The Columbian. [volume] (Bloomsburg, Pa.) 1866-1910, 1905-10-12
LIE Insurance MATTERS
An Article Intended to Give
an Idea of the Subject
THE MORTALITY TABLES
Premium, Reserve and Endowment
Policies ENplaincd--Few Under
stand System - One American
Company has Four and Half
Times as much as France.

Times as much as France.
In the United States to-day there
60 In force nearly 100000, 900
"orth of life insurance. This vast
edm is nearly twice as great as the
.jm total of life insurance in force In
England, Germany, France and Rus
STA.
Scientific life insurance Is based
upon the knowledia that there is a
natural law governing the mortality
of the race by which may be deter
mined the average lifetime of a large
number of persons at given age.
True, 1t cannot be predicted in what
year any particular individual will
die, but II may be determined with
approximate accuracy how many per-
sons out OF given number will die
at any specified age.
II the mortuary records of any
community arc studied and the va
rious ages noted at which the sew
eral deaths have occurred, 1t will be
found that the yearly mortality is
governed by law which is practi-
cally invariable. SUPPOSE, for exam
pie, that such an observation covers a
period OF time sufficient to include
the 1istory of 900 lives. OF these
a certain number Will be found dy-
ing at age 20, larger number at age
30, and so on at the various ages, the
extreme limit of life reached by any
enc being In the ncighborhood OF
100 years.
As a result OF sys.,-Iatic study Of
mortality record life insurance
companies hay' .corporated the re-
suits OF the' computations into what
are called Mortality tables. These
tables reveal at a glance the inexora-
Bile workings Of the natural law gov
srning the mortality OF the race
They show how many in any large
number OF persons born will live to
age 30, how many to age 40 and how
many TO any other age. They also
show the number that will die at
each age and the average lifetime re-
naming to those still alive.
In the simplest form OF life insur-
ance number of persons combine to
create q common fund to be drawn
1pon In providing for the families
u deceased members of the organi-
alton. This organization is called q
uItual life insurance company, and
contract Is made by the company
nth each member, fixing the amount
o be paid In the event of his death
% some member OF his family, who
y called the beneficiary.
One OF the most popular forms Of
insurance to-day is endowment In
arance. 1t has been devised for the
person who may wish to make some
provision for his oTn future as well
~ for the future OF his descendants.
An endowment policy Is one which
y payable 10 the insured himself II
he lives through a specified number
Of years or to a stated age, or paya-
bic to his beneficiary In the event OF
his death before the specified period
There Is a twenty-year endowment, a
hirty-year endowment and so on.
At age 35 each of the 81 1922 mem
kers OF company takes out a ten
year pure endowment policy OF
$1,000, During the next ten years
the $40 members who die will re-
ssive nothing. At the end of that pc
Hod the 74,173 survivors will be
paid a total OF s74,173,00O. Find
the present worth OF this sum and
proceed as in computing the net sin
gle and not annual premiums for or
Anary life.
The net single premium for such
"A endowment policy Is s642.65.
This amount in ten years at 3 n per
cent. compound interest will amount
to only S906,52 Instead of the face
value Of the policy, $1,000. This diff
terence Is made up by the premiums
forfeited by the members who die
during the term and who get moth
ing Here comes In what is known
~ forfeiture In life insurance.
To obtain the net single premium
u the more popular form of endow-
ment, known as ten and twenty year
endowment, suppose that each of the
S,622 members OF the company, be-
ades carrying pure endowment poll
aies also carry term insurance of like
amount covering the same period of
ten Years. Then each OF the 7,649
persons who die during the ten years
viii receive $1,000 and thus by com
bining the premium of a policy tho
net single premium Of regular en-
dowment is obtained.
There are innumerable other
forms OF policies, but these are rep
resentative and suffice to show how
the premiums OF all policies result
from computations based upon the
mortality table and the expenses In
adent to the running OF a life insur-
ance company.
The reserve In life insurance is
amply the insurance fund or mortal
ity fund OF the company, from which
all death claims are paid. The re-
serve is made up OF the net annual
premiums and the money these pre-
niums will earn at az per cent.
com pound intereRt Nathan nat pra