PRACTICAL BUSINESS OF LIFE INSURANCE, 741 



least, the whole amount of premiums paid ought to be returned, since 

 no loss has occurred. However absurd such notions, they have caused 

 much dissatisfaction, and, as they spring from a total misconception 

 of the aims and functions of the institution, they ought to be dispelled. 

 The companies themselves are not free from blame, however, for per- 

 mitting many false impressions to gain ground. Nothing can be more 

 mischievous than the assertion that life insurance is a profitable invest- 

 ment for money in the ordinary acceptation of that phrase. It is a 

 provision against a contingency to which every human being is sub- 

 ject. A proper appreciation of its great benefits would prompt most 

 men to seek its protection as far as their means permitted. To the 

 majority of insurers, however, it is an actual expense, though allotted 

 among them upon the most equitable basis. On the other hand, the 

 amount of premiums paid can never be totally lost, since every life- 

 policy must eventually become a death-claim. But only those should 

 insure who really require it and can continue payments to the end. 

 Had this always been understood, many policy-holders would have 

 been spared disappointment and suffering when sober reaction followed 

 a period of wild inflation. 



One of the evils resulting from dissatisfaction with insurance com- 

 panies has been the formation, all over the country, of so-called coop- 

 erative (latterly mutual benefit) life associations. They are based on 

 what has already been shown as utterly impracticable the collection 

 of contributions on the death of members, with no fixed premiums or 

 adequate accumulation of reserves. AYhen the lives are newly se- 

 lected, and not much above middle age, there is, at first, an appearance 

 of saving over regular premiums. But, as they get older and the rate 

 of mortality rises rapidly, the contributions become onerous, and, there 

 being nothing to forfeit, the healthy lives withdraw, leaving a con- 

 stantly increasing preponderance of impaired lives. The association 

 breaks up, and those most in need of insurance can no longer obtain 

 it from regular companies. The fallacy consists in assuming a continu- 

 ous increase of new young lives that are willing to bear the burdens 

 of the old members ; an infatuation that never lasts long. It seems 

 almost incredible that, in the face of well-established scientific princi- 

 ples and a century's experience, such crude exjoeriments should again 

 be introduced, as though they were a new invention. They deserve 

 no better name than frauds, originated either by designing men to 

 plunder the credulous or by those so grossly ignorant as to be no less 

 culpable. Well have they merited the name current in insurance par- 

 lance, "the co-duperatives." 



We have now touched upon most of the distinctive features of life 

 insurance that interest the general reader, and but little remains to be 

 said of the general management. It has been shown that next in im- 

 portance to the collection of premiums is the accumulation of a reserve, 

 which must earn at least the minimum rate of interest assumed as the 



