INSURANCE. 



515 



property be distinctly specified at the time of exe- 

 cuting such policy. Most of the offices except in 

 their proposals against making good any loss occa- 

 sioned by " invasion." " foreign enemy," " civil 

 commotions," &c. ; and under this condition the 

 Sun Fire Office was exonerated from the loss oc- 

 casioned by the disgraceful proceedings of the mob 

 in 1780. The risk commences in general from the 

 signing of the policy, unless there be some other 

 time specified. Policies of insurance may be 

 annual, or for a term of years at an annual pre- 

 mium ; and it is usual for the office, by way of in- 

 dulgence, to allow fifteen days after each year for 

 the payment of the premium for the next year in 

 succession ; and provided the premium be paid 

 within that time, the insured is considered as with- 

 in the protection of the office. Insurances are 

 generally divided into common, hazardous, and 

 doubly hazardous. The distinguishing characteris- 

 tics of these may be learned from the subjoined 

 proposals of the Sun Fire Office. The charge for 

 insuring property of the first description is now 

 usually Is. 6d. per cent., the second 2s. 6d., and 

 the third 4s. 6d. These charges are exclusive of 

 the duty payable to government, of Is. on the 

 policy, and 3s. per cent, on the sum in the policy. 



The details of Fire Insurance are so generally 

 known, that it is unnecessary to extend this article 

 by stating them at greater length. 



Under the articles Annuity, and Expectation of 

 Life, will be found all that is necessary to explain 

 the elements of Life Assurance ; in this place, 

 therefore we shall do little more than treat of the 

 insurance of sums payable at the death of the in- 

 surers or their nominees. 



Life Insurance. Suppose an individual of a 

 given age wishes to insure 100 payable at his 

 death, the single premium, or the series of annual 

 premiums, he ought to pay an office for such 

 insurance, must plainly depend on the expecta- 

 tion of life of such individual, and on the rate of 

 interest or nett profit which the insurers may 

 make by investing the premiums. With respect 

 to the first of these conditions, or the expectation 

 of life, it is usual in estimating it to have re- 

 course to Tables framed from the mortality ob- 

 served to take place in particular cities or dis- 

 tricts ; but though the actual decrement and 

 expectation of life among an average population, at 

 every year of their lives, were accurately deter- 

 mined, it is doubted whether it would form a fair 

 basis for an insurance office to proceed upon ; for 

 insurance offices invariably profess to act on the 

 principle of rejecting bad lives, or of making them 

 pay a proportional increase of premium ; and it may 

 besides, be fairly presumed that persons insuring 

 their lives are of a superior class, and are not, gene- 

 rally speaking, engaged in those manual and labo- 

 rious occupations that are esteemed most injurious 

 to health. But, on the other hand, the friends of 

 parties whose lives are supposed to be bad, and the 

 parties themselves, are most anxious they should 

 be insured. And since the competition among the 

 different offices became so very keen, as it has been 

 of late years, there are but few lives so bad that they 

 will not be taken by one office or another ; and we 

 doubt, were the results of their experience made 

 public, whether it would be found that there is 

 much foundation for the opinion as to the superi- 

 ority of insured lives. With respect to the se- 

 cond condition in valuing an insurance, or the rate 

 at which the interest of money may be estimated, 



VII 



it is impossible to arrive at any thing like accurate 

 conclusions. At an average, perhaps, transactions 

 in life insurance may extend over a period of thirty 

 years from the time when they are entered into ; 

 and in such a lengthened term the greatest changes 

 may take place in the rate of profit and the rate of 

 interest. Mr Finlaison, of the national debt of- 

 fice, appears to think that 4 per cent, may be 

 taken as the true average rate in this country; and 

 that 4| is a rate at which no loss need be appre- 

 hended. But this is not a point on which previous 

 experience can be safely depended upon in forming 

 engagements for the future ; and there are grounds 

 for concluding that no institution, intended to last 

 for the next half century, would be warranted in 

 reckoning upon realizing more than 3 per cent, 

 upon its investments. Security being the princi- 

 pal object to be aimed at by every insurance office 

 established on sound principles, they would not act 

 wisely, if they did not calculate their premiums 

 considerably higher than may appear necessary 

 to those who look only at what has taken place 

 during the last thirty or forty years. Societies 

 contracting prospective engagements that may ex- 

 tend for half a century or more, are exposed to 

 innumerable unforeseen contingencies ; and they 

 would be highly censurable, and altogether un- 

 worthy of the public confidence, were they so to 

 conduct their affairs, that they might be liable to 

 serious embarrassments from fluctuations in the rate 

 of interest, or an increase of sickness, or any other 

 cause. 



Life insurance companies are divided into three 

 classes. The first class consists of joint stock 

 companies, who undertake to pay fixed sums upon 

 the death of the individuals insuring with them ; 

 the profits made by such companies being wholly 

 divided among the proprietors. Of this class are 

 the Royal Exchange, the Sun, the Globe, &c. The 

 second class are also joint stock companies, with 

 proprietary bodies ; but instead of undertaking, 

 like the former, to pay certain specified sums upon 

 the death of the insured, they allow the latter to 

 participate to a certain extent, along with the pro- 

 prietors, in the profits made by the business. The 

 mode in which this sort of mixed companies allot 

 the profit granted to the insured, is not the same 

 in all ; and in some, the principle on which the al- 

 lotment is made is not disclosed. The Rock, Al- 

 liance, Guardian, Atlas, &c. belong to this mixed 

 class. The third species of company is that which 

 is formed on the basis of mutual insurance. In 

 this sort of company there is no proprietary body 

 distinct from the insured ; the latter share among 

 themselves the whole profits of the concern, after 

 deducting the expenses of management. The 

 Equitable Society, the Amicable, the Norwich Life, 

 &c. belong to this class. 



Our limits will not permit us to copy into our 

 pages the terms and regulations of the various 

 Life Assurance Companies now existing ; and in- 

 deed it is unnecessary to do it, for each society is 

 careful to keep the public mind informed, by ad- 

 vertisements and published reports, on these points. 

 From the great success, however, which has at- 

 tended the Scottish Equitable Life Assurance So- 

 ciety, which is founded on the plan, or nearly so, 

 of the London Equitable, we deem it proper to 

 ' lay before the reader some slight notice of its na- 

 ture and operations. 



The Scottish Equitable Life Assurance Society 

 is formed upon principles calculated to afford the 



