Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-02-04
FINANCIAL.
Fifty-seventh Annual Report
CONNECTICUT MWTWAl LIFE
INSURANCE COMP AMY.
To the Members:
DE- TIE

To the Members:
For many years the operations Of the Connecticut
Mutual have been assuming a more and more DIS.
t.ncive and peculiar interest for its members for
the American public. and for the whole insurance
world, and for several remarkable reasons worth
noting.
For many years the great majority Of companies
have been gradually swervlng from the Ines Of
practice which native and inherent in life in
surance. until at last many Of the largest and
most rapidly growing companies have openly aban-
doned the motive of life insurance the motive
to which they appeal for their business; they no
longer offer the results OF real life insurance at
tained by them the attraction to the men whose
families need its protection and whose business
they seek; they give their contracts other names;
they suppress far possible tine appearance
of life insurance contract: they endcavor as
far as possible to give them the appearance Of a
profitable investment for the insured himself. He
Is offered. not life insurance policy for the sake
of its protection to those who need its protection
but a Bond as money making investment for
himself. trusting, apparently, to tie general ig-
not to discover the unalteTable facts
which make such a thing impossible, far as the
great body of their clients is concerned. and pos
s:ble if at ALL only to few at the undue expense
OF the many
Life insurance undertakes to pay the money value
of a mans life to those dependent it. when
they may lose it By death While he lives
he contributes to pay the values OF other mems
lives by way of a premium proportional to his
risk of dying according to his age. His risk OF
dying increases each year, but his premium does
not Increase; therefore, 1t must be so calculated
that proper part Of 1t be put into Reserve
Fund meet the future increase OF the risk; this
Reserve is put at interest. a certain part Of which
is yearly added to the Reserve; an addition to his
premium is also made to provide for his share Of
the expenses
If the death losses heavy was assumed
in computing the premium. if the interest earned
is higher than assumed, and If the ex-
penses are as much as was assumed, then the COM
pany will just pay its losses as they occur. and
there will be nothing over for anybody; the cost of
the insurance will just equal the income; but If
the losses lighter, the interest rate higher and
the expenses less than was assumed, saving will
be made each of these items of total cost and
that cost to the company will be much less
than the assumed cost.
Mutual Life Insurance undertakes to give each
his insurance at only what 1t costs the COM
pany; at his equal share Of that total cost in pro-
portion to his risk and to the premium he has paid
in 1t returns to him. therefore, his share Of the
savings. If it does this each year. then he pays
each year only what his risk has actually cost
the company for that year. The more carefully
the risks selected, the better the rate of In
terest earned; the smaller the expenses in proper
tion to the income the greater the whole yearly
greater each mans share of the total savings and
the less his share of the total cost-f he gets back
his share of the savings. That is Mutual Life In
surance. There is speculation in that; there is
nothing in that to make 1t attractive to a man as
personal venture; 1t is pure expense to him.
and no one is advantaged In any case except his
beneficiaries, who get the money value of his lfe
which they would otherwise have lost by his DEATH
The only motive for man to take policy of
Mutual Life Insurance, therefore, IS the need of
those dependent on his life for its protection and
his duty to give that protection to those whom he
has made, or who rightly d pendent his life
and its financial product and his desire to get it
at only its actual, proper cost
The only way to make policy attractive
personal venture to any man is to do away with
mutually, except in the premium charged; charge
the full mutual premium. but instead of giving
back to each man his share Of the yearly savings
divide them up among only few and make the
go without.
No man would accept such proposition unless
he W. Elf faIf do.
gree Of confidence, that he was to be one Of the
few. SO the thing is put up a gamble. Each
man agrees to leave his share Of the savings with
the company for, say. twenty years; that II he
dies meantime. his policy being still in force, all
his yearly shares of savings which he might have
had back shall be forfeited to the company for
division among the final few; also, II he does not
keep up his policy, his share of the savings while
1t was in force shall go the same way. The d.
vision is supposed to take place at the end of the
twenty years among those who have survived SO
long and also have paid their full premiums
straight through; but each one has had to agree
beforehand to accept whatever the company allots
to him his share; there Is to be no statement
of the size Of the pot any accounting for
its distribution The expected value Of the share
in it of each Of the final few is set forth in the
estimates Of various ''bonds'' and other forms Of
contracts, the specific feature of all Of which Is
the postponement of all dividends for some period
Of years. 1t is the chance of being in at the final
division and getting what others have lost that
is the attraction. addressed to the personal interest
Of the man and not TO his sense OF duty and honor
toward his dependent family. That chance as
estimated by the companies originating the scheme
is about one in three. At least two-thirds will
drop out by the way. Each man expects to be Of
the third So he stakes his own proper share
of the savings for twenty years in the hope Of
helping divide what the other two-thrds must .Ose
And the company holds the stakes without account
ability to any one.