POPULATION POOR-LAWS LIFE-ASSURANCE. 



Supposing such a society to be constituted, and 

 ^4225, IDS. gd. to be paid in by the 46 members, 

 we shall see how its business would proceed until, 

 at the close of seven years, death put a period to 

 the account : 



"The original contribution of 4225, IDS. gd. being put 

 out to interest, at the end of the first year amounts 

 to 4352 5 2 



From which deduct for the twelve lives which fail in 

 the course of the year 1200 o o 



Fund remaining at the commencement of the second 



year 3152 5 



Which, bearing one year's interest, will amount to.. . ^3246 16 8 

 From which deduct for the ten lives which fail in the 



course of the year loco o o 



Fund remaining at the commencement of the third 



year 2246 16 8 



Which, bearing one year's interest, will amount to. . . ^2314 8 2 



From which deduct for claims 800 o o 



Fund remaining at the commencement of the fourth 



year 1314 8 a 



Which, bearing one year's interest, will amount to. . . .1559 16 8 



From which deduct for claims 700 o o 



Fund remaining at the commencement of the fifth 



year 859 16 8 



Which, bearing one year's interest, will amount to. ... ^885 to 5 



From which deduct for claims 500 o o 



Fund remaining at the commencement of the sixth 



year 385 10 5 



Which, bearing one year's interest, will amount to ... .397 i 8 



From which deduct for claims 300 o o 



Fund remaining at the commencement of the seventh - 



year 97 i 8 



Which, bearing interest, will amount to *<x> o o 



Which will exactly discharge the last remaining claim 100 o o 



Practically, life-assurance is not effected upon 

 lives so advanced as 90 years. It is common to 

 confine business to ages under 60 ; and the great 

 bulk of insurers are between 27 and 40, the time 

 about vvhich men in this country begin to feel the 

 responsibilities of a family. But the calculations 

 followed for the various ages are formed exactly 

 in the above mode. All the persons of a par- 

 ticular age in a life-assurance society are con- 

 sidered as a distinct group insuring each other. 

 Of those, for instance, at 30 years of age, it is 

 calculated what proportion will die the first year, 

 what the second, and so on ; and from each the 

 society looks for such a contribution, present or 

 prospective, as may make up an aggregate suffi- 

 cient, with the accumulation from compound I 

 interest, to pay the sum assured upon each life in 

 that group. It is quite the same thing to the 

 society, or, we shall say, to the general interest, i 

 whether the individual insurers pay the whole i 

 required contribution at once, or in a series of | 

 annual payments, which, as the plan convenient j 

 for the majority of people, is that generally 

 adopted. 



FORMATION OF RATES. 



According to the principles of which we have 

 given a slight outline, offices form scales of rates 

 at which they profess to do business. In these 

 rates, very considerable discrepancy exists, for 

 many continue to calculate mortality according 

 to the Northampton Tables, which, as already 

 shewn, give the decrement of life too high ; while 

 others proceed upon those more recently formed, 

 which are certainly much nearer the truth ; and 

 some, again, assume interest at only 3 or 3^ per 

 cent., while others deem 4 not too high. There is 

 also an allowance for the expenses of business to 



be added to the naked sums required by a regard 

 to mortality and interest ; and here, also, the minds 

 of parties may differ, some allowing more, and 

 some less on this account. 



In most cases, the charges for life-assurance are 

 considerably within the verge of safety. Hence 

 companies generally divide good profits, and 

 societies realise large surplusages, which fall to be 

 divided among the insurers, in the form of addi- 

 tions to the sums stated in their policies. The 

 scales of the various offices may be classed in 

 various grades or sets. 



Scales of the first or lowest grade proceed upon 

 modern tables of mortality, and the expectation of 

 about 4 per cent, interest at an average, adding 

 from 10 to 15 per cent, according to age, for ex- 

 penses of management, and as a guarantee against 

 any unfavourable fluctuations of mortality and 

 interest. For an insurance of ,100, the Northern 

 Assurance Company require from a person aged 

 30 an annual premium of 2, 95. 3d. ; the annual 

 premium charged by the Standard Life-assurance 

 Company being 2, IDS. id. ; the Scottish Pro- 

 vident Institution charging 2, 2s. 6d. The 

 high premiums borne by the stocks of com- 

 panies that transact business at these rates, and 

 the bonuses divided in the mutual societies, give 

 tolerably fair evidence that these calculations rest 

 on a sound basis. The government life-assur- 

 ances, which are limited to sums not exceeding 

 ;ioo, are based on a higher scale, the annual 

 payment required from a person of the age of 30, 

 effecting an insurance of .100, being 2, 6s. yd. 

 This higher rate was adopted for the purpose of 

 preventing the national exchequer suffering from 

 any possible miscalculation of the chances of life 

 among the assured. In other offices higher rates 

 are charged, as in the Economic Company, where 

 a person aged 30, desirous of effecting an insurance 

 of ;ioo, has to pay an annual premium of 2, 53. 5d. 

 The Norwich Union charge 2, 125. nd; the 

 Guardian, 2, los. id. ; and the Scottish Widows, 

 2, i2s. i id. These scales entitle the insuree to 

 participate in the profits of the company, the 

 bonuses being equal, for the most part, to an 

 addition to the policies of from I to 2 per cent, 

 per annum on the sum insured (reversionary 

 addition). 



A third class of offices, adopting the Northamp- 

 ton Tables, and generally of old standing, and 

 acting upon old calculations, present higher scales 

 of rates, and divide, or ought to divide, higher 

 profits. One office, the United Kingdom Temper- 

 ance and General Provident Association, has 

 established a section in which abstainers from 

 the use of alcoholic drinks may effect insurances at 

 lower rates than in the other sections ; it being 

 found that the rate of mortality among total ab- 

 stainers is considerably under the average, even 

 among selected lives. This is shewn by the fact, 

 that during the years 1866-73, the number of 

 deaths in the Temperance section was 691, instead 

 of 957, the estimated number; while in the General 

 section the number was 1689, or only 50 below the 

 estimated number of 1739. Thus the number of 

 deaths in the Temperance section was 27-8, and 

 in the General section 2'88, below the estimated 

 rates. 



The existing British offices number about 120, 

 most of them of recent origin. The oldest is the 

 Amicable of London, established on the mutual 



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