Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1913-08-08
INSURANCE AND PROFITS
Agent Takes Exceptions 70 Conclusions
Drawn BY Correspondent From Fig.
urss Taken From State Auditors
Renort

n0PorIs
Marshalltown, Iowa, Aug. Z, 1913.
Editor T.-R, city. Dear Sir: If you
will allow me space In your paper, I
wish to explain few things relative
to life insurance, in answer to an artl-
Gle printed in your paper Of Des Moines
date of July 81. In large black let
tiers in the headlines of this article APP
peared the words, Money in Insur-
ance."
In the first place, it is obvious that
the writer of the article is not very
we'll informed on the subject, else he
would not have inferred that the pol
icy holders contribute about 500 for
every $50 received back.
While the amount stated may be
correct. for the year 1912. yet the peo-
pie who insure their lives do not ex-
pect the face amount of their policies
the first year, unless they die during
that year. He might as well have said
that the farmer who pays 500 per
acre for a farm only got back IS In
1912. and that fer every 800 paid for
Iowa land, the holders received back
less than, 10 per cent Of what they
paid Yet that farmer is not worried
about his investment. for he realizes
that he will eventually get his money
back, just the same as the same farmer
expects to get his money back on the
policy of life insurance that he carries.
as it Is a sure thing that the man who
insures his life, Is wise enough to know
that the money he pays nearly all goes
to fund (called reserve) and Is
watched over by our insurance depart
ment, for the express purpose OF ma
turing his contract. The statement
that 80 out Of every 800 paid the
policy holders received back less than
$50, the balance going to the company
for handling the business" Is mislead-
ing to say the least. The facts relative
to this part Of the statement are about
as follows:
man at the age Of 35. on a straight
life policy. (Which is the standard OF
life insurance) in a participating
old line company that accumulates its
reserve on 3k per cent basis. is re-
CURED to pay s22.4o premium on ST.
900 of insurance. The net premium re-
quired to mature this contract, Is
1891. payable In advance during the
life Of the insured. Now it is plain
enough that if it takes 1891 out OF
the gross premium of s22.40. the COM
pany is not getting over $40 out Of
every 800 for their trouble in handling
the business. as the statement referred
to would infer.
And in the case of the participating
companies, the net annual premium to
mature a policy is just the same as it
&c, in, ho fri fjpp Z, mics
altho one is required to pay little
larger annual premium. For example.
man at the age Of 35 years will pay
about $2S11 during his life. but at the
end of each year there is returned to
him an amount ranging from 81 to Sc.
which is termed dividend. So when
the reserve of s21.0s is deposited. and
the policy holder has received his re-
turn of the overcharge. the company
does not have $40 out of every 500
left for handling the business. as the
article in question infers. These fig
ures are based on 3 per cent reserve
company.
Now in the case of either company
the beneficiary will receive the face
amount of the contract at maturity.
which amount almost invariably equals
| paid into the company.
Take for example the record OF our
oldest companies which has paid to
policy holders over onc-haif billion
dollars. and this. added to the amount
held in trust for the policy holders.
equals over $40 900 900 more than the
policy -holders ever paid to the COM
pany. This, too after all the expenses
Of handling the business have been
/ paid.
/ Other old line companies have the
same experience. the amount, of course.
depending on the aSeNlnd size of same
I! And the records prove beyond doubt
! that no one who has matured. or ful-
! filled his part of an old line contract
have ever received any such settle
ment. as the article suggests, viz: $50
! for 800 paid. Now in conclusion l
will say that am only one of an army
/! Of life insurance agents. and feel that
| 1t Is duty owe to my policy holders
| to correct the erroneous statement l
refer to. as nearly as can, and to
protect the occupation and profession
of the life insurance agents against
such misleading statements.
] Respectfully yours
j. 8. MCCORMACK.