1903-4.] THE PRINCIPLES OF INSURANCE. 81 
of that company’s experience, and compared it with the experience of several 
- other leading companies. The differences shewn are remarkable, and seem 
to lead to the inference that our well-to-do people come of a hardy, long- 
lived stock. The life of the poorer classes in our city is, however, much 
inferior from an insurance point of view, not only because many trades are 
unhealthy but because the family history of the city mechanic is often 
lamentably discouraging. 
Life assurance companies, like all other financial institutions, balance 
their accounts from time to time. To do so they must value their policies, 
that is, calculate the reserve which, together with future premiums—the 
whole invested at the assumed rate of interest—will provide for the payment 
at death, or other term agreed on, of the amounts the policies call for. This 
is done every year in Canada and the United States; in Great Britain a com- 
plete investigation with allocation of profits is only undertaken every five 
or seven years. 
The question often arises whether it is better to apply for a policy with 
or without profits, and whether, after all, it is not wiser to invest savings 
in stocks, bonds, or mortgages. and I have been asked for my opinion. 
.That depends so much upon circumstances that I cannot answer fully 
to-night, but I will submit a few facts. First I examine a policy taken 
outin 1873, without profits, premium $23.45 per $1,000. That sum, invested 
yearly at 5 per cent. would now have amounted to $1,765, or, at 6 per cent. 
to $2,124.* The assured is still paying his $23.45 annually, per $1,000, 
and if he wished to surrender he could perhaps obtain $500 per $1,000 cash, 
or a paid-up policy for $750 per $1,000. Next I look at a policy in a Scottish 
company which has been successful in its investments, netting quite 44 
per cent. It is on what is called the minimum premium system, which is 
practically insurance without profits. This policy has run forty-two years 
and the premium is $17.44 per $1,000. If we allow 124 per cent for loading, 
the company has $1,815 in hand to pay each $1,000 covered, and has the 
interest on this sum as well as a large part of the $17.44 to receive as long 
as the policy holder lives. Had the assured invested the premiums here at 
7 per cent. he would have had $4,022 for each $1,000. After this I examine 
a policy of the same age, with profits, premium $19.96 per $1,000, or $2.52 
more than the other. The same person holds them both. The profits 
assigned are $265 per $1,000, which is $50 more than the $2.52 would have 
realized at 4 per cent., but it is only payable at death; the interest account 
would be realisable forthwith. Lastly, I scrutinize a policy which has 
run forty-six years, and was paid up by tenannual premiums. At 4 percent. 
the sums paid would have amounted by this time to three times the face of 
* To be exact, ten months‘ interest should be added, to cover the period since the payment of the 
last premium. The annual interest is about four times the premium, and yearly increasing. 
