The Grit-advocate., 1905-06-16
LIFE INSURANCE TOO COSTLY.
Through Manipulation of Funds Policy
Holder Ia . Loser.

Through Manipulation of Funds Policy
Holder IL . Loser.
The articles which are daily being
published with reference to the man
agement and methods of the Equitable
Life Assurance Company are awaken
ing TO greater degree than ever be-
fore the public interest in the life in
surance business in general. That n
business of such magnitude should be
so little understood by the average
person seems incredible; and yet it is
a fact that the vast majority of policy
companies in which they are insured,
and still less of the manner in which
their premium payments are used. Ihe
insurance companies are considered to
be among the most stable of institu'
tions. and apparently it has been suf-
ticient for the average layman to feel
assured that, in the event of his death,
his heirs would receive the amount
guaranteed. Beyond that he does not
go, and of the fact that lie is not re-
ceiving full value for his payments, he
Is, in many instances. unaware.
Life insurance is necessity. That
grave evils of management exist, that
policy holders moneys are being used
improperly, has been amply illustrated
in the case Of the Equitable Life. Per-
sonal fortunes have been gained by
officers through the manipulation of
the funds under their control, and the
individual policy holder is the loser.
That there are some companies
which are conservatively ond honestly
managed is well known. These COM
panies do not accumulate huge sur
pluses, and, in fact, the accumulation
of large surplus funds is unnecessary.
Some companies return the profits de-
rived from the business to the policy
holders at the end of every year. and
accumulate only sufficient fund to
provide for any slight depreciation
which may occur in the "aluc of their
securities. 1t has been suggested that
a remedy for the evils in the busi-
ness that exist to-day lies in legisla-
ton which will compel all companies
to disburse their earnings among the
policy-holders annually. There are
many companies which do this. and it
has been proved conclusivcly that the
net cost of policies issued on this plan
has been less than of others. In order
that satisfactory results may be at
tanned by the annual dividend COM
pany, the management must be con-
servative, and all channels of unneces-
sary and dishonest expenditure elm
mated. The policies issued by the
New York companies provide. in the
great majority of cases. that the sur
plus earnings shall not be paid until
the end of the twentieth year. and
then only in the event of the holder
living out that period and having made
all payments on account of his con-
tract. AS matter of fact, only about
one-quarter of the persons who insure
are persistent in their payments, and
the forfetures of profits which the
other three-quarters are compelled to
make go to increase the surplus, which
is already larger in amount than is
necessary for the safe conduct of the
business. 1t is an outgrowth of the
old tontine methods, and is manifestly
unfair. The policy holder who dies
and the one who, through adverse cir
cumstanccs, is compelled to permit his
policy to lapse before twenty years
have expired, should receive the bene-
fits of the profits made from their pay
ments. The amounts paid in dividends
by the New York companies have been
absurdly small, and have been eN-
cecded by the returns made by annual
dividend companies on policies of SIM
liar kind and amount, and in the lat
ter institutions every member has re-
ceived his just due, whether he SUI
vived the twentyyear period or not.
The conclusion is unavoidable that
where surpluses are permitted to ac-
cumulate and are not SO diSbursed they
are misused That the evils of the
business are directly traceable to the
accumulation and control of these large
surplus funds is well known to those
familiar with conditions as they exist,
and if the deferred -divider.. companies
were compelled by law to divide their
earnings among the body of policy
holders every year they would be
forced to pursue different practices in
order to compete with the honestly
managed institutions which are being
run for the benefit Of the policy holders
and not the officers, and which are at
tanning better results.-San Francisco
.Argonaut,