Page:American Journal of Sociology Volume 15.djvu/504

 49© THE AMERICAN JOURNAL OF SOCIOLOGY

next five years receive 20 weeks; the next five years, 15 weeks; the next five years, 10 weeks, and the next ten years, 5 weeks.

This brings the company's total bonus cash payments for the last seventeen years up to over twenty-one millions of dollars in cash, besides about four millions of dollars more in additions to reserve by concessions made beyond the terms of the contract. In the last nine years it has reduced its industrial expense ratio about 10 per cent., which on the present industrial premium income amounts to nearly five millions of dollars annually.

The effect of these bonuses on the cost of industrial insurance can be strikingly illustrated, as follows :

1. Take policy No. 5,649,851, issued March 24, 1890, at age 35 for $305, with a weekly premium of 25 cents. Under the mortuary bonus offer for 19 10, the amount of this policy will be increased by 20 per cent., or $61, making the total death benefit payable $366. A cash bonus of 15 times the weekly premium is also to be offered, or $3.75, which deducted from the yearly premium of $13.0x3 leaves a cash payment of $9.25. Now if $9.25 will purchase $366 insurance, then $25.27 would purchase $1,000. The annual rate of a prominent participating ordinary life insurance company for $1,000 at age 35 is $28.11 so that there is a difference of $2.84, or 10 per cent., in favor of the Metropolitan.

2. A policy issued in 1880 at age 30 for a weekly premium of 45 cents carries a death benefit of $738. This will be in- creased by a mortuary bonus of 30 per cent, making $959, and in addition it will carry a cash bonus equal to 26 weeks' premium. Fifty-two weeks' premium amounts to $23.40, and therefore the 26 weeks' bonus will amount to $11.70. If $11.70 will secure $959 ^^ insurance, then $12.20 would secure $1,000; or $23.40 would secure twice $959, or $1,918. The annual rate of a prominent participating ordinary life insurance company at this age is $24.38 for $1,000. Thus excluding the question of divi- dends of participating policies of that company, this industrial policy at present is costing only a little more than half ordinary insurance.

The poor man who begins by paying very high rates, largely