Omaha daily bee., 1907-03-31

one-aikth OF the amount collected. And yet
commissions for solicltins and collection are
only part OF the expenses. The physicians
zee, ths Gust OF supervision, OF accounting
and Of advertising must all be added
with the result that substantially no indus
trial policy pays It's way" until Il has been
In force about three years. In other words.
II the policy lapses before Il has been In
force three years, not only does the policy
holder lose Except the temporary protee-
toni ali that he has paid in, but the com
pany chat is, the persisting policy holder
bears part-generally the larger part
Of the cost Of the laosed policy.
Percentaae of Llpses.
And only a small percentage OF industrial
policies survive the third year A majority
OF the policies lapse within the first year.
In 1865 the average payments on q policy In
the Metropolitan 30 lApsng continued little
more than six weeks. In the eight years
ending December 81 1906 the examinations
Of the industrial policies in New YorK state
numbered l54s.sO6. and only 427635 chat
is. less than one teuth) we're by death.
Tho result OF the present system Of in
dustriai insurance establish conclusively
that. IN the conduct OF the business, the in
terests Of the insured are ignored. A life
insurance company for workingmen should
as to each policy holder be conducted. like
a savings bank as o benevolent institution.
No one should be induced to take out
policy unless It IL advisable for him to do
so IN the interest Of those whom he wishes
TO protect by It. No one should be lured
into Becoming a policy holder. No one
should take a policy unless he will probably
be able and willing to continue 1t in force.
Furthermore economy in the management
Of the insurance savings Is as essential to
satisfactory results as the economy on the
part Of the worklngmen, which alone makes
it possible to pay premiums.
The supporters Of the present system OF
Industrial insurance declare that reduction
Of expenses and Of lapses is impossible
They insist that the loss to the insured and
the heavy burden borne by the persisting
policy holders from lapses, as well as from
the huge cost of premium collection, must
all be patiently borne as being the In
evitabie incidents OF the beneficent institu-
tion OF life insurance when applied to
the wofklngman. 1t is obvious that q
remedy cannot come from men holding such
views-from men who refuse to recognize
that the best Insurance is not eloquent
persistent persuasion, but to furnish good
article ht a low price. A remedy can be
provided only by some institution which
Will PTOCGeu upon hut pIluGlplo ludl IL lhiS-
ton is to supply Insurance on proper terms
to those who want 1t and carry 1t. and
not to induce working people to take in
suranee regardless of their real interests.
To attain satisfactory results, the change
Of system must be radical.
Proper business for Savings Banks.
Savings banks established on the plan
prevailing in New York. and in Massachu-
sets, are managed upon principles and
under conditions upon which alone salts
factory system OF life insurance for work
ingrnen can be established. These savings
banks have no stockholders, being operated
solely for the benefit of the deposltors
They are managed by trustees, usually men
Of large business experience and high char
acter, who serve without pay recognizing
that the business Of collecting and invest
ing the savings OF persons Of small means
is a quasi-publc trust which should be
conducted as beneicent and not a
oney-making institution. The trustees,
the officers and the employees Of the savings
banks have been trained in the administra-
ton Of these savings to the practice of the
strictest economy. While the expense Of
managing the Industrial departments of the
Metropolitan. the Prudential and the John
Hancock companies have, excluding taxes
miums, the s6e9 10000 of deposits held in
1906 in the 1S9 Massachusetts, savings banks
were managed at an expense of O,23 Of /
per cent OF the average assets, or 1.S6 per
cent Of the years deposits.
Savings institutions so managed offer ade-
quate means Of providing insurance TO the
worklngman. With a slight enlargement OF
their powers. these savings banks can, at
minimum Of expense, iii the great need
of cheaper life insurance in small amounts.
The only proper elements Of the industrial
insurance business not common to the saw
ings bank business are simple and can be
| supplied at small ense in connection
with such existing savings banks. They
are:
(s) Fixing the terms on which Insurance
shall be given.
Cb) The initial medical examination.
(cJ Verifying the proof OF death.
The first is the work OF an insurance
actuary and the present pro rata cost Of
actuarial service can be greatly reduced
both by limiting the forms of insurance
policy TO be uniform throughout the state
| and by providing for the appointment OF
state actuary. who, in connection with
the insurance commissioner. shall serve
all the savings-insurance banks. The
initial medical examination and the veri-
| hcation OF proof OF death are services that
may be readily performed for the savings
! bank at no greater pro rata expense than
/ for the existing insurance companies. But
state medical director should act as
adviser and have supervision Of the local
physicians
schools OF Thrift.
The insurance department Of the savings
banks would OF course, be kept entirely
dlstinct as a matter Of accounting, from
the savings department. but II would be
/ conducted with the same plant and by the
same ofacials. without any large increase
OF clerical force or incidental expense, ex-
cept saoh as would be required II the de-
posts OF the bank were increased. On the
other hand, the Insurance department of
savings banks would open with an ex-
tensive and potent good viii. and under
the most favorable conditions for teaching
the value Of life insurance. lesson easily
learned when Insurance Is offered at about
half the premium enacted by the industrial
companies With an Insurance clientele
composed largely Of thrifty savings bank
denositofa. the expensive house to house
collection Of premiums could be dispsnsei
with and more economical payments o.
premiums could probably be substituted for
weekly payments. Indeed. Il is prob7b!e
thaA tha folfaxpiaar atr,,wla