Life insurance

“ A policy of life insurance is a contract susceptible of ownership like any other chose in action. It 'is not an assurance for a single year, with a privilege of renewal from year to year by paying the annual premium.' It is 'an entire contract of assurance for life, subject to discontinuance and forfeiture for non-payment of any of the stipulated premiums.' N.Y. Life Insurance Co. ”

“ Life insurance is an admirable system, devised, in all its ramifications, to provide against loss or damage through the various contingencies to which human nature is subject.
A simple life insurance is that by which a person may leave behind him a sum of money for the benefit of those who, during his life, have been dependent upon him. ”

“ I was recently waited upon by an important man.
"Lawson, what are you doing in life insurance?" he asked.
"Giving facts about the life-insurance branch of a 'System' which is foully plundering the people," I answered.
"What are you trying to do?"
"Educate the millions of life-insurance policy-holders to their present peril; after they are educated, arouse them to quick, radical action." ”

“ Do you not know that the greatest institution in this country to-day is life insurance, and that if you disturb the confidence of the people in life insurance their families will be deprived of the greatest source of income at a time when most in need of it? ”

“ Theoretically only one is indispensable; the mortality law. This enables the company to foresee, for a long period of years, its annual expenditures, and consequently to make provision for their payment. With this principle alone, however, life insurance would not be an accomplished reality, because its cost would be excessive. The interest element, by making life insurance cheap, brings it within the purview of the poorest citizen. It transforms life insurance from an unutilized theory into a most salutary fact. ”

“ For the last thirty-five years a constant warfare has waged in the United States between the good and the bad in life insurance. On one side have ranged honesty, economy, and fair and liberal treatment of the insured; on the other, dishonesty, extravagance, and absolute disregard of policy-holders' rights. Certain companies have treated life insurance as a great beneficent institution, organized for the purpose of protecting the weak and the dependent against adverse fortune ”

“ But, fortunately for the cause of life insurance, it varies always in one direction. The company's charges, that is, always exceed the actual cost. It almost invariably has fewer death losses than the mortality tables indicate; and it commonly earns more interest than the estimate assumes. That is to say, it pays out each year less than it has provided for; and earns, in interest, more than it needs to pay all claims. A company properly conducted also uses less every year for expenses than the amount provided in the premium loadings. ”

“ In this thirty-five years the history of American life insurance has been one of progressive degeneration. The people have forgotten the old ideals; have persistently abandoned good life insurance and taken up with bad. ”

“ I would not try to keep house without life insurance. Last September I was caught in one of the most destructive cyclones that ever visited a republican form of government. A great deal of property was destroyed and many lives were lost, but I was spared. People who had no insurance were mowed down on every hand, but aside from a broken leg I was entirely unharmed.
{Illustration: PROTECTED BY LIFE INSURANCE.}
I look upon life insurance as a great comfort, not only to the beneficiary, but to the insured, who very rarely lives to realize anything pecuniarily from his venture. ”

“ Two Scientific Bases of Life Insurance—Mortality Law and Interest Rate The application of this mortality law to the cost of life insurance may now be illustrated in its simplest form. Let us take 1,000 men, all aged 40, who desire to insure their lives. They might take out policies in some existing company, but not necessarily—they can carry their insurance just as well themselves. So they enroll themselves into what may be called a life-insurance association. They agree that $1,000 shall be paid to the widows of all that die. ”

“ The agents, however, have not found opportunities enough in the orthodox forms. They have inspired the invention of numerous picturesque, contracts. Under their houndings the actuary's life has become a burden. In reality, there are only three forms of life insurance; the regular life policy, payable at death; endowment, payable to the beneficiary at death and to the insured provided he survives a stipulated period; and the term policy, which insures a man, not for life but for a certain period, ten, fifteen, or twenty years. ”

“ For one reason, a life insurance policy is not expensive. You might as well talk of the expense of buying bank stock, or the expense of putting your money into a savings bank or any other safe place as to speak of the expense of keeping up a life insurance policy. It is accumulation and not expense. Every dollar put into life insurance is a dollar saved to yourself or your estate. ”

“ He regarded life-insurance simply as a family protection; on the part of the insured, he declared again and again, it was a purely unselfish act. No policy-holder must himself expect to benefit from his policy. ”

“ Given a certain number of lives of a certain age, nothing is more clearly demonstrated than the order in which they will die. Given a certain amount of money, invested at a certain rate of interest, nothing is more self-evident than its precise accumulation in a given number of years. If all life-insurance companies thus used the same mortality tables—anticipated, in other words, the same number of annual deaths—and invested the premiums at the same rate of interest, the cost of the actual insurance would in all cases be the same. ”

“ The benefit to be gained by death has no periodicity. It is a substitution of money value for something permanently lost, either in a house, a ship, or a life. Assuming, without deciding, that Congress could call the proceeds of such indemnity, income, and validly tax it as such, we think that, in view of the popular conception of the life insurance as resulting in a single addition of a total sum to the resources of the beneficiary, and not in a periodical return, such a purpose on its part should be express, as it certainly is not here. ”

“ 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. ”

“ There can be no dividend, no profit—no investment—because, even under the most favourable circumstances, the expenses of management are so great. For every dollar collected by a life insurance company, it expends anywhere from eighteen to fifty cents in expenses; manifestly it cannot invest the rest so as to pay you any investment return.
Life Insurance Merely Indemnity—Not Investment Life insurance is one thing, and one thing only. In the social and economic order it performs a single and a simple service. It is the money indemnification for the destruction of a valuable human life. ”

“ We have explained this great life insurance principle on the basis of the single premium—the payment down, in a lump sum in advance, of the entire cost of the life insurance—chiefly in the interest of simplicity. As s matter of fact, few buy their life insurance this way. They make to the common fund not one large contribution, but a smaller one each year, A considerable number pay this uniform sum throughout life. ”

“ Life insurance is "a subject of which, though some of the details may be complicated, the first principles are singularly plain." So wrote De Morgan, thirty-six years ago; a period within which there have been created in America seventy life-insurance companies now existing, the details of whose business are before us; of whose policies about 917,000 are now in force, insuring about $2,331,000,000, with a yearly income exceeding $125,000,000, and holding assets amounting to $375,000,000. ”

“ Every widow and orphan in the United States who receives the benefit of a life- insurance policy owes a blessing to Elizur Wright, who was the first to establish life insurance in America on a strong foundation, and whose reports on that subject, made during his long term as Insurance Commissioner for Massachusetts, have formed a sort of constitution by which the policy of all life-insurance companies is still guided. ”

“ It is a mistake to look at life insurance as a primary form of saving because, generally speaking, the more the life-insurance policy conforms to a savings account, the less effectively and economically it affords protection against the hazard of death. ”

“ Just so soon as we begin to talk about things. A man that can afford only last March to take out a new five-thousand-dollar life-insurance policy—"
"'Sh-h-h-h, Becky."
"For why shouldn't your children know it? Yes, up-stairs in my little green box along with my cameo ear-rings and gold watch-chain I got it put away, children. A new life-insurance policy on light-blue paper, with a red seal I put only last week. When a man that never had any insurance before takes it out so easy he can afford it." ”

“ At the beginning, therefore, it is plain why life insurance, in the usual commercial sense, is not an investment. The company puts your premiums at interest, not that it may furnish you a return in addition to the insurance, but that it may accumulate a fund out of which the policy itself is paid. ”

“ Term life insurance, so called, is simply banking for the benefit of the company which takes the risk. In regular life insurance the insured has a certain expectancy at the time of taking out the policy. Payment for the amount he is to receive at death is spread out over his expectancy, less four per centum interest compounded, and he pays it in annual, semi-annual, or quarterly installments, as may be agreed upon. If he lives out his expectancy, he will have paid in all he is to receive at death, either directly, or by the interest carried on his premiums. ”

“ 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 ”

“ As a matter of fact, the men who work for a living at trades and in the various branches of employment where skilled labor is not demanded, do not carry life insurance as a general thing, except in benevolent or fraternal societies of which they may be members, and this is the main reason why the “straight” life insurance companies, as they are called, did not suffer more than they did. ”

“ A third reason, life insurance is cheap. You can in an instant create a capital of $1,000, though you may be ever so poor, by laying aside only a few cents a week. Young people chew up and drink up and smoke up and frolic up more money every week than would be sufficient to protect them against the rainy days that must come to everybody.
And, then, life insurance has a character value. 297It makes a young man a better man; it makes a young woman a better woman; that is to say, it makes them more economical, more business-like, happier, and, I believe, it will make them live longer. ”

“ I believe that life insurance is doing a great deal to induce the habit of saving. When a young man on a salary or a definite income takes out an insurance policy he has a definite aim. He has made up his mind positively to save so much money every year from his income to pay his premium. ”

“ In life insurance, however, we have shown that the premiums contain a third element, namely, the portion that is set aside and accumulated to meet the risk of the insurance when the premium payable is no longer sufficient of itself for that purpose.
When a policyholder withdraws from his contract with a life insurance office, the provision made for the future in respect of his particular insurance is no longer required, and out of it a surrender value may be allowed him for giving up his right to the policy. ”

“ 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. ”

“ With certain limitations, which will be detailed subsequently, life insurance is a science. It is scientific because it deals with one of the few certainties of human experience—that is, death itself. If a company contracts to pay a certain amount at death it knows that it will have to fulfil that promise ”

“ The statute fixes the premium which for life insurance must be based upon the American experience table of mortality, with additions for extra hazards, and with interest at three per cent, and with an addition for expenses and contingencies amounting to two dollars per year per thousand dollars of insurance and one-sixth of the value of the insurance distributed equally through the premium payments. ”