Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1906-12-22
poN,I DISCUSS DEFERRED DIVIDENDS

DON'T DISCUSS DEFERRED DIVIDENDS
without stopping to examine into
the personnel OF the legislative insur-
ance commission 1t ought to be evident
to most business men that something Is
radically wrong when any body of men
discussing the public good can not
agree upon a verdict that the deferred
dividend has no place In legitimate life
insurance. The Iowa commission ought
to have reported against the deferred
dividend without dissenting member.
The legitimate province Of life In
surance is to furnish protection i'm the
risk is fixed by the actuary's tables as
accurately as interest is computed by
the bankers interest tables. Good bus
mess men may disagree as to what
each policy holder should pay annually
for the expense Of running the company
/ but within certain reasonable limits all
could agree on this. II it is desired to
average up the cost of insurance during
the period of the policy holders expect
ancy and charge such a level premium
at the start as will be adequate to pay
out to the end, the actnary's tables will
furnish fixed and accurate basis from
which to compute this premium. Then,
If for the sake Of safety and to allow
latitude for the fuctuation Of interest
rates and abnormal losses of life, 1t is
wise TO charge a premium slightly In
excess of the net costs as figured above,
even this becomes legitimate If the
company agrees to make an accounting
with the policy holder every year and
to pay back to him in the form of a
dividend every cent OF his premium in
excess of the actual cost Of his insur-
ance during the year. To propose that
{ this excess be retained in the hands OF
the company's officers Indefinitely or
even for five years is no more legiti-
chant to take your ten dollar bill and
keep $685. of change coming to you
with the remark that at the end Of five
years or when you decided to quit trad
ing with him he would give back the
change. but that in the meantime all
he could make by investing your right
ful portion Of this ten dollar bill would
be his. II he should invest and lose
he might go broke, and besides, you
need the money yourself.
Reserves in life insurance are legit-
innate. II man feels that he will
be better; able to pay during the next
ten or twenty years all the cost Of his
Insurance as long as he lives he should
have that privilege, and his advance
payments thus made should be invested
in gilt-edged mortgages and held in
trustf for him, then when he is delivered
a paid-up policy at the end of the ten
or twenty year payment period his
premiums during the rest OF his life
~
can be drawn from this reserve fund
into which he has paid them in adj
vance. But it is not legitimate life in
surance for 100000 or 100000 policy
holders to pay several dollars year
N excess of the cost of their insurance
into the hands of insurance officials
sto be kept by the latter under the guise
of deferred dividends to furnish a fund
sof enormous magnitude from which to
manipulate stock markets, underwrite
trust mergers. build trust company
buildings for the free use Of trust COM
panies or to be deposited without inter-
est in the trust companies owned by
the insurance company officials. The
legislative commission has wasted
much time discussing deferred divi-
dends Make the merchant give every
man back his change.