Expensive Systems of Life Assurance. 121 



to participate alike, in proportion to the sums assured, but with- 

 out any regard to their ages. Hence it follows, that the first or 

 youngest class of entrants secure to themselves all the benefit of 

 their own surpluses ; but while the excess from their premiums 

 must always continue to decrease, and, after a certain age, cease 

 altogether, still they continue to participate in the surpluses of 

 every succeeding class of members. Thus the first class gain at 

 the expense of the second ; the first and second at the expense 

 of the third ; the first, second, and third, at that of the fourth, 

 and so on — the surpluses accruing to the last or youngest class 

 of entrants being always diminished in proportion to the num- 

 ber and ages of those who had entered before them. Youno- 

 and good lives, therefore, can have no inducement to enter such 

 a society. 



It is usual for institutions of this kind to refer the pubhc to 

 the large sums of bonuses which have been added to the policies 

 of the original members ; but it will be perceived that it by no 

 means follows that similar additions will continue to be made to 

 the policies of all future members. So long as institutions upon 

 this principle can obtain an increasing number of youno- entrants 

 the surpluses may at one or two successive investigations appear 

 to be of the same or perhaps even of an increased amount ; but 

 should the number become stationary or decrease, or the a^es of 

 the entrants be higher, while the ages, and consequently the 

 mortality, of the existing members increase, the surpluses would 

 soon begin to diminish, and ultimately cease altogether. It will 

 then be found by all but the first and second class of entrants, 

 that the additions to their policies will by no means be a recom- 

 pense for the heavy extra premiums to which they are subjected 

 through life. 



But tliere is still another strong objection to the usual mode of 

 dividing the suri)luses. To the sum specified in the policies, at 

 whatever time the death may happen, the representatives of the 

 assured are justly entitled, because that is the nature and object of 

 the contract ; and the aggregate premiums of the long and the 

 short lived, should, if properly calculated, be made fully adequate 

 to the policies of both classes in the long run. But the rioht to 

 participate in a surplus fund depends on a very different prin- 

 ciple. Whether the excess of capital arise from a low rate of 



