Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-24
GROUP INSURANCE
SHOWS BIG GAINS
New Form of Protection Is
Factor in Promoting Per-
sonal Policy Sales.
BY J. C. RoYLE.

o1 De " NJ 4 LIE
A tremendous field for individual en-
deavor by insurance men through the
country has been opened this month
This has resulted from the startling in
crease IN the group insurance field,
which has been led by General Motors
The big motor manufacturing company
added to its already Misunderstanding
group life insurance policy, which
lives of 10000 employees, policy
which covered 1925 dealers and their
employees, totaling 10000 individuals
in all. Each one of these recently in
sured men may secure a minimum pro-
lection of $4,000.
Life insurance in general in recent
months has shown a decline in most
Of its departments, but there has been
a startling gain exhibited in the
amount of group insurance taken out
This can be attributed to mutual de-
sire on the part of employers and en-
ployes to safeguard the future Of the
families of the workers of this country
Strong Promotion Factor.
In addition to providing this protec-
ton, the gain in group insurance has
opened wide field for the individual
insurance agent whose business, as a
result in the next nine months, can be
expected to show material gains. This
insurance by wholesale it has been
found, does not diminish the retail
sales of life insurance by individual
agents. In fact, it gives an avenue of
approach such as they have never had
previously in the history of the BUSH
ness.
Group insurance has proved to be a
strong factor of promoting the sale of
other lines of personal insurance
through development of appreciation
of insurance protection and the fact
that the amounts which may be Sc
cured under the group plan are neces-
sarily limited. Group insurance, in
addition, has become a stable factor in
the lessening of labor turnover, accord
ing to many level-headed business ex-
ecutives. The truth of these state
ments is borne out by declaration of
j. H. Birkett, assistant secretary of the
Prudential Insurance Co. of America.
Mr.. Birkett says: Reviews have been
made number of times of claims paid
under group contracts to ascertain what
other insurance, If any, was in force on
the life. These studies show 40 per
cent with no other life insurance. In
many of the remaining cases there was
only a small amount Of weekly premium
insurance, or about sufhcient to cover
burial expenses. It Is evident that group
insurance is not taking the place OF
other forms, but is remedying the ex-
isting situation of inadequate insurance
among wage earners.
THE contacts made through the group
insurance transactions lead to the plac-
ing Of individual ordinary policies, and
the movement as whole is educating
employees to think of life insurance in
Terms 1f lar0or aua0ftnfe
Features of Contract.
why is it that an individual appli-
cant must pass medical examination,
while this is not required for a group?
The law requires that at least rs
per cent Of all who are eligible must
apply before the group contract can be
issued. In actual practice the enroll
ment nearly always exceeds 80 per cent.
All of those insured are at least able
to be at work. and experience shows that
the mortality in such group will be
about the same normally expected be-
cause individual selection adverse 10 the
company has been eliminated.
IF an individual applies for q whole
life policy-that is to say. a policy with
level premium which will not be in
creased in the future-we have got to
consider, in fixing the amount Of such
pACAAl&uAAlt tAta6 J4AC GAdlAAI rate WILL III
crease with each year of age, and in the
later years claims alone may call for
more than the premium. In the earlier
years the fixed premium will be more
than. needed, for the claims will be
light, and large portion of the pre-
MUM is therefore laid by or reserved
to meet the increases in later life.
These legal reserves are the chief items
in the billions of dollars held by the
insurance companies as their assets
Group insurance is based upon the
principle that while the age and NOR
tally rate for an individual increases
the average age for group Of employees
may remain approximately the same
because those at the older age are con-
stantly dropping out and being replaced
by younger lives. For this reason there
is not the need for q reserve and it is
practical to issue a one-year renewable
term policy. This saving of the reserve
factor, coupled with marked saving
in expenses, accounts for the lower
schedule of premiums charged the en-
ployer. In turn, the contribution rate
set for the employees is still lower. be-
cause the concern usually puts in a
good share of the premium payable to
the insurance company"
Copyright, 1879