The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1903-03-06
WHO GETS THE SURPLUS?
To the Public.

noticed quite lengthy article In
your issue of Feb. Is, written by we'll
known insurance man, under the heading
of "A Needed Reform in Life insurance..
One would suppose from the tenor of
this article that all that was generous
towards policy holders was embraced in
the laws of Massachusetts,, and especially
in the policies issued by the companies
organized under that law, because they
are compelled to pay annual dividends,
Chat is, if they have any to pay), and
Judging from the average dividends of
the Massachusetts companies, 1t would
not make much difference to policy hold
ers whether these dividends were consid-
cred as assets or Liabilities, although
the gentleman seems to think that in
surance surplus is a liability instead Of an
asset, but when I have surplus, which is
not very Often II seem to think that
have got an asset. Suppose we see how
generous Massa chusetts companies are,
and what annual dividends they arc pay
ing. The average dividend for 1901 was
IA per cent, as per cent, 14.5 per cent
III per cent, 1913, per cent. The largest
average dividend being 14.5 per cent Of
the premiums received, and if this divi-
dend is taken as basis, for the average
of twenty years, say ON a twenty pay
| ment life policy. issued at the age of So.
at a premium OF 1854 per year. or d total
amount of premium paid in during twenty
years, of $77SS0,, less ,14.5 per cent as
dividends, or $112.93, the net cost Of the
insurance would be S665.S7. On the other
| hand, the dividend from such q policy
with the same premium by three of the
leading New York companies for 1901 on
the tWentyyear- distribution or semi
! tontine plan, was as follows: 1888, 1851,
1928, making the net cost to policy hold
ers $455.SO, $427.8O, $395.8O. These New
York companies give cheaper insurance
during twenty years which range as fol-
lows: $270.O7, $23S.07, $210.07. Where does
the generous spirit Of the companies in
the above Illustration come in?e Yet he
would compel policy holders to accept
| such small dividends. The larger por-
| ton of the New York companies issue
both annual and deferred dividend pol
| icies, but 95 per cent of the policy hold
| ers prefer to get a SO per cent dividend
rather than an II or IA per cent dividend
Such policy as described above would
have a surrender value at the end Of nine
teen years of $523.53, whereas a. policy
/ issued on the deferred dividend plar
could be sold for $685. which shows thai
a policy issued nineteen years ago under
this wonderful Massachusetts, law is no.
as valuable as the New York companies
by s210
AS broker, I buy or loan money or
all good old-line companies policies, il
assignable and Of sufficient value, or
will insure you in the Manhattan Life
Company of New York, giving you tn,
4 choice of an annual or deferred dividene
plan. If the latter is selected the com
pany will loan the full 3 per, cent lega
reserve at per cent at the end of tn,
second year and increase loan from yea
to year, besides we expect to pay as 1afg
a dividend as any New York company.
Yours respectfully.
Ii. P..Van- Norman,
Il Associate Manager, Mania ttan Life CO
and Life Insurance Investment Broker