Mr. Spens <m Life Insurance. 223 



is founded. Modifications of the latter system have been now very 

 generally introduced by the proprietory offices charging higher pre- 

 miums, and allowing a share — I must in fairness say a large share — of 

 profits combined with guarantee. 



13. It is thus seen generally how the surplus from which the bonus 

 additions are allocated arises ; and there will not be much wonder 

 at the contrariety of opinion in regard to its division, when the follow- 

 ing modes of division, although diametrically opposed to each other 

 will be found to be both perfect in theory. The first is the case of a 

 party who wishes to lay out £25 a-year in assurance, receiving the 

 largest possible amount. The ofiice approaching perfection, says. We 

 will give you a policy of £1000 in the mean time, but in the course of 

 a few years we shall have ascertained exactly what sum such a pre- 

 mium at your age will yield, and your policy will be increased ac- 

 cordingly. The second is the case of a party of the same age who 

 goes to the same office, and states, I wish to secure a definite sum of 

 £1000 to be paid at my death, I know I must pay more than is 

 necessary just now, but I understand in a few years you expect to 

 ascertain exactly what the proper premium should be, and you can 

 then return me the difference paid, and reduce the premium for the 

 future. 



It is ascertained after five premiums have been paid by each, that 

 £20 is the proper premium for £1000; both die a short time after this 

 and the heirs of one receive £1,200, corresponding to £25 of premium; 

 the heirs of the other receive £1,025, being the £1000 with return 

 of over paid premiums. Both these modes are evidently quite 

 fair in theory, looking to the respective views of parties in the 

 transactions. 



14. We must therefore look, in the first place, to the real or pre- 

 sumed inteOftions of parties in the original contract; and assuming 

 that the surplus is intended to be applied in making annual or periodi- 

 cal additions, we may judge of the fairness of the rates and modes 

 of addition, by adding their annual values to the true annual premiums 

 as here approximated, and observing if the sums generally agree with 

 the premiums charged. If the table of premiums here submitted do 

 exhibit the minimum rate fairly apportioned at each age, giving effect 

 to the rate of mortality which may be anticipated, and the proper rate 

 of accumulation of money from interest and profits, less expenses, I think 

 it will be readily conceded, that under ordinary circumstances, if the 

 sums of these premiums and the annual values of the additions con- 

 siderably exceed the premiums charged, then it must be fairly pre- 

 sumed that the additions are too great, and if too great, must cause 

 unfairness to the new members, or those of the old who remain longest 

 in the office. If again, the sums are at some ages considerably less, 

 and at others considerably more, then an unfair advantage must be 



