Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-07-15

the mortality table for he various ageo, y
.etill another source Of profits u tho HsAf
a saS s sv ' 2ss aso, Mi ss .Sso
putation shows the actual prtm!um 10 hk
For example. calculation ihovs that Ia
a asry I Ss' po Snnna To- premium e 0 an
collected d sla.ai nat. T T' latter an,ounE
and not hs.eO must BE- collected 4 TIL
With which 20 meet all obligations az they
mature; and 10 the fraction of q oent Qys}E
charge 10 placed to profts u some unfoyee
seen contingency does NOS require III oiS
Then, too, profits accrue when the ioAdJ
ing proves to be more THU SUFFICIENT to-
pay the running expenses Of the company
ana 10 meet various contingencies that may
arise from time to time.
But iapsss are not looked upon a. .
source sour OF real profit. II q policyhol6ef
first or feeona year-that Is, lets his policy !
lapse-he forfeits the pro yata OF the re- :
serve held for his policy. but Il 10 he'd THAI
expense necessary TO replace the lapsed
policy on the books by new business. But
at the end OF the third year and thereaftey
Of expense. and so the iapsns po S Sd
will be entitled to what is called a sur.
render value. This entities him TO the larger
part of the reserve held TO meet the face OF
the policy. Hence. II is held, lapses DO
not form part OF the profits.
Distributing the Profits.
The profits. or savings. may be apportlons
ed in various ways. II they are appor.
toned at the end OF each year. the plan lie
known as the yearly dividend plan. r.
there is no dividend at the end OF the first
year. the plan is known as the deferred dis
tribution system. Under this system dihs
trlbution may be deferred until the end Of
any given number OF years with subssquenSl
annual dividends u
Under the semI-tontine system on disara. !
button the policyholders are divided into
classes, usually according to date OF entry 1
INTO a company and length OF distribution |
period selected. A thousand members have
policies bearing the date of 1905; all select ,
niteen years as the period OF distribution, I!
ana all prohts accruing from these policies
In this period will be distributed among thih |
others. !
Under the tontine method Of distribution !
only a class benefits. but 1t differs from the 1
semi-tontine method in that the laps.ns
members forfeit not only all gains. az un.
der the semi-tontne plan, but their surren,
DER values as well. which are guaranteed
10 them under the semi-tontine plan. IN.
der both systems the beneficiary OF the
member who dies before the end OF the die.
tribution period receives only the face
value of the policy and has no share in the
profits. Neither does the member who
iapses under the semi-tontine system share
In the savings
Deferred distribution differs from thsss
TWO systems in that there Is no accurnulas I
ton Of profits to the credit of a class or
classes. and there are no forfeitures for
the benefit OF the members who do nor
lapse. Ihere Is, indeed. an accumulation
OF savings, and those who die or withdraw ,
before the distribution OF savings ia mada
nave no share therein; but that which they
| might have received had their contracts re-.
mained In force accrues. not 10 a parttc,1iar
CLASS but to the whole body of surviving
policy holders.
tder the yearly or deferred method OF
distribution. dividends are apportioned 40.
cordlng to the amount which any policy
mas contributed to total gains accrutng 10
the company in that time A policy Witch
according TO contract, will figure in divf.
uend distribution is called particpatinst
ana one which does not figure in distribu,
ton Is called participating Surrender
value policies are non-participating
BUT when a policy holder lapses II is not
Necessary for him TO take out surrender !,
VaIue policy. He may receive cash: that is =
cash surrender value. Ue has at least these
two options open to him. Options too
numerous to mention are now offered to
holders of life insurance policies in their
contracts, both during the life OF the policy
and at its close
In n purely mutual company all the
prohtS finally accrue to the policy hold
ers, the members of the company II tho
life insurance company is q stock company
owned and controlled by a limited number
or individuals termed stockholders, the
profits. When the policy holders of stock
company share with the stockholders In the
prohts, the company is termed a mixed
company.
The Surplus.
The two systems of prof1t distribution
now generally in vogue in this county are
the yearly and deferred dividend systems,
Under these fund is set aside at the end
of each year to be distributed among the
yearly dividend policies OF a company and
among such other policies as have COM
pleted their respective distribution periods. /
In the words of insurance experts the
amount TO be distributed in each case IS a
policys equitable share of the gains which
have accrued during its distribution period,
whether that period be one or twenty or so
years. This sum is apportioned according
to the amount which such policy has con-
tflbuted TO the total gains accruing during
the period of distribution. The fund thus
set aside each year Is termed the Invisible
surplus.
The balance Of the savings or gains ac-
cruing during that and other years is held
as reserve for the better protection of all /
policies of the company, and for future dis /
tributon as dividends among the par
ticipatng policies as their several dis
tributon periods are completed. This fund
constitutes the much discussed surplus
proper.
These are the main underlying principles
of scientific life insurance. There are in-
concern the insurance expert only, and a
recital of them would merely serve to con-
fuse To have "A clear idea OF scientific
life Insurance, the lay reader only needs
to be familiar with the basic principles
here gone into.