BY M. B. PELL, ESQ. 225 



interest, to the date of the present distribution ; and charge him 

 (1st) with the actual cost of the risk to which the company has 

 been exposed, during the interval, determined by means of a 

 table representing the rates of mortality and interest actually 

 experienced ; and then (2nd) with the amount now reserved as 

 the present value of the policy. The difference between the sum 

 of his credits and the sum of his debits determines the over- 

 payment or contribution from the policy proper." 



This is perhaps the clearest statement that has been made 

 upon this subject, and amounts to this. The premiums were 

 originally settled according to a certain rate of interest, and a 

 certain table of mortality, with a margin or loading added to 

 cover expenses and contingencies. At the former investigation a 

 sum equal to the liability upon each policy was calculated upon 

 the same basis and reserved to the credit of the policy. At the 

 present investigation it is found that during the interval the rates 

 of interest and of mortality have been more favourable than 

 those assumed, and a new scale of premiums is calculated upon 

 the experienced rates, being the scale according to which the 

 members should have paid if those rates could have been foreseen. 

 To each member there is returned the difference between what 

 he has paid and what it is supposed that he ought to have paid, 

 together with the superfluous accumulations of interest upon the 

 sum reserved to his credit at the former investigation. But even 

 this elaborate method is very far from attaining to that mathema- 

 tical equity which is intended, for it must be remembered that 

 the sums to the credit of the policies at the former investigation 

 would have differed, not only in amount, but in proportion, if the 

 events of the succeeding bonus period could have been foreseen ; 

 and, therefore, to carry out the principle fully, those sums should 

 be revised, which would greatly alter the results, and would lead 

 to further, and practically interminable, complications. 



By the effective premiums Mr. Ho mans explains that he means 

 the actual premiums with a certain per centage upon the amount 

 insured deducted to cover expenses. This mode of apportioning 

 the expenses is correct as far as it goes there is no reason why 

 a policy upon an older life should be charged more for expenses 

 of management than one upon a younger, the amounts assured 



