the pol. is paid up-the assured becomes entitled to the full amount of his pol. The st deduction during the temporary period, is arrived at by the process of calculation we h The resulting amount, when reduced to ann. prems., is in exact proportion to the nu added to the life, and is the equivalent compensation to the co. for the ann. extra during the whole of life under the old system. It must be kept in view, however, that years added to a life when the pol. is taken out is supposed to be the same under bot fact the new method does not in any way interfere with the recommendation of the m a co., as to the number of years to be added to a life, or the rate at which the board of agree to accept the case.

The method here proposed is simply an expedient for adjusting and re extra prems., "so that they may subsequently be levied more equitably, those who are more justly liable for the payment." To the co. the mone or present value of the extra prem. to be received under both systems is i is made clear as follows:

If we take the difference between the single prems. for assu. of a given sum, increased and real age of the assured, and apply this sum as a single prem. to ass at his increased age during the time in which the pol. will be paid up with int., su represent the deduction that will be made from his pol. in the event of his dying a the period named; from which it is clear that an office will derive equal advanta system as under the old. This object, however, is not to produce more profit to the the errors of the orig. assessment of the extra prem. as regards individual interest is obtained by requiring that the full amount of the extra prems. orig. charged sha whose pol. become early claims, in order that those who have turned out bett anticipated shall be wholly exempt from the payment of any add. prem.

Then follows a series of examples-the prem, employed being the English T. No. 2, with 20 p.c. uniform loading. The following T. con of the examples, when a 5 years' addition has been made:

When a 20 years' add. has been made, the figures would read as fol

The advantages of the scheme are set forth (inter alia) as follows: Those who take out pol. at an increased rate of prem. have generally great c lives; they believe, notwithstanding their tendency to some disease, that the prec the regular lives they lead will go far not only to delay the development of activ for them the enjoyment of a green old age.' Those therefore who are liable the new scheme are offered a prem, for leading careful sober lives. The ende however, is just taken at what it is worth. This, notwithstanding, is a fact o who have to pay an extra price for their assu., on account not of any organic the certain consequences of a recurrence to irregular habits, and against tha so, can have no guarantee. To such the new scheme presents the inducemen ation, for they will have a greater chance of leaving more money at their de sober life they outwit the doctor's anticipations, and enjoy their average expec Another feature of the scheme, and one which we think will materially pr L. assu., arises from the fact of there being no payment demanded for extra pr of the assured. Cases are constantly occurring where proposals are fact of the extra prem. being so high as to render the payment beyond the res assurer, or if not beyond his means, further than his inclination will yield, submit to, when without a prospect of ultimate relief.

It may not be out of place to observe that another practical advantage o new scheme in connexion with the allocation of profits. For the ascertain priated to a pol.-holder could be legitimately applied to the liq. of the amoun of death before the age agreed on. . . . This, however, is a matter for t

offices.

Our final inquiry resolves itself into an examination of the peculiar and pol.-holder under the new scheme. In what does it consist? viz,: In 1 opportunity of being ultimately exempted from the payment of extra prem either annually or by deduction from his pol. Instead of arbitrarily decidi the pol. is taken out, and making the assured liable for the payment of an anr whole of life, the new system provides that the life shall first be proved, and medical estimate put to the test; and the extra prem. charged or remitted a shall turn out, as it is commonly called, a good or a bad life.

...

We have rarely seen a proposition worked out in a more careful and painstaking manner. Logically it hardly accomplishes all that is claimed for it; but as a rational solution of a difficult question it has much in its favour; and although the office with which the method was first associated has long since passed away, Mr. Black's method continues to be applied by other offices, and we understand with satisfactory results.

Dr. A. P. Stewart, M.D., adds, by way of supplement to Mr. Black's pamph., a paper, Obs. on the Characteristics of Assurable and Non-Assurable Lives. He takes up the question: "Under what circumstances, if any, is a diseased life assurable?" And replies as follows:

In the present state of our knowledge it is impossible to lay down any precise rules in regard to the acceptance of lives actually diseased. It is only by the accumulation of the recorded experience of many life offices, extending over a long term of years, that we can hope to arrive at any general results. When many reports characterized by the accuracy and distinguished ability of those drawn up by the Scottish Widows' Fund and Standard Life offices, by Drs. Begbie and Christison, shall have been issued by other long-estab. cos., we may hope for some clearer light to guide our decisions, which are meanwhile little better than guesses at truth, and often very wide of the mark. Each separate case must be judged on its own merits or demerits, and where opinion has so much to do with the result, each one of a dozen medical examiners may come to a different conclusion on a given case.

We shall recur to his obs. under MEDICAL SELECTION, and other heads.

In the case of Manby v. Gresham L., before our Equity Courts in 1861, the facts were as follow:-A pol. on the life of another was effected with the Co. in 1849. It was said of the life insured, in the proposal form, "that he formerly was not so steady as he ought to be, but was latterly much more steady and temperate." The Co. put him up 10 years; but the prosp. of the Co. in force at the time of the ins. stated that the life might from time to time be re-examined, and the "So. being satisfied" of the removal of the cause of charging the extra prem. would reduce it. The insured went to Melbourne after the pol. was effected, and joined the police force, but he subsequently became a clerk at the Town Hall there. The holder of the pol. applied for a re-examination; the Co. replied that it had no agency or medical examiner in Melbourne, but ultimately agreed to consider any medical certificate sent. It did consider such a certificate, but refused to make any abatement in the prem. On a bill filed, it was held, on demurrer, that the directors having bona fide exercised their discretion, and refused to reduce the prem., this Court could not interfere in favour of the plaintiff, though the life ins. had become thoroughly healthy and sound.

In 1862 Mr. Samuel Younger contributed to the Assu. Mag. [vol. x. p. 268] a paper entitled: A plan for making conditional the payment of extra prem. in the case of a life supposed to be diseased, or more than ordinarily hazardous. The author says:

The practice of charging a higher prem. corresponding to an advanced age, which has hitherto generally been adopted, is of course open to the double objection, that the judgment of the medical officer may have been at fault in placing the life in the second or third class at all, and supposing he were right in his decision thus far, that the prem. at which he has assessed the risk may not be in accordance with its precise magnitude. It is true that in after years reductions may be made if the person's health improve; but this plan is not without trouble both to the office and the assured, and it has the further disadvantage of leaving the latter in a state of uncertainty as to what his future prems. may be.

He indorses entirely the principle of Mr. Black as already described, and says:

My object now is to suggest what appears to be a fair and sufficient amount for this deduction, and to assign the length of period over which it should extend. The method made use of by Mr. Black in his investigation of these results is in accordance with his hypothesis; but as I am inclined to think that other assumptions than those which he employs may be safely made, by means of which the rev. deductions in different cases become more consistent in their relative magnitudes, and often considerably lessened in their actual amount as compared with Mr. Black's figures, I would submit the following points for consideration.

In making an add. to the life, the medical officer may, and doubtless does, not unfrequently commit an error; but as the mathematical prob. of his doing so cannot be determined, our object, in an investigation like the present, must be to introduce hypotheses of such a nature as to counterbalance, to the best of our judgment, the possible error so committed. The first assumption I propose to make is, that the decision of the medical officer, if incorrect, is far more likely to be in favour of the co. than otherwise. There cannot be a doubt that an add. is frequently made to the age when none at all is needed; this must often be the case when the cause assigned is "family hist.," "hernia," and such like. It cannot always follow, for instance, that the life of a man whose father died of consumption is extrahazardous on that account: for if all the circumstances could be known, it might sometimes prove that the disease had its origin long after the birth of the son, and was the consequence of exposure, accident, or unhealthy occupation; yet such a case rarely escapes the charge of some add. prem. The task, however, of discussing in detail the many cases in which an add. is prob. made in error would be endless; but a very great number of instances will readily occur, to those engaged in the bus. of life assu., in support of the reasonable assumption that the medical error, when it exists, is far often more in favour of the co. than against it. I would suggest, therefore, that the extra prem. proposed to be charged should be left unpaid until the expiration of the period termed the expec. of life: on condition that a certain deduction, agreed upon beforehand, be made from the sum assured if death happen in that period; no deduction to be made if the life fail after that term.

In theory, of course, it does not follow that an individual is an average life because he survives the term here spoken of; but it must be remembered we are dealing with a case which theory alone cannot decide in all its bearings, and under the circumstances the test seems to be a fair one. It should be distinctly understood that I propose to assume as a fundamental truth, that the fact of a person whose life was considered an extra-hazardous one living to the end of the "expec." period is complete evidence that the medical opinion was wrong, and that no add. prem. was necessary. This being premised, we may reason in the following manner in estimating the amount of the rev. deduction. If death takes place during the first year, the co. should be entitled to deduct one extra prem. and a year's interest upon it, to place itself in the same position as if the add. prem. had been paid in the

ordinary course. If death happen in the second year, the deduction should be two extra prems., together with int., and so on. This calculation I carry to the end of the period of "expec.," and after finding the present value of these several possible deductions, I treat the total as a single prem. for an assu. for the whole term of life, and the amount of such assu. I take to be the deduction which should be specified in the pol.

It will be seen that another departure is here made from pure theory, inasmuch as theory would require all the possible deductions to the end of life to be taken into account, instead of those only during the "expec."; but after carefully weighing all the circumstances, I am inclined to believe that the plan above suggested will give a perfectly safe result for office use.

In the same vol. of the Assu. Mag. are letters from Mr. Peter Gray, Mr. H. Ambrose Smith, and Mr. W. E. Braybrook, involving criticism upon and dissent from Mr. Younger's proposal. Mr. Gray says, with some emphasis:

It is maintainable that no amount of survivance on the part of a particular life, although extending to the utmost limit of human existence, will suffice to prove that there was not, at the date of the medical rep., sufficient ground for the relegation of that life to a class of a greater age than the age assigned by the date of its birth. If, in consequence of increased care (which is frequently engendered by delicacy of constitution), or from any other cause, the life in question should, contrary to anticipation, attain a good old age, the case must be considered as just one of those, the decision of which in favour of the office enables it to meet the claims arising on account of those that are decided against it. Having stood the risk of an adverse decision, the office must not be called upon to surrender the consideration in respect of which it undertook that risk.

Mr. Gray also objects on scientific grounds.

Mr. Ambrose Smith considers that Mr. Younger "rather needlessly complicates a comparatively simple matter," and proceeds to state the grounds for this opinion.

Mr. Braybrook objects not only to Mr. Younger's proposal, but also to that of Mr. Black. He says:

It appears to me, however, that there is a fundamental error of principle which renders both of the proposed plans unsound, and which the palliative considerations set forth by Mr. Younger do not affect. The payment for a contingency ought never to depend on the issue of the event. An ordinary assu. on a healthy life, it has often been pointed out, is a transaction in the nature of a wagermorally harmless, it is true; but still a wager upon the happening of an event unknown to either party. If the life survive the year of the payment of the prem., the co. stands to win; if it die, the co. will lose and as the latter event is antecedently less prob,, the co. gives odds to the assured. But as soon as the year has expired, the transaction is closed; the assured cannot say, "The life has survived, if the death has happened, say, "We will pay you back what we

return me my money," nor can the co., It is true the co. has entered simultaneously upon many other

have received from you, and no more.' similar transactions, and expects to be neither a loser nor a gainer on the whole extent of them; but that is its own risk, not the risk of the assured. The proportion of the prem, to the sum assured that is, the amount of the odds given by the co.-is settled according to what are erroneously termed the "laws" of mort., which are really only the results of past experience, as extensive as we can collect. Those "laws" promise no certainty of life equivalent to the odds given, but merely enable the co. to say at what rate they can afford to run the risk.

An assu. upon an invalid life differs in no respect from an ordinary assu., except that the rate of odds the co. can afford to give is matter of more anxious calculation. Whatever the rate may be, when fixed upon an antecedent investigation into the case, it must not be disturbed when the contin. is at an end. If upon an individual case, or any number of cases, the co. finds the transaction result in a loss, they must abide by it; if they have made profit, the profit is legitimate, having regard to the antecedently equivalent risk of loss. There cannot be an "error" or "mistake" for subsequent remedy, in the estimate put originally upon the risk.

I see Mr. Younger admits that he has "departed from theory"; but I think that the experience of all offices which have entertained invalid assu. would show that such departures on the wrong side are very dangerous. It is a most hazardous class of bus., and the co. requires every practical and theo. retical barrier against loss that can be devised. Every plan which charges a debt upon the pol., to be wiped off at a future day if the death has not intervened, whether the debt be estimated on the careful method of Mr. Younger, or by the more empirical modes adopted by the offices which advertise the system, deprives the co. of the chance of profit which alone can compensate them for the concurrent chance of loss; and enables the assured in effect to say to the co., Heads, I win; tails, you lose." Indeed, any debt whatever upon a pol. is unsound, and subversive of the principles of assu. He makes the following further practical obs.:

It may be worth while to add, as collateral to the subject, that what has been said does not affect the question of returning a bonus to the assured out of the resulting profits of a series of transactions, if such profit has arisen from prudent investment, gain of int. beyond that involved in the T., economy in expenditure, or other like causes. But bonus ought never to be divided out of profit supposed to arise from a more favourable past experience than that for which the rates of prem. have provided; and those cos. who boast that their claims have been less than the expected amount, unless they retain in their hands the money so saved, are congratulating themselves upon what is really a presage of future disaster as far as the pol. under obs. are concerned. [SURPLUS.]

In 1862 Dr. Fleming, M.D., pub., Medical Statistics of Life Assu.; being an Inquiry into the Causes of Death among the Members of the Scottish Amicable from 1826 to 1860; and a comparative analysis of the Diseases which have proved fatal among the assu. in several Societies, and among the general pop. of England. There is nothing bearing specially upon the subject of ins. diseased lives as a class; and the statistics it contains will be best noticed under the heads of the specific diseases of which it treats. [SCOTTISH AMICABLE, MORT. EXPERIENCE OF.]

In 1862 the City Assu. Co. was founded, and its prosp. set out the features of Black's scheme in a very attractive form, supported by the following argument:

Those practically acquainted with the working of a life office must be aware how large a proportion of the proposals made are upon lives not altogether unexceptionable, and where an extra prem. is fairly chargeable. They may not be cases of absolute disease; but where the future is not altogether free from apprehension, or where the party, while by no means an uninsurable life, is, from some cause more or less important, below the average standard. How often is it that the proposer, feeling himself in good health, and perchance supported in this view by the opinion of his medical advisergiven however generally and not with any particular reference to the object of ins.-regards himself as in all respects a first-class life; although upon examination, or an investigation of family hist., he

may not be found so. Yet invariable is the reluctance to pay an extra prem., arising from the conviction that there is nothing to warrant it. In fact too often the intended family provision is in consequence either not made at all, or if the required prem. be paid, it is a source of constant dissatisfaction.

In cases of diseased lives, where of course the fact must be more or less known to the proposer, there is not the same ground for complaint; but the add. is oftentimes so heavy as to preclude the possibility of the assu. being for more than a nominal amount, and when once the contract is made, it so continues throughout life, whether the party has outrun the physical objection or not.

In 1863 the Hercules (No. 2) perfected a scheme for the insurance of diseased lives, of which the following is an outline :-A second-class life will be assu. at the ordin. tabular rates, the expec. of living being divided into four equal portions. Should a pol.-holder for £1000 die during the first portion of the expectancy, the Co. would engage to pay £200 of the sum ins.; if he should die in the 2nd, £400; the 3rd, £600; and should he die during the fourth portion of the expectancy, the Co. would engage to pay £800 of the sum ins. And should the life survive the full expec., the full sum of £1000 would be paid. This scheme was perfected by Mr. Shrubb, the then Sec. of the Co.

In 1865 the mort. experience of the Metropolitan L. from 1835 to 1864, both inclusive, was pub. Under T. D., "different classes of assu.," we find 555 enumerated as diseased lives. The average number of years they had been under obs. was stated to be 116. The total deaths had been 99; giving a per-centage mort. on the years of life exposed to risk of 154. The number of deaths at like ages to be expected according to Experience T. No. 1, was 112; the actual mort. experienced had therefore been 88.4 p.c. of the expected mort.; while in the "healthy life" branch it had only been 791 p.c. It was explained that under "diseased lives" had only been classified those who either for gout, hernia, impaired health, or tendency to disease, have been assu. at an increase of their natural ages." The average add. had been 3 years. This had been “entirely disregarded in determining the mort. of this class."

In 1868 Mr. Makeham addressed a communication to the editor of the Assu. Mag. [vol. xiv. p. 159], On the adjustment of prems. for L. Assu. in reference to Extra Risks. [EXTRA PREMS.]

In 1868 the British Alliance announced a scheme for the ins. of invalid lives, which was clearly based upon Black's plan.

In 1868 the mort. experience of the Gresham L., extending over the first 1000 lives which had become claims, and covering its experience for the first 18 years of its existence down to the year 1866, was pub. by the assistant medical officer of the Co., Mr. A. H. Smee. The report does not throw much light on the special question of the ins. of diseased lives; indeed, the following T. is the only one bearing upon the subject. It shows that out of 1000 deaths from "all causes," 206 took place among the diseased lives, ¿,e. “English lives at extra rates," from the following specific causes:

The further experience of the Co. was pub. in 1871, which see. The Bristol and London, founded 1869, ins. diseased lives on Black's plan. The most important contribution, in many respects, made to our stock of knowledge concerning the mort. of diseased lives insured in British offices is that contained in the Mort. Experience of Life Assu. Cos. collected by the Inst. of Act., and pub. in 1869; supplemented as it is by the separate obs. of the Scottish offices. The number of "diseased lives"-male and female-embraced in the obs. is 11,146, who had lived through 101,695 years of life. Of these there had died 2456, had been discontinued 3365, and were in existence on 31st December, 1863, nearly one-half of the whole, namely, 5325. In these numbers were included the experience of the Clerical, Medical, and General, which had, as we have seen, made the ins. of diseased lives a special feature for a period of forty years at the time the data was collected, viz. up to the end of 1863. The other offices con

tributing their experience were mostly such as might be considered very careful regarding the acceptance of lives of this class, and had not made any "feature" of so doing. The report of the Com

mittee says:

In regard to the diseased lives, male and female, the deaths are too few in each separate year of ins. to give very trustworthy results. It is evident, however, from the excessive mort. in the first and second year, which under the age of 60 is generally about double that of healthy male lives, and also by comparison of the rates at 5 years and upwards with the total, that the benefit of selection is very slight indeed, and generally disappears entirelyby the third or fourth year.

The total rates of mort. as compared with healthy males and females, are given in the annexed Table.

The mort. amongst diseased lives, at all ages under 65, therefore exceeds that of healthy lives by 30 p.c., and at the younger ages is nearly 70 p.c. in excess.

The following T. shows the force of mort., and also the expec. of life, by way of comparison between the healthy males and females of the new mort. experience [Experience T. No. 2] and the diseased lives; the Carlisle and old experience being added also for purposes of comparison.

It is pointed out that "the T. for female lives and that for diseased lives may also be liable to fluctuations from the relatively small number of obs."

At the age of 40 the diseased lives and the healthy female lives show nearly the same decrement, 7544 of the former, and 7574 of the latter, remaining against 8223 healthy males out of 10,000 assumed to enter at age 10. But after that age the diseased lives rapidly diminish by death, being reduced to 2785 at age 70.

It is important, in a practical point of view, to note the mort. results among diseased lives in the early years of ins. ; and the following T., abstracted from the more complete T. in the report, furnishes the means.

Diseased Lives-Male and FEMALE.—Annual mort. per cent. in years of Ins.

The last three columns show very regular progressive results. The fluctuations in the