266 



ESSAY ON PROBABILITIES. 



this. Persons having insured for their whole lives, and 

 being afterwards desirous to discontinue, are surprised 

 to find that they cannot get for their policies even as 

 much as the amount of their premiums, to say nothing 

 of interest. Each of them reasons thus : Since I did 

 not die, the office lost nothing by me, and, as it has 

 turned out, ran no risk : why, then, should they not 

 restore me the premiums which I have paid ? To which 

 it should be answered: Because the risk, which turned 

 out favourably in -your case, did not produce the same 

 result in another case ; and it is the very essence of an 

 insurance office, that those who live pay for those who 

 die. If you can induce the executors of those who have 

 died during your tenure of your policy to refund what 

 they have received from the office, with compound 

 interest, then the office will repay you your premiums, 

 also, with compound interest. The above-mentioned 

 reasoning of the insured party is much on a par with 

 that of the judge in Godsal's case. 



A respectable weekly newspaper has lately allowed 

 the following doctrine to be promulgated in its columns ; 

 namely, that it is an undeniable fact, demonstrable by 

 the books of any insurance office, that very much the 

 larger portion of their profits has always arisen from 

 lapsed policies ! Till I saw that article, I could hardly 

 have believed that even a newspaper would have admitted 

 so palpable a mistake. On the supposition (no matter 

 how false) that all the back premiums of a lapsed policy 

 are, as they say in book-keeping, to be carried to profit 

 and loss, how could such an assertion be made, in the 

 face of the well-known fact, that premiums are deduced 

 from a table of much higher mortality than that actually 

 experienced ? Those persons who, one with another, 

 were expected to live twenty years, have lived twenty- 

 four years. A small proportion of them have allowed 

 their policies to lapse, enough to give, perhaps, a per- 

 ceptible profit to the office, but not enough materially 

 to increase its funds ; for it must be remembered that, 

 though the number of policies allowed to lapse bears a 



