INSURANCE 



3006 



INSURANCE 



to pay a certain sum to his heirs or to any 

 named person after his death. Under the en- 

 dowment plan, the company agrees to pay a 

 certain sum to the insured himself at a future 

 time, as ten or twenty years. If he fails to 

 survive the term, a certain payment is made 

 to his heirs. Endowment policies are now 

 much favored as investments. However the 

 policy be written, it is essential that the 

 premiums together should pay all the losses 

 and all the expenses of the company, plus 

 interest on the capital invested. The rate is 

 determined in accordance with the principle 

 of averages. By reference to mortality tables 

 (see MORTALITY, LAW OF), it is possible to de- 

 termine with a reasonable degree of closeness 

 how long a person of a given age will survive. 

 The likelihood of a long continuance of life 

 is much less in the case of elderly than of 

 young persons; accordingly, the rate increases 

 with the age of the insured. Persons in bad 

 health are often rejected as an unwarrantable 

 risk. Those occupied in especially hazardous 

 employments are obliged to pay a higher rate. 

 Under the tontine plan, profits are not di- 

 vided until after the lapse of a specified period 

 ten, twenty or thirty years. Often the in- 

 sured agrees to forfeit his policy in case he 

 allows his payments to lapse. No dividends 

 are credited to such policies as fall due before 

 the dividend period arrives. The accumulated 



dividends are distributed at the end of the 

 period among such policies as are actually in 

 force at that time. 



The life insurance in force in 1915 in the 

 United States and Canada amounted to over 

 forty billion dollars. 



Since almost any commodity can now be 

 insured, the varieties of insurance are too nu- 

 merous to be given. Some of the chief forms, 

 not enumerated above, with the amount in 

 force in 1915, are as follows: personal accident 

 and health, five billion dollars; steam boiler, 

 $750,000,000; plate glass, $175,000,000; burglary, 

 $80,000,000. 



Insurance against sickness, accident and old 

 age has become an exceedingly important part 

 of the social program of Germany and other 

 European countries, and the idea meets with 

 growing favor in North America. In the United 

 States such insurance schemes have been 

 adopted by a number of large industrial or- 

 ganizations for the benefit of their employees. 

 The popularity of sick benefits has been such 

 that many companies have been organized to 

 offer insurance against sickness, agreeing to 

 pay from $10 per week to $50 per week or 

 more in case of illness requiring medical or 

 surgical care. A.E.R. 



Consult Gephart's Principles of Insurance; also 

 the reports of the insurance commissioner of 

 your state or province. 



Insurance, in Arithmetic 



In teaching insurance to young people at 

 school, there should be a discussion of the 

 subject in class, full and free enough to enable 

 them to understand the meaning of insurance 

 in the business world, and to become familiar 

 with the technical terms peculiar to the sub- 

 ject; as insurance, policy, rate, jace of policy, 

 premium, underwriters, etc. The students can 

 get much information on this subject from 

 their parents, neighbors, and business men in 

 their neighborhood. Why are the rates of 

 fire insurance high or low? What is the ef- 

 fect on rates of the location of insured prop- 

 erty, of better fire protection, of fireproof 

 building, of fewer fire departments, of better 

 water supply, of nearness to sources of dan- 

 ger? Are rates lower in city or country? Are 

 rates lower for apartment buildings or indi- 

 vidual houses, etc.? All these questions can be 

 a source of keen interest. With a clear under- 

 standing of the practical side of the subject, the 

 arithmetic arising from it is a simple matter. 



Premium, or the money paid to the insurance 

 company for "taking the risk," is expressed as 

 a per cent of the insurance, or, as so much 

 per $100. For example: 



(a) What is the premium paid for insuring 'a 

 barn for $3800 for 3 years at 1%%? 

 Solution : 



Insurance = $3800 

 Rate = 1%% 



Premium^. 01 % x $3800 = $47. 50 

 (&) What is the premium for insuring a stock 

 of goods valued at $240,000, for % of its value, 

 at $1.60 per $100? 

 Solution : 



Insurance=% of $240,000=:$180,000 

 Premium = 1800X$1.60 = $2880.00 

 Problems. 1. What does it cost a farmer to in- 

 sure his growing crop of wheat for $24,000 at 

 $2 per $100? 

 Solution : 



Insurance = $2 4, 000 

 Rate=:$2 per $100 

 Premium = 2 40 X $2 = $480 



2. A lake steamer is insured for $250,000 at 5% 

 per year. What premium is paid in 6 years? 



