provide for
the cost Of his insurance during
that year. And were he to con-
tinue to live until he was 9S years
old it would be assumed that would
be the limit of his life and hence
the cost of his insurance would be
i 600, and therefore it would be
necessary to draw from the Re-
serve Fund 1899 &c in order to
add to his payment of $lO.34 so
that there might be on hand Il Suf-
iiclent amount to pay the face of
his policy which it is assumed
would mature in that year.
1t will be seen that under the
level premium plan the reserve ac-
emulation will always keep pace
with the increase in the cost of in
surance, which is due to the fact
that the excess payments in the
early years is placed at compound
interest, and the increase of money
at compound interest is of the
same progressive character as the
increase in death rate, or cost of
insurance.
Thus it is the same thing is
accomplished by the increase of
money at compound interest as
would be accomplished by the in
crease in the number of assess
ments or in the rates of assess
ment.
The reserve fund is for the pur-
pose of providing for the increase
in the cost of insurance, and nee
essarily it must be large enough to
take care of that increase. If the
reserve accumulation is inadequate
then it will not make sufficient pro-
vision for the increase in the cost
| Of insurance, and therefore the So
ciety would become inSolvent. The
amount of reserve accumulation
can be definitely determined, and
no less amount will suffice than is
shown to be necessary by actual
experience and by mathematical
deductions from such experience.
If there is very large amount
OF Insurance protection III force
then it will require II very large
reserve fund in order that the
principal and interest may be Suf-
| ticlcnt to meet the natural increase
IN death rate and insurance cost
In Il straight level rate plan it
requires II very high reserve accu-
mutation, aud for that reason the
Committee thought it best not to
recommend such a plan as a single
proposition to the jurisdiction.
But they thought it wise to com
hnc the increasing rate and the
level rate so rs to avoid II large re-
serve accumulation and also in or
der to give reasonable rates at the
earlier ages when insurance is
most needed.
The Committee offered options
which are mathematical equivalents
of the plan recommended by them,
and under these options II member
can have almost any kind of plan
desired by him.
The plan which was preferred
and recommended by the Commit.
tee has an increasing mortality rate
from age of entry or from attained
ace to 10 At and after ace 10