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Let, however, the Assurer clearly understand the price he pays for this accommodation. At the day when his premium becomes due, he pays, first, half his premium for the current year; next, 5' per cent. on each half-premium unpaid; and 5 per cent. upon the halfpremium just due, which he withholds. The office obtains a pretty safe investment of one-half of the premium at 5 per cent. : safe, if the Assurer decease before the septennial period; safe, if he abandon his policy before or after; while, when more than five years have elapsed, the half-premiums already paid are sufficient to cover the risk of the assurance for seven years. But the man who is thus drawn in to effect an assurance, must bear in mind that he is merely taking long credit from the office, and paying full interest into the bargain ; and the chances are that he may be disposed, through unforeseen difficulties, to abandon his policy, or to allow the half-premiums to accumulate all his lifetime, and be deducted with interest at his decease, and thus greatly diminish his family's claim.
Nor is this practice to be commended to the consideration of every office. Directors should know that they cannot adopt it, unless the half-premiums paid, added to the interest on the half-premiums in arrear, exceed, on the average of seven years, the rate payable for a term-policy* of seven years. The plan, therefore, is most advantageous to offices charging high rates, and is not desirable when low rates are demanded ; nor is it applicable to the non-profit scale of most offices. Another disadvantage to the office is that the Assurer, upon this plan, may continue his policy without re-examination of health, while he may (if the rates are low) have been paying little more than for a term-assurance of seven years. If it should be supposed that managers could adopt this plan for a longer period than seven years, it is to be observed that, although they thus put out their money at a high rate of interest (probably higher than that inscribed in their tabular calculations), yet the law of mortality is all the time in operation; and, if any considerable portion of their capital were thus invested, although the nominal assets of the Society may appear to be satisfactory, the available funds would not be sufficient to meet the claims, unless counteractive measures had been taken in other forms, which must be attended with corresponding disadvantage. Furthermore, when an office invests its money in mortgages and other similar securities, it frequently obtains additional business from the parties concerned ; and all such business is forfeited in the case of half-premium assurance. Such a plan, therefore, will chiefly suit young offices with a large paid-up capital, or older offices charging high rates of premium.
One of the advantages secured, perhaps, by the competition which
* A Term. Policy means an assurance for a given number of years only, as five or seven ; the premiums for which are naturally less than those for a whole Life Assurance, the risk to the office being reduced to a chance of death within the assigned term. After that, the contract ends. Such policies are frequently used to protect creditors in the business of loans, and are very useful as well as easy.
has made it imperative upon the older offices to become more liber. than was their wont, is this :-It had always been the custom declare a policy wholly forfeited when one or more premium. left unpaid ; whereby a person who had for years punctually atte's to the notice of the office, that his renewal premium was due one instance of neglect or inability, lost all the benefits of prt punctuality. Now, however, it has become the habit of offis. return a certain portion of the premiums paid-always a safe prio tion for the risk actually incurred. Such a concession has to considered to be the utmost that could be expected ; but a f-2.accommodation has been proposed, and although not, we fel adopted by more than one or two offices, yet it appears to law worthy of general adoption. No provision having hitbertad made for what, unhappily, is too common a case in the history, that large classes of persons whose incomes are derived from sions, namely, a temporary failure of resource, perhaps at the period when the insurance office remits its notice of the area premium being due—it occurred to an Actuary that a printre suspension might be admitted, the effect of which is as follows .. party who may be insured, but from unforeseen emergencies mar :: himself unable to pay his premium, will be allowed once or otrosto exercise the privilege of suspending the payment of such prins (he having already paid three or more premiums at leax:), azlka policy will be endorsed with a concession of its contingator, pir holder thereof having it in his power at any time to discharge debt incurred upon it, of premiums unpaid, and interest then P course should he decease in the interim, the debt must be doi : from the sum paid to his executors.
Another improvement now frequently adopted is, the permiss" that an Assurer may at any time terminate his future parmenis at: either receive a return of a proportion of the premiums which he se paid, or an equivalent reduction shall be made upon the sum The after his death. Very few, however, of the offices fix the scale of the reduced assurance at the time of issuing the policies, and is any forego a reserved and arbitrary power of dealing with to Assurer as they see fit at the period of his difficulties. We were objection to such a condition as the following being arranglar the issue of the policy: that after the payment of the fifthermore full annual premium, the Assurer shall be regarded as having a reduced assurance to be estimated by the subtraction frim se original amount of his policy that amount of assurance who ! rate of premium would purchase at the advanced age when be era from all subsequent payments. Thus, if at commencement de ces of assuring for a policy of £1,000 be £20 per annum, ani: a: the termination of payment of premiums the cost of assuring €!... : the increased age would be £35 per annum, then subtraction the £3.) whatever sum has been charged in the annual prem: 127 the security and expenses of the office, say 20 per cent. the remainder, £28 per annum, is at the advanced age the pet pan>
which would assure a new policy for £1,000. Now if £714 5s. is nearly (as it is) the sum which £20 would assure at the advanced age, then the original policy for £1,000 should be diminished by this measure, and the remainder, or the reduced policy, would be £285 15s. If this plan were followed, the Assured would always be able to learn the minimum amount of Reversionary Assurance which they would certainly have secured by past payments.
We have a favourable opinion of a plan, or branch of Life Assurance, which is of recent suggestion, and has not yet, we think, been fairly tried. Its want of success in one or two instances obviously arose from the weakness or misfortune of the hands into which it fell.* There can be no reason inherent in the plan itself against its success and extensive acceptance, except a partial and primary one--the expenses of its management in earlier stages. We allude to the Accumulative or Deposit system of Assurance. By the usual plan a comparatively small annual payment secures a large deferred payment upon the death of the Assurer, whenever that may happen, and by such plan the premiums once paid cannot be withdrawn, except in the form of a loan, and under fixed restrictions, producing a loss to the Assurer, and a corresponding gain to the office. But permit Assurers to deposit at the Assurance office or at a Bank small or large sums, not at fixed but at variable and convenient periods, and grant policies whose value increases with the number and amount of the deposits made, with the additional benefit of being able at any time, upon due notice, to withdraw the whole or part of the money so deposited, with a corresponding endorsement upon the policies—and then, we think, a very large portion of the public would avail themselves of Life Assurance who now hold entirely aloof from it. Such a plan, properly executed, and conducted with undeniable credit, and by unquestionable men, would present numerous advantages not probably to be secured in any other manner. It would afford a secure investment for all spare sums of money at a continually increasing value, and procure an equitable Life Assurance at the same time, and in the same office. It would prevent any fear of loss of premium, and would afford an inducement, stronger than now commonly exists, to husbands and fathers immediately to place any unneeded monies in the office. It would combine an Assurance office and a Bank of Deposit in one. It would meet the case of that large number of the community who have only fluctuating and precarious resources, and who are deterred from Life Assurance, at present, by the prevailing fear of being unable to continue the payment of the premiums. It is true that, even now, every man can, in part, adopt this plan by payment of a single premium for an Assurance, but then he cannot withdraw. A person age twenty may, by a single deposit of £100, acquire a policy of £253 12s. upon this principle, and increase that policy by occasional deposits, or, at the age of sixty, withdraw £100 by surrendering
* One or two respectable offices now adopt this plan with modifications.
£138 13s. of his Assurance, and still the balance of £114 19. I be paid to his representatives at his death.
We might allude to a variety of modifications of this prince all of which could be worked out and safely adopted. For instant the depositor might receive the interest of his deposits during lifetime, and leave the principal for Life Assurance. An olvert. taken against the system, as we have propounded it to Act anries." this :-Fresh medical examinations would require to be marle up : any renewal or increased Assurance, and the perplexities thuset sioned would be insurmountable. This, certainly, is a difficulty. he not, we believe, insuperable. A large business would well rar : additional expenses thus incurred. Nor, upon consideration, w.2: the Deposit office be in a worse position than other offices, if a natbes higher premium were charged, and if small risks, comparatirir. were successively incurred, even supposing that no medical examins tions were made; for as ordinary offices must, by their terinsite contract, continne in force their liability to pay, even when the hea's of the Assurer is obviously deteriorated, so the Deposit office w only, at worst, be in a like position, while, by easily-devised arrang ments, it might be placed even in a somewhat better position--awar provided that the public would largely patronize the principle. Tber seems to be no valid reason why the Government should not adan it in connection with Savings Banks, for they have all the machine 7 for raising Deposits already in action, and would only find it nee sary to supply the medical examination,
The great majority of Life offices confine their attention to bral: and select lives, and reject such as are diseased or unwani : large, however, is the proportion of the latter class, comprising. : * said, 20 per cent. of all who apply for Assurance at the various chers that two companies have been established especially for their A. rance, and one of them, at least, has succeeded to a consente extent. A few of the other offices will assure unsound lines > proportionably advanced rate of premium, or by placing the time, ad Assurer at a higher age and rate than his true age. But the way proper mode of assuring unsound lives, proceeds upon calcula.. / the mortality of diseased persons. It is a remarkable ani ! known fact that diseased lives are subject to a law of art resembling that of ordinary mortality in its regularity, uran a lar scale, and there is, in truth, little more risk in assuring disas -than healthy men-the premiums being in dne proportion. l'aire man, therefore, be very unsound, and very far gone in dan disease, he can obtain a Policy of Assurance, though at a heavy a sometimes oppressive cost. It is even said that, at such as the business of assuring unsound lives is more profitable than that assuring sound lives at the lower charges-since the unseen mas will take greater care of his life than the sound and in 2014 Assurer.
As this is a very curious and little-known branch of the face we may mention that Mr. Farr has prepared a Decennial LOT
from the mortality of perons dying of consumption in the metropolis, from which we extract a specimen :
According to this Table, a man in average health, at the age of forty, has the same expectation of living as a consumptive man at the age of twenty. It is obvious that, upon such data, enlarged and confident assurance business can be safely carried on; so that no man in good circumstances is excluded from the benefits of Life Assurance simply from ill-health. Various diseases have now been tabulated, and the singular result may be made apparent in the subjoined computation for one age :
PRESENT VALUE OF £1,000 3 PER CENT. CONSOLIDATED
From which it may be seen that, while a healthy man, age 30, could obtain £586 13s. 7d. for the sale of his Life-Interest in the promise of £1,000, 3 per Cent. Consols when at par, the consumptive man could only obtain £359 6s. 2d.; and men otherwise diseased, in proportion. The great value of such data, in monetary transactions, must be obvious.
We now turn to a different kind of Assurance-namely, that against Sickness; which, however, is invaluable, when safely conducted, on a similar law of average. This branch of inquiry has, unhappily, been neglected until very recently. No attempt was made to ascertain, from registered facts, the quantity of sickness experienced by a certain number of persons of the same age, until the publication of the “Highland Society's Report " in 1834, and that of the Society for the Diffusion of Useful Knowledge (by Mr. Ansell) on “ Benefit Societies,” in 1835. This latter work is accessible, though now scarce. But the valuable labours of Mr. Neison on “Vital Statistics," have more recently brought this subject within scientific investigation. The result of that gentleman's researches gives the quantity of sickness as much higher than other researches,