On the present Systems of Life Assurance. 119 



Most of the uncertainty and difficulty by which it has hitherto 

 been supposed to be attended have been cleared away, and Life 

 Assurance transactions may now be calculated and managed 

 with nearly the same accuracy and simplicity as those of any 

 common mercantile concern. 



The case was very different in the earlier periods of Life As. 

 surance. Its principles were but very imperfectly understood : 

 and from this cause, as well as from the defective tables of mor- 

 tality in use, several institutions were founded upon very erro- 

 neous calculations, and have been since carried on upon any thing 

 but equitable or scientific principles, and others more recently 

 established have, with slight modifications, followed the same 

 plan. By all of these the premiums required for sums payable 

 at death are uniformly much higher than necessary. In proprie- 

 tory companies, the excess of funds thus occasioned is a complete 

 loss to the assured, as the proprietors appropriate it exclusively to 

 themselves ; while in mutual guarantee associations, there arise 

 much trouble and expense, and a great inequality in the adjust- 

 ment, from the necessity of periodically apportioning to each in- 

 dividual a share of the large aggregate surpluses. 



Two reasons are usually assigned for still exacting such ex- 

 cessive premiums. The proprietory companies allege, that, as 

 they guarantee the assured in payment of their policies by a large 

 subscribed capital, and for a long period after outset run a 

 great risk of loss, so, on the other hand, they are entitled to be 

 recompensed by the assured for such obligations. The mutual 

 guarantee associations, again, acknowledge that their premiums 

 are too high, but assert that this signifies little to the members, 

 or rather is beneficial to all concerned, because, while the insti- 

 tution is thereby rendered more secure, the accumulated sur- 

 plus is periodically added, under the name of bonuses, to the 

 policies of the subscribers. 



Both of these reasons, however, are quite fallacious. The 

 risk at first is next to nothing. The chances are only about 

 100 to 1 against an ordinary life of thirty years of age failing 

 in one year ; 100 times lOO, or 10,000 to 1, against two named 

 livesof that agebothfaihng within the year; and 100 times 10,000, 

 or a million to 1 against three of that age dying in the year. 

 But if among ordinary lives the chances are so small, as every 



