Year: 1872

Life Insurance Company 10 uooO iCo oDi6"
tions after the proposed change. There Is
general and not unfounded belief that the
management Of insurance companies Is need
lessly expensive, and there is natural mtcr-
ence from this that the rates OF premium are
unnecessarily high. Tho new proposal, whlch
creates so much agitation, is to reduce what
Is known as the loading from 4O TO III per
cent. Loading is per centage added 10 inc
average yearly amount of premium reqnireu
to meet losses by death. 1t is intended 10
cover tho expenses of carrying OH tho busi-
ness, including, among other things, agents
commissions. In Great Britain the loading Is
but 90 per cent The Mutual Company
says that as its actual expenses are
less than 10 per cent, that IS
sufficient loading. It is an admitted fact
that the classes most in need Of life insurance
families of slender means-are least provided
with it. The Mutual Company expresses the
hope that by its reduction of rates this great
boon may be extended where it has hitherto
been inaccessible. Such motive Is exceed
ingly praiseworthy. Most men who have not
studied tho matter, regard all systems OF life
insurance as needlessly intricate. If COM
pany can return % or 80 per cent as "dlyi-
"dendn on o premium after year or two,
why can it not, they say, deduct it at first
Nor does it seem as il so doing could hurt
well-established company Thus, as beng, so
far as it goes, simpler method OF doing busi-
ness, the new measure may be expected 10
commend itself to business men TO whom thc
"dlyilendp matter is q mystery.


We have on o recent occasion alluded to
lurking fallacy in the minds of many concerns
ing fire insurance: that in case of fire some
thing is saved by insurance. like fallacy
exists about life insurance. Fow people clearly
realize that they really insure themselves, both
as to fire and life; that the company Is merely
tho custodian of their money, and can pay
only what they pay it, plus interest and minus
expenses. A purely mutual life company pays
back thus in death claims and dividends
whatever it receives. Now the opponents of
the newly proposed measure, including in their
ranks tho great majority of the insurance
interest-say from this point of view,
PRODUCTION OF rates" is fallaciOus. At best, ii
the rate bo reduced, the dividend must
be more reduced if the company receives less,
it must pay less as this particular company
pays dividends the second year, its reduction
of rates. after all, wohld only reduce the first
payment. 1t is alleged that principle is in
volved in making the early payments heavy,
which cannot be justly ignored a surplus Is
thus created for the emergencies OF new bust
ness. A mutual company, having no capital,
needs this surplus. If the new business is to
be done without such preclution, what is there
to back it Surely not surplus belonging to
and needed to protect previous business.


If life insurance can be conducted more
chcaply than it is now, very great benefit
we may say q blessing-will be conferred
on the community. If this is what the re-
duction of rates means, We welcome it with
unqualified satisfaction. If it means the first
step in an unscrupulous competition which will
destroy many of the smaller companies and
diminish tho confidence of the public in all
these institutions. the less we have OF such
change the better. A decision, as TO
which of these alternatives represents
the fact is of the gravest moment.
There is 30 form in which financial disaster
can occasion such widespread misery as in the
failure of life insurance. America has record
in this respect Of which she may well be
proud. But mathematics and human nature
are probably about the same on both sides OF
the Atlantic. Three years ago a cOnvulsion
took place in life insurance business in En-
gland, during which the Albert and the
European Life Assurance Companies went
under. They were themselves the swollen
aggregate of sixty smaller life insurance COM
panies which had been amalgamated and
absorbed into the larger ones under the pres
sure OF a runous competition. 1t is estimated
that the different organizations thus embraced
in destruction had gathered from the public
S6O,O0OOOO; tho assets after failure proved
tniling. Yet the life insurance system of
England, which differs but little from our
own, had stood the test of five generations
OF experience Ours has had but one.