The Washington herald., 1914-01-24

surance he could buy with the $50 he
would receive every year from his bond.
His salary was small, but he figured
that after a year or SO he might be able
to take out some additional insurance.
At first. however. he intended merely
to use the interest on his investment to
pay the premiums on a life insurance
policy, and he wanted to get as much
life insurance as he could get for this
interest. He put this problem in the
hands of a friend of his who was en-
gagged in the insurance business, and in
the course of a day or so he received
a letter from his friend in which he set
forth a perfectly good proposition WHERE
by the thousand dollars of investment
would become 5000 of cash and invest
ment in case of death. This seemed too
good to be true. and the young man, in
search of protection, had quite an argu-
ment with his friend before he would
believe that the figures were correct
The figures as they were worked out
were about as follows:
Interest from investment Of 81 ooo at per cent sno
Premium On 500 ordinary life insurance, age
twenty-.ix. at Sl66l per thousand. 60
1t became obvious to HIM after a while
that in case he were to die his wife
would have the original investment of
81 CO., and would also have 5000 cash.
His friend also explained, of course. that
in the course of time il he became
wealthy or reached a state in which the
protection was not so necessary, he could
surrender his policy or change 1t into
a paid-up policy and enjoy his invest
ment himself. On the whole, the proposi-
ton appealed to him and he took out
that policy. Actually. however. he did
not keep his premiums altogether inside
his interest, because he determined to
nay his premiums semi-annually. max
ing them payable on the day after the
day on which the coupons Of his bond
were paid to him. This was merely to
be sure that he would always have
money for the premium when II was due.
or course, he figured that he was pay
ing something for the additional protec-
ton of $500. He could not figure that
II was a good investment purely as an
investment. He found that II he lived
for twenty years and kept on depositing
his $50 a yeaTof interest regularly even
in the savings bank at 4 per cent COM
pound interest. he would have In cash at
the end of twenty years about $500.
whereas the cash value of his investment.
plus his insurance policy at the end Of
the twenty-year period, would be only
about H,700 Therefore, he did not re-
gard the proposition, as an investment
proposition al ALL he inquired tnat ne
was going to pay about $500 in the next
twenty years for the additional protec-
ton 1t would afford his wife and family.
His initiation into the investment and
insurance combination was rather an un-
usual one, because he had certain
definite problem on his hands which he
wanted to solve and out Of which he
wanted to get the best result that was
possible.
It does not follow, for instance. be-
cause he selected an ordinary life policy,
that an ordinary life policy is the best
policy for everybody. A good many
critics think 1t is, but a good many others
think 1t is not, and there seems to be
plenty OF room for difference Of opinion.
There are so many uses to which insur.
ance policies can be put, and are put.
that, obviously. the different kinds of
purposes require different kinds Of poll
cies Nor does II follow because he
bouRht a quiet per cent long-term
bond that that is the best kind Of in
vestment for everybody. He was looking
for two things-first, permanent. safe
investment at a good high rate Of inter-
est, and, second. a cheap. but solid kind
Of protection for as long as his family
might need It. His selections were wise
for his purposes.