FRATERNAL INSURANCE IN AMERICA 



241 



insuranre is improved with intorosi and roscrvod to counter- 

 balance the deficiencies of hiter level premiums. In other 

 words, every level premium embraces an investment reserve, 

 in addition to other elements which need not be discussed here, 

 with which future losses are met. Under a natural premium 

 plan the policy holder — again disregarding loading, etc. — pays 

 just enough to cover the cost of insurance for his age, and no 

 more. Natural premiums are, consequently, low during youth 

 and increase with advancing years, until finally they become 

 practically prohibitive. Assuming that the premiums are 

 payable at the beginning of the year, it is evident that even 

 under the natural system some reserve exists with which to 

 meet losses during the year. This form of reserve may be 

 termed insurance reserve. It is used to meet current losses 

 and is greatest at the very opening of the year, gradually 

 decreasing until at the end of the year it is completely ex- 

 hausted. 



The tables of the fraternal congress admit of both the 

 reserve and the natural premium plans. The reserve plan 

 involves the adoption of a level premium table like that given 

 in colunrn 3 of the comparative exhibit, and the natural plan 

 is illustrated in the table given below. Both tables of rates 

 are based upon the same mortality tables. The committee on 

 rates of the fraternal congress has also prepared other modifi- 

 cations of the natural plan, but this one will suffice for purposes 

 of illustration. 



Vol. 10—16 



