Mutual Life Insurance Company of New York

“ The company which manages its agency system with the greatest economy and thus makes the largest savings from "loadings" will return the largest dividends, or furnish insurance at the lowest cost. How grievously the New York companies have sinned, a few statistics will show. The New York Life, in 1903, spent $11,406,482 on the new business obtained that year. It collected in new premiums $13,784,000. In 1904 it spent $12,005,090 on new business; it collected in new premiums $13,988,186. The Equitable and the Mutual make a showing equally bad or worse. ”

“ In the mutual company the assured themselves receive all the surplus premium or profit. The law of the State of New York passed in 1849 requires that all life-insurance companies organized in the State shall have a capital of at least one hundred thousand dollars. Mutual life-insurance companies organized in that State since 1849 pay only seven per cent on their capital, which their stock by investment may produce. ”

“ Section 700 states that 'any moneys held or owing' by life insurance companies in the following three classes of policies issued on the lives of residents of New York shall be deemed abandoned property: (1) matured endowment policies which have been unclaimed for seven years; (2) policies payable on death where the insured, if living, would have attained the limiting age under the mortality table on which the reserves are based (an age varying from 96 to 100) , as to which no transaction has occurred for seven years ”

“ The Missouri statute provided that such policies as the present, after three annual payments, should not become void for non payment of premiums, but that three-fourths of the net value of the policy after deducting certain liabilities should be taken as a premium for temporary insurance for the full amount written in the policy. It is not disputed that if this statute governs the case, the plaintiff stood as having a policy for the original amount at the death of Mr. Blees. In New York Life Insurance Co. ”

“ A policy of life insurance, without restrictive words, is assignable by the assured for a valuable consideration equally with any other chose in action, where the assignment is not made to cover a mere speculative risk, and thus evade the law against wager policies ”

“ It is doubtless an interesting question how far the action of the insured can affect or bind the beneficiaries in a life-insurance policy. If the answer in this case contained simply the allegation in respect to the insured's agreement with the company, we should be compelled to enter into an examination of that question; but it is alleged, not only that the insured and the company agreed to abandon the contract, but also that the beneficiary, his wife, and the plaintiffs, their children, 'failed, neglected, and refused' to pay the premium. ”

“ In the last few years his rivals have thrown aside all restraint. They have paid 50, 75, 80, and 90 per cent of the first premium. The Mutual Life has paid its New York agency ninety-six cents out of every dollar collected in new premiums. Many smaller companies have followed their example. Such minor companies as the Home Life and the Manhattan have managed their agency forces most extravagantly. The United States Life, though most of its business is on the deferred dividend basis, has absolutely no surplus ”

“ Such instalments are clearly not intended as the consideration for the respective years in which they are paid; for, after they are all paid, the policy stands good for the balance of the life insured, without any further payment. Each instalment is, in fact, part consideration of the entire insurance for life. It is the same thing, where the annual premiums are spread over the whole life. The value of assurance for one year of a man's life when he is young, strong, and healthy, is manifestly not the same as when he is old and decrepit. ”

“ By means of life insurance a man may buy from The Mutual Life of New York on the instalment plan a fortune deliverable to his family at his death, or to himself at the end of twenty years if he be then living. ”

“ Rep. 110, and in New York L. Ins. Co. v. Cravens, 178 U.S. 389, 44 L. ed. 1116, 20 Sup. Ct. Rep. 962. The latter case has special application, for the plaintiff in error here was the plaintiff in error there, and the case concerned life insurance companies and their policies. In that case it was contended that a policy of mutual life insurance was an interstate contract and the parties might choose its 'applicatory law.' The contention was made in many ways and with great amplitude of argument and illustration. ”

“ A policy of life insurance is a peculiar contract. Its obligations are unilateral. It contains no undertaking of the assured to pay premiums: it merely gives him an option to pay or not, and thus to continue the obligation of the insurers, or terminate it at his pleasure. It follows that the consideration for the assumption of the insurers can in no sense be considered an annuity consisting of the annual premiums. ”

“ The rapidity with which mutual companies have yielded to the compacter and more efficient form of the joint-stock concern will be comprehended when it is known that just twice the number now in being have gone out of existence during the last decade. There are twelve marine insurance companies in the metropolis, with assets amounting to $24,947,559. The life-insurance companies number thirteen, with an aggregate capital of $1,885,000. We may safely set down the property invested in New York insurance companies of all sorts at $51,139,461. ”

“ I found I was little more than a puller-in for a den of respectable thieves—that life insurance is simply another of the devices of these oily rascals here in New York—like all their big stock companies and bonding schemes and the rest of it—a trick to get hold of money and use it for their own benefit. Ours is the vilest trick of all, though—it seems to me. For we play on people's heart strings, while the other swindles appeal chiefly to cupidity. ”

“ This is, without doubt, a just conception of the nature of life insurance; but, while the companies agree with Mr. Wright in dividing the premiums into "insurance value" and "reserve," they disagree with him as to the ownership of the "reserve," half of which they insist on retaining for themselves, in case of surrender. The Mutual Life, of New York, retains from fifty to seventy-five per cent, of the "reserve," in settling for surrendered policies, and the Equitable from fifty to sixty per cent., and this is done on all policies alike, without respect to age or class. ”

“ The year after that you take the same policy in the New York Life. The fourth year you come back to the Equitable; and repeat the performance indefinitely.
Occasionally, a rebated policy-holder becomes physically impaired;—what is known as a bad risk. Then sticks in the company into which he was last rebated. A sick man always hungers for life-insurance. A man who ordinarily could afford a $10,000 policy takes one for $100,000 at 90 per cent off. If he falls sick, his relatives and friends gladly pay the few remaining premiums; and his widow, at death, pockets a neat $100,000. ”

“ One thing the policy-holder can always depend upon, however: he pays for everything he gets. The price rests upon certain scientific principles; no company can disregard them without disaster. What one company offers another can offer; and any policy that contains unusual opportunities also carries a premium that completely pays for them. All modern novelties are simply old forms of life-insurance under new names—and usually at greatly increased prices.
In recent years, for example, the New York companies have gone daft over "gold bonds," " consols," and "debentures." ”

“ When failure became inevitable, the New York Life purchased, at par, the stock with which its own trustees found themselves encumbered. The policy-holders, that is, kindly relieved their own trustees of a very bad investment. In the Mutual Life Building there are also safe deposit companies, in which Mutual directors hold office and stock ”

“ They thus force the insured, during the first half of the premium paying period, to advance a considerable amount on the insurance cost of the latter half. These advance payments, with accumulated interest, are the company's reserves. The Mutual Life, for example, collects each year about $60,000,000. from its policy-holders; but pays in death losses only about $20,000,000. Its $40,000,000. balance, after deducting expenses and other larger disbursements, is really the advance payment of the insurance cost of succeeding years ”

“ Provided, that domestic industrial insurance companies shall in no case be required to deposit more than the legal reserve on their policies, but not less than $1,000, which said deposit may be made at the rate of $500 a year, on April 1st, of each year, until the whole be deposited; each domestic mutual life insurance company doing business on a recognized table of mortality with interest assumption not higher than 4 per centum per annum, not less than $3,000. ”

“ And there is no doubt that a man may effect an insurance on his own life for the benefit of a relative or friend; or two or more persons, on their joint lives, for the benefit of the survivor or survivors. The old tontines were based substantially on this principle, and their validity has never been called in question.
The essential thing is, that the policy shall be obtained in good faith, and not for the purpose of speculating upon the hazard of a life in which the insured has no interest. ”

“ The business of insurance is founded on the law of averages; that of life insurance eminently so. The average rate of mortality is the basis on which it rests. By spreading their risks over a large number of cases, the companies calculate on this average with reasonable certainty and safety. Any thing that interferes with it deranges the security of the business. If every policy lapsed by reason of the war should be revived, and all the back premiums should be paid, the companies would have the benefit of this average amount of risk. ”

“ That they remained for years the favorite canvassing documents of Equitable, Mutual, and New York Life agents was notorious. Connecticut Mutual policy-holders were inundated; leading citizens of American cities were overwhelmed. Anyone even mildly contemplating life-insurance inevitably received, through the mail, a marked copy of the Monitor or the Times. Many of these articles were found mailed in Equitable envelopes. Greene, over his own signature, charged that the New York companies had spent $500,000 hounding the Connecticut Mutual. ”

“ The New York companies have reasoned that they could sell any amount and any form of insurance if they only obtained sufficiently skilful men. As soon as a successful producer appeared in the Equitable's ranks, the Mutual and the New York Life at once began to tempt him away. They would offer higher commissions, guarantees, and salaries, and frequently actual initial bonuses. Companies less lenient with their policy-holders' dividends have had the utmost difficulty in building up agencies. ”

“ There was default in April, 1905, in the payment of the interest on the loan and the premium on the policy, and pursuant to the terms of the loan agreement and the law of New York the policy was settled, the sum remaining from the accumulated surplus after paying the loan and the past-due premium being applied to the purchase of paid-up insurance, and the policy was, at the request of Head and his daughter, sent to them in New Mexico in May, 1905, and was in the possession of the daughter when Head died in April, 1906. ”

“ Life insurance has come to be a sacred thing. It is the substantial token and expression of responsibility which a reasonable man dying leaves to those dependent upon him. I so wrote Mr. McCall, and told him that if the head of a great institution like the New York Life Insurance Company would be guilty of such perfidy as charged by you, the organization which would retain him in a position of responsibility was undeserving of confidence or patronage. ”