The Indianapolis journal., 1903-02-06
FIFTY-SEVENTH ANNUAL REPORT
OF THE
CONNECTICUT MUTUAL LIFE
INSURANCE COMPANY

To the Members:
For many years the operations of the
Connecticut Mutual have been assuming a
more and more distinctive and peculiar in
terest 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 swerving
from the lines of practice which are native
and inherent in life insurance, until at last
many of the largest and most rapidly grow
ing companies have openly abandoned the
motive of life insurance as the motive TO
which they appeal for their business; they
no longer offer the results of real life in
surance attained by them as the attraction
to the men whose families need its protec-
ton and whose business they seek; they give
their contracts other names; they suppress
so far possible the appearance of life
insurance contract; they endeavor as far as
possible to give them the appearance of
profitable investment for the insured
himself. He is offered. not life insurance
policy for the sake of it's protection to
those who need its protection, but bond
as money-making investment for himself,
trusting, apparently, to the general ignor-
ance not to discover the unalterable facts
which make such thing impossible, so
far as the great body of their clients is con-
cerned. and possible, IL at all. only to few
at the undue expense of the many.
Life insurance undertakes to pay the
money value of mans life to those de-
pendent on ii, whenever they may lose ii by
death. While he lives he contributes to pay
the values of other mems lives by way OF a
premium proportioned TO his risk of dying,
according to his age. His risk of dying in
creases each year, but his premium does
not increase; therefore, il must be so cal
culated that proper part of IL can be put
into a Reserve Fund to meet the future in
crease of the risk; this Reserve ia put at in
terest, 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 are as heavy as was
assumed in computing the premium, If the
interest earned is no higher than was as
fumed, and IL the expenses are as much as
was assumed, then the company will just
pay its losses as they occur, and there Will
be nothing over for anybody; the cost or
the insurance will just equal the income;
but If the losses are lighter. the interest
rate higher, and the expenses less than was
assumed, saving will be made on each OF
these items of total cost, and that cost to
the company will be SO much less than the
assumed cost.
Mutual Life Insurance undertakes to give
each man his insurance at only what II
costs the company; at his equal share OF
that total cost in proportion TO his risk and
to the premium he has paid in. 1t returns
to him, therefore, his share of the savings.
If 1t does this each year, then he pays each
year only what his risk has actually cost
the company rithat year. The more care
fully the risks are selected, the better the
rate of interest earned; the smaller the ex-
penses In proportion to the income, the
greater the whole yearly saving; the less
each mans share of the total savings and
the less his share OF the total cost-if he
gets back his share of the savings. That Is
Mutual Life Insurance. There is no specu-
lation in that; there is nothing in that to
| make 1t attractive to a man a per-
sonal venture; it is a pure expense to
case except his beneficiaries. who get the
money value of his life which they would
otherwise have lost by his death.
The only motive for a. man to take a
| policy of Mutual Life Insurance, there
! fore, 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 are dependent on his life
and its financial product, and his desire 10
get 1T at only its actual. proper cost.
The only way to make a policy attractive
away with mutuality, except in the pre-
MUM 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 a few and make the
rest go without
No man would accept such proposition
| unless he was either assured or felt a con-
siderable degree of confidence that he was
/ to be one of the few. So the thing is put
up gamble. Each man agrees to leave
| his share of the savings with the company
| for. say, twenty years: that If 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, if he does not keep up his policy
his share of the savings while 1t was in
force shall go the same way, The division
| is supposed to take place at the end Of the
| twenty years among those who have sur
vived 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 nor any accounting for its
| distribution. The expected value of the
share i'm il 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 di-
vision and getting what others have lost
| that is the attraction, addressed to the per-
| sonal interest of the man and not to his
| sense of duty and honor toward his de-
| pendent 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 ex-
meets to be Of the one-third SO he stakes
| his own proper share of the savings for
| twenty years in the hope of helping divide
what the other two-thirds must lose And
| the company holds the stakes without ac-
| countability to any one.
| : Notwithstanding the fact that none of the
| companies doing this sort OF Investment
| business have ever made dividend which
| even approximated the estimates which
| attracted the investors, and that
/ these dividends have steadily and rapidly
| shrunk through all the many years of their
| exnerience IL Is true that they still sue
ceed in attracting great numbers TO their
| membership. Personal interest I'm what is
| made to appear good thing, for which
| some one else is expected to furnish the
! contents is a motive far more easily ap-
| pealed to- with less effort, and with much
| reader success, than ones sober, unselfish
! duty to those he has made helpless and
| dependent and whose protection he has no
right to put in hazard.
| The point of view OF the companies sell
| ing postponed dividend schemes is admira-
| bly revealed in the instruction recently
| given TO its agents by one of the very
| largest of them: the italics are the COM
| nany's own: Get the idea out of your
own head, and keep 1t out Of the investors
| head that you are simply assuring his life
| Avoid that inadequate conception OF the
| transaction. View the matter accurately
| and scientifically. You are selling block
| of bonds-that Is the first idea To that
| Won add the idea of insurance. Insurance
of what? Why insurance of the investment
| 1t is not. strictly speaking, life assurance
| rine ihsurance-it Is bond insurance" but
he