INSURANCE. 



547 



and fatherless children, we might be little sur- ' 

 prised at this calculation : but when we consider j 

 that the case is quite the reverse that few fa- ! 

 thers have property wherewith to provide for a 

 surviving family, that the number connected with . 

 the institutions which allow pensions to widows ' 

 is necessarily small when we consider, in short, i 

 that the great majority of men who have wives 

 and children have nothing but an income depend- 

 ing on their own life and exertions between their 

 families and want we cannot but conclude that [ 

 the expedient of life-assurance is either unknown 

 to a large portion of society, or knowingly neglected 

 by them. In either case, a short paper explain- 

 ing the subject, and enforcing its claims on the at- 

 tention of husbands and fathers, may be expected 

 to prove in some degree useful. 



" Down to a comparatively recent period, life 

 assurance was chiefly conducted on the ordinary 

 principles of a mercantile speculation. A com- 

 pany, possessing a large capital, assured sums pay- 

 able on the deaths of parties, at certain rates, cal- 

 culating on a profit from their transactions. The 

 sole advantage of this plan lay in the guarantee 

 afforded by the capital of the company. It has 

 since been found that, by the plan of mutual assur- 

 ance, all desirable security is afforded, while the 

 profits are divisible among the only parties who 

 have any right to them, the assurers. Mutual 

 Assurance Societies are, therefore, rapidly sup- 

 planting Assurance Companies, most of which will 

 probably in a few years cease to exist. In the pre- 

 sent paper we propose to confine our attention to 

 the plan of mutual assurance. 



" Mutual assurance proceeds on the following 

 simple principles. While it is an indubitable fact, 

 that nothing is more precarious than the life of an 

 individual, seeing that a thousand dangers con- 

 stantly beset him, it is an equally certain fact, that 

 if we take so large a number as ten thousand per- 

 sons, or even a smaller number, it is possible to 

 say with almost unerring certainty how many of 

 these will die during the next ensuing year, how 

 many in the next again, and so on, until, at about 

 the age of a hundred, not one person remains. 

 Thus Dr Price of Northampton took 11,650 indi- 

 viduals, whose births and deaths were recorded in 

 the proper books at that town, and found that in 

 the first year 3000 died, in the second, 1367, in 

 the third, 502, in the fourth 335, in the fifth 197, 

 and so on till the last man died at ninety-six. Dr 

 Price consequently assumed that, of any 11,650 

 individuals who existed in the like circumstances, 

 3000 would die in the first year, 1367 in the 

 second, and so on. It will be observed that the 

 whole number who die in the first five years is 

 5401, leaving 6249 then alive: consequently, any 

 one of the 11,650 children, at the moment of birth, 

 had a chance of living five years equal to the pro- 

 portion which 6249 bears to 5401, or somewhat 

 more than a half. No man could say, at the mo- 

 ment, that any one of these babies would continue 

 alive for three seconds ; but yet it was possible to 

 say with some degree of probability that, in the 

 proper circumstances, 6249 of the whole num- 

 ber would live to the commencement of the sixth 

 year. When we go on to an age at which life 

 assurance is more likely to be effected say 52 

 we find that, of 100,000 persons who complete 

 this portion of existence, 3044 will die before the 

 end of the ensuing twelvemonth, so that each 

 man's chance of dying in that space of time is in 



the proportion of 3044 to 100,000, or about three 

 to a hundred. Now, supposing: that these 100,000 

 persons were each desirous of insuring the payment 

 of 100 to his heirs in the event of his dying dur- 

 ing this year, it is evident that if they deposit a 

 sum equal to 3044 times 100, that is, 304,400, 

 or about 3 Os. lO^d. each, they will form a fund 

 sufficient for this purpose, leaving nothing over. 

 We have only to suppose a set of persons of dif- 

 ferent ages depositing each the sum appropriate t<r 

 his age, and continuing to do so as long as he lives, 

 and we then have the idea of a Mutual Assurance 

 Society in all except this that, generally, instead of 

 paying an increasing sum each successive year, pro- 

 portioned to the increased risk, it is common to 

 strike a medium in the probable future payments, 

 and pay that from the beginning. Thus, in point 

 of fact, the sum usually required for the assurance 

 of 100 at death, from individuals aged fifty-two, 

 is nearly 5. 



" While MutualAssurance Societies are founded 

 upon this basis, they take, from circumstances, 

 another character in addition to that which they 

 hold out to the public. It may readily be con- 

 ceived that the calculations of the probable dura- 

 tion of lives are liable to be modified by certain 

 contingencies. From climate, and modes of liv- 

 ing, there is more health and better expectation of 

 life in some countries than in others. Even in the 

 same country, from improvements of various kinds, 

 the ratio of deaths to the amount of the living in- 

 habitants may be experiencing diminution, so that 

 a man of thirty has the chance of living several 

 years longer than his grandfather had at the same 

 age. In this country, the annual mortality is con- 

 siderably less in proportion than it was sixty years 

 ago. Consequently, the calculations of Dr Price, 

 forming what are called the Northampton Tables, 

 and which are above adverted to, although they 

 were formed amongst a comparatively healthy 

 rural population, are no longer strictly true. They 

 calculate the chance of life at each particular age 

 too low, and dictate the taking of a too high pre- 

 mium for assurance ; in other words, a man at 

 fifty-two, has not in reality a chance of death in 

 the next year equal to the proportion of 3044 to 

 100,000, but something less, and he should there- 

 fore pay less than 3, Os. 10 Jd. to assure 100 

 for a year. Nevertheless, the most of Mutual As- 

 surance Societies, such as the Equitable of Lon- 

 don, and the Scottish Widows' Fund and Scottish 

 Equitable in Edinburgh, proceed upon the Nor- 

 thampton calculations but for a reason which 

 must be generally approved of. By this plan a 

 considerable surplus takes place, which, at certain 

 intervals, is reckoned, divided, and added to the 

 standing policies, or sums assured, in their respec- 

 tive proportions. It must be evident that this 

 plan, while it adds to the security of the So- 

 ciety, will be perfectly just to all parties, if the 

 divisions of the surplus do not take place at such 

 wide intervals as to leave many policies of short 

 currency unbenefited. The society last mentioned 

 (Scottish Equitable) appears to us to make this 

 justice most certain, as it divides the surplus trien- 

 nially, being the shortest interval in practice. Now, 

 what is the general result of this adherence to a 

 large calculation of mortality, hut that Mutual As- 

 surance Societies become also, as it were, banks 

 for savings? The money deposited there, is not, 

 strictly speaking, parted with. It is put into a 

 stock, where it is sure of being invested to the 

 2 M 2 



