New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1905-10-16
LETTERS TO THE EDITOR.
SHEDS LIGHT ON GAME,
Another Insurance Man Shoes Ton
tine EuiIs-ProposeS Remedy.
To the Editor of The Tribune.

To the Editor Of The Tribune.
Sir: have read with interest the several COM
municatons the subject OF deferred dividends.
Deferred dividends were first offered TO the insur-
ing public in 1871 It was expected that large
profits would result TO the surviving and persistent
policyholders IN 1891 because not only the surplus
but the reserve also "tontined." and a con-
sequence large estimates Of results authorized
by the companies issuing this class OF insurance;
but although only & per cent OF the insurers in
1871 lived and persisted until 1891, they received
only 81 per cent OF the estimate, and the percent
age Of that estimate has declined every year since
1t has long been accepted that annual dtvi-
oend is a misnomer, as It is impossible that there
should be any such thing in life insurance. Such
payment by any life Insurance company is a re-
turn Of the part Of the premium which does not
appear to be necessary for the payment Of ex-
penses Of death claims and for the proper con-
trbution 70 the reserve and the general surplus Of
the company.
One American company paid real dividends quin-
quennially in the first twenty years of its opera
ton and tiienniaIly for a few years thereafter
when the custom OF paying so-called annual divi-
dends was inaugurated by all companies. The com
petition under this plan became so great that the
annual dividend paid by most Of the companies
was too large; indeed. so large as TO reduce the
low what should be held as contingent guarantee
10 cure conClt deleGieu CLt!elIu
tine" "'semi-tontine" distribution" ''accumula-
ton" Under any Of these plans the policyholder
consented TO be kept in the dark in regard to the
surplus earnings of the company his policy for
ten. fifteen twenty years. This latter is DOUBT
less the cause OF all the very bad practices which
have admittedly prevailed for many years
Permit me to offer cure for the present
condition the following: That all companies doing
a deferred dividend business shall be required to
set aside a general surplus a contingent
guarantee fund amount equal to 21z per cent
OF the and to appoTtion the balance OF this
so-called surplus to each participating policy to
be paid with the policy according TO its provisions;
If annually very good; If deferred five, ten, fifteen
or twenty years, very good but in every case a
statement Of the amount apportioned each year
should be sent TO tbs policyholder with tho Gus
tomary notice OF the due date or his premium
This would require the company to show its hand
in the matter Of its surplus earnings once year
and such publicity would prevent any from raining
into evil ways in respect to the handling OF the
polcyholders' money.
Such apportionment Of the dividends should be
made the Contribution PLAN" which is nov
we'll understood and would be perfectly fair 70 all
concerned and would undoubtedly result In great
Insurance as an investment for old age. as well
as for the benefit of dependent ones whom the IN
sured might leave a. his death, more attractive
than It has ever been, and woLld DOUBTLESS extend
the business into a wider field than IL has ever
occupied before, because under such conditions no
insurable person would be willing 10 go without
insurance, and would be glad to take as much as
could be conveniently carried -,
Every ccmpany would under this plan have the
same PROPORTION OF general surplus or contingent
guarantees fund. and would therefore be equally
safe and the company saving the most by true
economy in the matter of expenses would easily
be recognized the deserving to be at the top
ANOTHER INSURANCE MAN
Buffalo, Oct Il, 1905