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

during the ensuing year. according 10 the
n ortality table $50 annuiiants will die
after having received only one payment
apiece. Thus 1,o:0 persons will be living
on the first day of the second year to re-
ceive payment of 81 each and on that day
the company will only need a total of $751;
O90 on hand to meet all claims. The pres
ent worth of that sum, at the safe COM
pound interest rate of 3R per cent, is S1S,-
349. i6. This is the sum which the company
really should have in its possession today to
pay the $751; 900 annuities due the first
day of the second year.
In like manner, the amount necessary to
have on hand to meet payments at the first
OF every one OF the siXty-one years can be
ascertained. The present worth of the sum
necessary 10 pay the last three annuities
on the first day of the siXty-first year is a
fraction over 1872 cents. and the present
worth of the total of 26i1, o1S annuities to
be paid from year 10 year to an override
creasing number of annuitants is Sl,521,-
1912 BY dividing the amount of the pres
ent worth of the annuities by S1,s22. the
value Of a life annuity at the age Of thirty
five is found to be 1851.
So S1SG1 paid down in one sum is the ex-
act equivalent at the age of thrty-hve of
the payment of 81 at the beginning of each
year during life. 1t has been seen that the
net single premium for $1,000 ordinary life
Insurance at the age of thirtyfive is 1910
AS S1S.61 Is the mathematical equivalent of
81 to be paid annually for life then S3I055
must be the mathematical equivalent of as
many dollars to be paid yearly during life
as S1S.61 is contained in S3I055, which is
1891 times. Therefore S19.91. paid at the
beginning of each year during life. is the
exact equivalent of the net single premium
of $310.55, and is the net annual premium OF
an ordinary life policy of $1,000 a age thir-
ty-fve.
The Premium for Each Age.
In similar fashion the net annual premium
can be scientifically computed for any GER
tain number of persons at any given age;
for example, for the 1885 persons out of
100000 who will be living at the beginning
of the forty-fifth year, according to the
mortality table. And 1t is easy to under
stand why with each year of increasing age
this net annual premium must be proper
tionately larger If the company is to have
the funds with which to pay all death
claims without making assessments from
time to time, or depending on the premi-
ums of members TO meet the death
claims of old members
The net premium, plus the annual loading,
gives the gross annual premium, which Is
popularity called simply the premium. The
premium Is often paid semi-annually and
quarterly and sometimes monthly and
weekly Paid in any of these ways, inter-
est charges are added. so that the company
will be certain of its interest money where
with to help meet losses as they occur.
The premiums of the different sorts of
policies now issued Ghere is an infinite va
riety of them) are all based on the net sim
gle premium of the ordinary, or whole, life
policy which covers the whole period of
life All other policies are but variations Of
this one, and hence their premiums are but
variations of the premium of the ordinary
life policy.
one of the common variations of the or
binary life policy is the limited-payment
life policy. When ten premiums only are
to be paid, it is ten-payment lie; II
twenty premiums. a twenty payment Ire,
and so on To determine the net single pre-
mi Of a
81 900, at any given age. divide the net SIN
gle premium of ordinary life policy for
81 coo at the same age by the value of
temporary annuity OF 81 terminating IN
twenty years A temporary annuity, like
life annuity, terminates on the death or
the annuitant, but unlike life annuity. IT
must terminate well when speclhc
number of payments have been made-as,
ten years-even though the annuitant is
still living. The value of a temporary an
nuity is computed in manner similar to
that OF life annuity.
Term Insurance.
Term insurance is taken out when life
Insurance is desired for. the protection it
will give during a specified period pending
the development of a business enterprise,
the maturing OF a debt and so on. If the
insured dies within the period named in the
policy, the policy will be paid. If he lives
longer than that period, he will be paid
nothing
be for any number of years.
To find out the net single premium for
81 SD ten-year term policies Issued to the
same number of men all at the age of thir-
ty-fve years, it is only necessary to ind
out (as In the case of the ordinary life COM
putation) the present worth of the amount
of money needed to meet the death losses
that the mortality table shows will occur
during the period covered by the contracts,
and proceed as before The persons who
are living after the tenth year are not taken
into consideration. According TO the very
terms of their policies these I4,1I3 surVlV-
ors although they pay premiums yearly for
ten years will receive nothing except the
protection the insurance affords them dur
ing a trying period at exceedingly low
rate.
Endowment Insurance.
One of the most popular forms of insur-
arce today is endowment insurance. 1t
has been devised for the person who may
wish to make some provision for his own
future, as well for the future of his de-
pendents An endowment policy is one
which is payable to the insured himself If
he lives through a specified number of
years to a stated age, or payable TO his
beneficiary in the event of his death before
the specified period. There is twenty
year endowment. thirty-year endowment.
and so
This policy is a combination of term in
surance and pure endowment. A pure en-
dcwment policy Is payable only TO a person
who lives to complete the endowment pc
riod, and those who die before that time
get nothing.
At age thirty-five each of the 81, 800 men,
bers of company takes out a ten-year
pure endowment policy of $1,000. During
the next ten years the 7,640 members who
die will receive nothing. At the end of
that period the 74,173 survivors will be paid
a total of S74173, 600. Find the present
worth of this sum and proceed as In COM
putting the net single and net annual pre-
n:iums for ordinary life.
The net single premium for such an en-
dowment policy is S642.65 This amount in
ten years at BIZ per cent compound interest
will amount to only s906.52 instead of the
face value of the policy. $1,000 This diff
ference Is made up by the premiums for
feited by the members who die during the
term, and who get nothing. Here comes in
what Is known forfeitures in life insur-
ance.
To obtain the net single premium of the
more popular form of endowment, known
as ten and twenty-year endowment, sup
pose that each Of the 81. 500 members Of
the company, besides carrying pure en-
dowment policies, also carry term tnsur-
apce Of like amount, covering the same pc,
Rod of ten years. Then each Of the 7,64Q
persons who die during the ten years will
receive $1,000, and thus, by combining the
premium OF D term policy with that Of Q
pure endowment policy the net single uss-