11^ 



THE POPULAR SCIENCE MONTHLY. 



It will be observed that, at the end of every year, with the exception 

 of the last one, an unexpended balance remains ; dividing this by the 

 number of survivors, we get the amount that applies to each individual 

 living at that period. This is called the net valuation, or, more com- 

 monly, the reserve for each policy. 



At the ages we have under consideration, the reserve would be as 

 follows : 



While the reserve, as here given, is strictly correct in amount as 

 well as in principle, other methods of calculation are employed in prac- 

 tice ; but, for a simple explanation, the plan here adopted will proba- 

 bly serve better than any other. The difficulty has also been that 

 the very high age of ninety had to be selected for the above illus- 

 trations, because every computation has to be carried to the end of 

 the table, which would be very lengthy and tedious for a young age. 

 But, the explanation having been given, a closer inspection of the 

 reserves applying to age twenty will afford a broader insight into 

 the subject : 



Age 20 Net Annual Premium $11.97 per $1,000. 



From the above table it will be seen that the annual premium may 

 be looked upon as consisting of two i:)arts, one defraying the annual 

 cost of insurance dependent upon the death-rate, the other put aside 

 as a reserve fund. Up to a certain period the premium is larger than 



