The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1906-02-28


Pythias, has made the following eX-
haustive and intelligent written reply
to a communication received recently
from Fred E. Wheaton of the Mime
apolis Advocate. The reply is made in
response to certain pertinent questions
relative to fraternal insurance and will
he of vital interest to readers of The
Evening Times. The letter follows:
Feb. 10, 1906.
Hon. Fred E. Wheaton,
Editor Advocate, Minneapolis, Mimi
Dear Sir and Brother:
Your open letter of the 9th ult.,
published in January Advocate re-
questing certain information on En-
dowment ra k matter is before me.
Twenty-Five years of service in the
order; twenty-five gears Of energy, en-
thusiasm and ability given to it's up
building entities your request for in
formation to careful consideration.
Again, my friendship for you, ripened
from an acquaintance begun with my
initiation would impel me to answer so
far as might.
In answering, however, it must be
distinctly understood that write
merely as an individual. The commit
tee of which l have the honor to be
chairman, will make it's report to the
supreme lodge and it would not be
proper from either Il business or
ethical standpoint for a member of
that committee to anticipate or fore
shadow it's report
trust that your letter is an indica-
ton of an increasing interest on the
part of the order at large in Endcw-
1nent rank matters. for, to my mind,
the perpetuation OF the Endowment:
rank depends upon an intelligent uli-
derstanding Of the fundamental prin-
ciples on which it is founded
There is nothing Intricate in The
underlying principles of insurance
and there is absolutely no distinction
between the natural laws governing
'fraternalism." as applied to insurance
and what is commonly known as the
odd line" companies; each, the fra
ternal and the old line, is but a dis
tributor of losses; neither is pro-
ducer, nor does either increase in
trinsically the value of any substance:
each but takes the contributions of it's
members or policy holders, and pays
them to the beneficiaries; thus the loss
GccasiOned by death is distributed over
the entire membership or body of pol
icy holders
There is nothing in fraternalism tn 1t
extends life's expectancy. and when
death occurs the money to be paid out
by the fraternal is realized from iden-
tically the same source as is the lnonty
OF the old line company, i. e.,-prem-
iums, and should be adjusted to he
premiums paid by the member in the
same proportion as it is in the "old
line; such adjustment, however, is
seldom made, but when death oc-
ours, the fraternal, in nine cases out
OF ten, pays much larger amount, il:
proportion to the contributions of tn.
member than does the 'old line" conf
pany.
The fraternal organization is har-
died by individuals who must and do
live; there is no magic about the name
"fraternalism" which enables them to
carry on the business of collecting au;l
distributing large sums without eA-
pense and the money to pay the same
must come from the members.
The payment of "B's" premium with
the money contributed by "a" would
be diversion of funds on the part of
the fraternal. precisely as it would =.
by an old line company. This leads
me to observe that the theory upon
which premiums are paid should be
looked into and understood by eyery
one who is interested either in the En-
foWment rank or who carries insur-
ance of any kind. Premium rates are
based upon the probability of the dea' Il
of the member or policy holder; the
insurance company charges each man
according to the risk OF loss by his
death that he imposes upon the com
pany by his membership. This is as
true in life insurance as it is in fire
insurance. The fire insurance conf
pany charges q man with frame
building much more than it does the
man with a fire-proof building because
of the increased risk and so the life
insurance company charges an aged
man more than young man proper
tionately because the risk of loss by
reason of carrying his insurance is
much more. The money contributed
or paid to the company for fire insur.
ance, we all understand, is paid out
ny the company during the year ID
policy holders whose buildings have
been destroyed during that period Ito
gether with the expense of handling
the business) and this is precisely the
condition with respect to life insur-
ance companies which operate upon
the natural or step rate premium plan
and all premiums have. for their basis
the natural or step rate plan; there
are many methods of adjusting prem
iums, but they all come back to the
proposition: What is the risk of loss
imposed upon the company by carry.
ing this insurance? And the moneys
paid to the company for carrying the
3 insurance are paid out by the company,
each year or are held in trust by it
3 to defray the excess cost during the
later years of life; If these truths
were understood, appreciated and
acted upon there would be no prob
lens confronting the Endowment rank,
but because of the hesitancy to face
the disagreeable we have these so
called questions.