244 ESSAY ON PROBABILITIES. 



their proposals, an insurance office is created, with all 

 these fundamental characters already described, and 

 which are but ill represented by the term. The word 

 insurance or assurance has given rise to some wrong 

 notions, and it will be worth while to examine the 

 nature of the contract. 



A and Co. engage with B that, in consideration of 

 11. a year, paid by him during his life, they will pay 

 20/. to his representatives as soon as he shall be dead. 

 Both parties run a risk ; A and Co. that of having to 

 pay B more than they receive ; B, that of paying more 

 than will at his death produce 20/. But the risk of 

 the office is of immediate loss, and that of B, of deferred 

 loss : that of the former is also continually lessening, and 

 that of the latter increasing ; until, should B live long 

 enough, both risks become certainties. If the in- 

 surance be only for a term of years, B runs the risk of 

 losing his premiums altogether. 



The office does not inquire what reason B may have 

 for insuring his own life or that of another person, nor 

 do any possible contingencies, except those of life, affect 

 the office calculations. We cannot, therefore, be too 

 much surprised at the ignorance shown by that judge* 

 f who declared that life insurance t was of its own nature 

 a contract of indemnity ; that is to say, if, by any 

 lucky chance, B can be proved to have accomplished 

 the object for which he insured by other means, he has 

 no claim upon the office. The circumstances are as 

 follows ; and the absurd conclusion is law, and 

 would be practice, if the insurance offices had not re- 

 fused to acknowledge the decision^or protect themselves 

 by the precedent. A and Co. covenanted with B to 

 pay 500/., if C should die within the term of seven 

 years next ensuing, in consideration of the usual pre- 

 mium. C did die within the term ; and A and Co., in 



