The Anderson intelligencer. [volume] (Anderson Court House, S.C.) 1860-1914, 1906-01-31
INSURANCE.
The Initial and Ultimate Cost of Life Insur
John Edmund NJ Laughlin in Atlanta Journal.
aIlcG.


sum figured at the rate per cent given,
together with the mortuary fund, will
give the required sum of $1,000, 900.
This is the net cost Of carrying insur-
ance without cent beiug charged for
expenses.
The expense item Of a company,
which is known to insurance parlance
as "tbe loading" depends largely upon
the conditions confronting the CON-
pauy, out il the instance taken ss an
example, the loading, or expense, if
you please, is $G.45, or about 25 per
cent. Of the net premium.
1t has been shown what arc the in
tesral parts Of q life insurance pre-
MUM, now the question arises whether
or not this amount is excessive for the
safe protection OF policy holders, or
could this amount be materially re-
duced. To those who will take the
time to thoughtfully consider tbe cub.
ject, it will be patent that reduction
Of this initial cost can not be made
without jeopardizing the safety Of the
insured.
In tho experience Of old line com.
panies, it has never beon shown that
the full amount Of the premium as
obtained on the above basis, is re-
quired to mature their contract, there
fore every company in the business is
supposed to return to the policy hol.
ders all Of the unearned premium.
Actual experience shows that the
desth rate is not as high as is figured
in the American Experience Mortality
tables; that the rate of interest is more
than 3 per cent and that the expenses
can always be shaved down to con.
siderable figure less than that charged
on the loading account.
Suppose, for instance, that the
death rate for each 1000 men is only
eight in the example given above,
there is q saving Of $50 on the mortu-
ary cost; rate of interest was d. per
cent, there would be saving Of 50 %
on the reserve item, and the expenses
were cut half in two, giving q saving
on the leading eg s2.22l, We have 9
grand total il savings Of s7.34. Now,
while this might be done one year or
two years, without impairing the safe.
ty Of the insured, it would not be ad.
visable, to say the least, to undertake
to carry out Q 20, 30 or 40 year con.
tract on 80 close margin. ..
In the case OF an annual dividend
| company, these savings from from the 7az;'
ous items enumerated are gotten TO-
gether and apportioned 20 each policy
| and returned 70 the policy holders il
tie shape Of dividends, except suef
portion as is deemed necessary For .
contingent Or surplus fund to bs usei
in the event Of some unforeseen cpl
demic, panic or financial stringenoy
The writer has. endeavored to givl
in as comprehensive o manner th.
actual cost Of carrying protection ant
at the same time TO point ont the pos
sibilities and probabilities Of cheaper
insurance. q Any insurance based OF
other calculation than these will in
evitab1y runSafoul the rocks Of disas
ter: Insurance that protects, must
have q, sound basis and che initia,
cost must be sufficient TO meet exist
ing conditions and provide for future
emergencies. ~ ,. &. : ! :. :. i. IS, :,.. ] J.
The example given in this article il
taken from an annual dividend com
pany. At some other time the sub
ieot Of deferredldividends will be taken
iup. -<l. %,3"3 t %:. .. -. 4 .:%+s ! i