The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1905-04-23
Spirit of the Press
State Insurance.
Salisbury Sun.

Salisbury Sun.
Recent disclosures of the corrupt
management of the Equitable Life In
surance Company have caused "a deep
er interest to be generally manifested
in the way that the great insurance
companies carry on their business. and
The Raleigh News and Observer, al
ways in the lead in suggesting meas
ures for the public good, is advocating
q system Of State insurance. The pro-
position is one that deserves serious
consideration. In Germany there is q
system of compulsory insurance on a
small scale, and it has worked very
satisfactorily and there seems to be no
reason why it could not be done in
this country under State auspices.
The great defect in the present
fashion in which life insurance is con-
Quoted is that the cost is out of pre-
portion to the benefits received Cheap
insurance has been attempted by many
fraternal organizations, but most OF
them have made the error of fixing
the rates lower than can be continued
indefinitely and disappointment has al
most always resulted. AT first the
membership is recruited from young
men, but as they grow older it is hard
to get enough new members among
the young to maintain the balance, the
death rate increases, and the rates
have to be raised, usually at, time
when those who joined the order years
before find it practically impossible
to pay the advanced cost.
Insurance in the old line companies,
10 matter how conservatiVely they
are conducted, is an expensive thing.
1t has been shown conclusiVely that
the average man 80 years old ought
to be able to obtain insurance for SIN
to $12 "a year, at most, with the GER
tanty that the rate will never be
raisedy and that there is ample re-
serve to pay the greater cost as he
grows older, but, except term policies,
good only a few years, he cannot buy
such insurance for less than $40 a
year and some of the larger companies
charge him $25 to $50. Part of this
amount goes for the expenses of the
company, at least half the first years
premium being paid the agent, and it
has been proved of late that these eX-
penses are much higher than prudent
management dictates The rest, over
the amount needed to pay the death
claims and maintain the reserve re-
quired by law to guarantee the future
payments, accumulates as surplus
Some of the companies notably the
Equitable Mutual Life and New York
Life. point with pride to their enorm-
Gus surplus and brag about the wise
management mat mas PROVIDED SO
strong a safeguard for the policy
holders. Instead, they ought to be
ashamed of having taken so unneces-
sarly large an amount of the public's
money, to be piled up in a monstrous
surplus whose only real use is in en-
aiding the officials of the companies
to float bond issues which they sell
back to the company at an enormous
profit. Witness recent disclosures of
the Equitable management.
state insurance would require no
costly system of agencies nor would ii
be necessary to accumulate a great sur
plus. Insurance at the bare cost could
be furnished, the rates being fixed OH
the basis of the American Table of
Mortality, plus a sufficient reserve to
guarantee that they would not have to
be raised. The expense of maintain
ing such a system would be infinitely
less than that of the private compa-
nies, nor would accumulated funds be
diverted into the control of the money
trust. To work such a system out to
greatest advantage is not an easy mat
ter, but it can be done and the saw
ing to the people of North Carolina
that would result makes the plan
worth trying.