PRACTICAL BUSINESS OF LIFE INSURANCE, 733 



the same purpose would be accomplished for an equal annual premium 

 of $11.97. The somewhat larger expense in the earlier years of in- 

 surance avoids the necessity of enormous charges at the high ages. 



The method of arriving at the equal annual premium is based upon 

 very plain reasoning, and can be explained in a simple manner. 



Let us assume, with the American Exj^erience Table, that, out of 

 100,000 persons at age 10, there remain 847 living at age 90, and that 

 they die, according to the table, as follows : 



Were these 847 to form an association, based on the condition that 

 the payments remain equal throughout, and be collected from the 

 survivors at the beginning of each year, and that $1 be paid at the 

 death of each member, there would be 1,628 contributions during the 

 whole period, to provide for 847 death-claims. The requisite annual 

 premium would therefore be yVA ^^ ^ dollar, or $0.52027 (52 + cents). 

 Let us examine the working of this fund : 



Age 90 living, 847 x -52027= contributions $440 67 



Death-claims 385 00 



Balance $55 67 



Age 91 living, 462 x '52027= contributions $240 37 



Balance 55 67 



$296 04 

 Death-claims 246 00 



Balance $50 04 



Age 92 living, 216 x -52027= contributions $112 38 



Balance 50 04 



$162 42 

 Death-claims 137 00 



Balance $25 42 



Age 93 living, 79 x -52027= contributions $4110 



Balance 25 42 



$66 52 

 Death-claims 58 00 



Balance $8 52 



