Year: 1873

surance prestent in Europe or America to-day who
knows what is the aggregate insurance value OF tne po


Cies his company much better than does MS UNBORN
grandchild. Ideas no matter how useiui are aMSs My,
slow IN taking possession of the human mlnd Dut tnen
invasion rs. nevertheless irresistible 49,,


1t is only by knowing the insurance value OF all the
With VI Other things eas we G@ he
the amount of the policies nor the magntsae OI no
gcher can enable 10 determine the strength o J @
company An these things have their eement we
can only guess between two companies ""'oh " w
stronger. ., l., -ecord In
the economy OF their working expenses, CON pa
respective ratios of expense 10 edhea 20 ono .be but
receipts is about idle as II would De 10 coud The
tons the clothing of their respective oca,


Ty 10 t6e ratio Of the expenses to the aggregate IN
surance value of the policies Ihs sgsreS"b G tbe noii
so little relation either to the amount y. t1o th, he
ces or the total or the premium receipts that tue
ratio OF expenses either OF these can nave no u.s. &
cept perhaps, in case 10 place IN tue lroII ram & o
economy a company which does not belong there Ihe
deception which has been pracuccd upon pohc
ance or conceament OF insurance value is something
which will greatly asOund near postery ana might
better be discontinued before that pOSerty arrives


SURRENDER CHARGE.


Keeping in mind that every policy comprises q series
OF assurances and series OF sefnsurances let us con-
slider how the entire contract be equitaby Cancelled
prior the expiration of its prescribed term in case the
insured desires it while the Company docs not II the
seinsurance part stood alone disconnected with any
other contract plainly there would be no more reason
for the Company refusing 10 surrender the whole OF the



out charge than there wond be for an ordinary savings
bank doing Hence whatever charge may be neces-
say compensate the company for canceng contract
valuable To it, such charge have no relation what
the sensurance part OF the contract 1t Is only
can possibly lose anything and It's will be in
proportion TO the insurance value OF the policy at tue
te that to the value OF thensurance yet TO be done
by it, This brings to the conclusion that tho surren
der charge must be such percentage OF the insurance
value OF the policy will leave the company as slrOng
alter the surrender as it before. What needs to
be rs maximum, it is unnecessary to inquire
here. But suffice IL 10 say. IL Will not require
70 be much more than the commission OK
brokerage which Will procure new p9liey Oh
cent of the value. And what worthy Of par
tCular notice Is that nasuch as the insurance vAue OF
policy when limited 10 an age not exceeding '5' uOea
not increase the proper surrender charge for given
policy greater at the end OF the first policy year than
IT be afterward, no matter how much the re,
serve may increase Ana Wnen the pOlcy Is not Iineu
but extends the whole life, the insurance value IN
little that the surrender charge increases IN
considerably. This is radically different rom tne Gus
tomary surrender charge which Is percentageusualy
from rs TO so per cen-Of the selfnSurance value aud
of conrse increases rapidly with the age OF the policy
The absurGity OF this barking up he wrong Tree iOr e
surrender charge is patent enough wnen as Oen nap
pens the charge larger than the whole lnsur
ance value OF the policy which means that IL costs
man more to withdraw his own sehlnSuranco depost
than the whole value the insurance 10 be done for
him by the company and from which nc releases IL Dy
his departure The common rule OF surrender IN tac
makes entire shpwreck OF equity, any equity court
in the world would have to decide II case should ever
reach 1t. -, ,. .. l..


the surrender charge. II this Is based on the reserve
which has no earthly relation to II except being secu
rty it's payment IL must necessarily be too small in
the early OF the policy and nonStr0usy too large
in the advanced years THIS eXOrDtant Increase Ol the
clarge, which seldom discovers TIL after he has
taken his policy, often induces him to drop II early.
whereas il il had been the largest at the end OF the first
year, he would have continued. Where the charge
amounts, does in almost all the present an cash
companies cOnfiscatiOn of large part of the self
insurance value without the slightest regard 70 the III
surance value anything but cohesive force. Ii Is
doubtless the of large part OF the premature dis
continuance which is now pulling down the companies
very nearly fast as extrayagant commissions can
build them up


ASSESSMENT OF EXPENSES.


Before any member of a mutual life insurance com
pany can receive his share Of surplus he must actually
or virtually have been assessed and paid his share OF
the working expenses The mutually implies that this
share shall have been equitablY assessed. far
member has money with the company, 1T is PLAIN
that he should pay his share OF the expense whch thS
occasions it, in proportion 70 It's amount But the re-
serve fund cannot well cost the company more, except
for collection, than would tue deposits III SAVINGS Oanh
Hence after setting aside OF the company expenses me
moderate which IL costs to collect and manage the
reservet hardly be one per cent OF II after year
or twO-the residue must Do assessed upon the mem,
bers without any reference TO the 5efnsaucc on the
policies and not in proportion 10 te premiums Whlcn
contain less scll-nsurance deposit But IT must
be assessed what the interest which each
policy holder has III the company. considered purely
rs an Insurance company and this is nothing
else than the insurance of policy at the time.
any logical escape from TINS, ana money VIII
buy it, the COMPANIES, OF which yet assessed
their expenses in this wLy Will be in full possession Of
u within less than year from THIS tme But II there
not they will then begin to change their practice to
The great satisfaction and rche OF the seinsur-
ing of their pOIcy.hOders, who now pay the more
toward the expenses the more they insure themselves
aud the less the company insures them


THE LOADING OF PREMIUMS.


Loading" is the addition which Is made to the "net
PREMIUM" to provide for commissions and other work
ng expenses and fer occasional excesses Of mortuary
loss the met premium" being exactly sufficient to meet
the policy claims, if there should be no expenses and no
variation from the assumed rates of mortality aud inter
eat or what amounts to the thing if the death
claims OF each year should be exactly what they would
pened on policies of the average amount 50 far as tins
loading is provide against occasional excess OF loss
variation OF the amount insured on one ie II Is plain
enough that should be prOpOruOned to the present
value of the " be done by the company under
the policy, that Is to the insurance value a the start
should be proporoned TO this rather than to anything
else il has been already shown that nearly the
whole the working expenses should be assessed on IN
surance value it plain enough that the provision Tor
tbem should propOrtiOued also TO the same value.
And when the policy does not extend beyond the age
5 the insurance yaiue does not increase But Srad
ally decreases with the OF the pOlcya percentage
OF the initial insurance value which Is sufficient for the
working expenses at first will become more than sut-
icent aterward and leave and more of the mar
gin as a safeguard against excess or mortality when
not occur ing any IL Will be returned as surplus


To illustrate the difference between the plan and
the Old in regard 10 leading let Us take case By the
Actuaries rate of mortality, at per cent. the net
annual premium 80 for policy OF $1,000 payable at rs
or previous death, IL S7 50. It's insurance value IA
slll u, Let us m ta o,Gin% tor tbis Motley
This per cent Of its insurance value and makes an
be payable at 40 previous DEATH Its net annual
premium Is $S4 So and It's insurance value is $50 e. per
cent of which 81 AZ, making the actual premium $50
The only objection which well be made this
mode OF loading which leaves the expenses of the self
insurance part OF contract to be wholly betrayed
out OF the of the actual interest the low
sumed rate, that life insurance company Is at some
expense the collection of deposits, while savings
bank IL not This will be obvated II provide for the
expense Of collecting these premiums which cannot well
exceed 2 per by adding 39th OF itself to each OF
Them aud they will then stand at S25 80 and s53 q
sDectively BY the old plan, which oftener than other
wise loads every net premium by 25 per cent OF IT
self they would stand at s2 81 ana slO0 %.
Granting that the former provision sufficiently loaded
the overloaded by sS IL But II the former