Page:The American Cyclopædia (1879) Volume X.djvu/440

 434 LIFE INSURANCE LIFE PRESERVER posits, but only to the insurance that remains to be done, that is, to the present value of it. This grows less while the self-insurance grows greater. Manifestly, then, the penalty for breach of contract should not increase with the age of the policy. It cannot therefore be a fixed percentage of the self-insurance fund, but it may perhaps justly equal or exceed it at first. There is therefore nothing to which it can to any appreciable extent have any just re- lation but the " insurance value." This princi- ple is just beginning to be recognized by some of the largest offices. The "insurance value" of the policy is also beginning to be recognized as the proper basis for determining the addition to be made to the net premiums for expenses and adverse contingencies. This will have the effect to reduce the premiums on the shorter endowments, if not to increase those on the longer ones. It is also beginning to be seen that the expenses, so far as they exceed those of ordinary trust institutions, should be assessed upon the members, not according to the pre- miums they pay, or their self -insurance, but ac- cording to the value of their interest in the company as an insurance company. Nothing can be more certain than that, as the business has hitherto been managed, it is better to put the difference between the premiums of an endowment insurance policy and a term policy for the same term into an ordinary savings bank, and take only the term policy of the life insurance company. It can only be politic to take the endowment insurance policy when the company's expenses in excess of one half of one per cent, on its investments are assessed on the policy holders according to the then present insurance values of their policies, dis- counted at an interest as low as 4 per cent. In that case, no one who needs insurance at all can afford to deposit in an ordinary savings bank, but will find it profitable to employ the life in- surance office both for insurance and accumu- lation. Nor, in that case, will the redundancy of the premium be any objection, because it will be sure to return annually with interest. If three things, to wit 1, the normal or tabu- lar cost of carrying the risk of each year ; 2, the addition to the net premium made to meet the working expenses and to provide against the possible excess of death claims in any year over the amount expected by the table ; and 3, the self-insurance of each year with that part of the net premium devoted to its increase were all stated distinctly in the policy itself, and also kept distinct in the books of the com- pany, it would probably dispel most of the mystery which has so much bewildered policy holders, and remove the necessity of any more elaborate governmental supervision than that which is exercised over other fiduciary insti- tutions. The following are the kinds of poli- cies usually issued by life insurance companies. It is to be understood that a claim said to be payable " on the death of the insured " is pay- able according to the calculation at the end of the policy year in which he dies; but when the claim is known to be valid, it is usually paid within from 60 to 90 days. A whole- life policy is an agreement on the part of the company to pay a certain sum to those repre- sentatives of the insured mentioned therein on his death. About three fourths of all the poli- cies issued are of this kind. A term policy is an agreement to pay to the representatives of the insured a certain sum on his death, pro- vided that event happens within a certain fixed term. A simple endowment policy is an agree- ment to pay a certain sum to the insured at the end of a fixed term if he be then alive. The insured himself takes the risk of living till the end of the term. Such policies are seldom taken out in this country. An endowment in- surance policy is an agreement to pay a certain sum to the insured at the end of a fixed term, or to his representatives on his death should that happen before the end of the term. When " endowment policies " are spoken of, it is this kind which is usually meant. A joint-life pol- icy is an agreement to pay a certain sum on the death of one of two or more persons named. In this and the following kind of policy usually only two persons are named, upon the death of either of whom the policy becomes payable ; but three or more may be. A survivorship policy is an agreement to pay a certain sum to the survivor of two persons named on the death of the other. Various other kinds of policies are sometimes issued, especially by English companies ; but those mentioned are the only ones issued in this country to any considerable extent. (See ANNUITIES.) Life insurance is governed by the same legal prin- ciples, so far as they are applicable, as other kinds of insurance. (See INSURANCE.) Any fraud or deceit in obtaining a policy, or misrep- resentation of essential facts, even innocently made, will render it void. Any person can in- sure the life of another upon whom he or she is dependent for support, or in the continuance of whose life he has an adequate pecuniary interest; and a wife is always held to have an insurable interest in the life of her husband. At present the policies of companies make spe- cific provision in regard to most points which would be likely to give rise to disputes. As these provisions vary somewhat in different companies, they should be carefully examined and strictly complied with. Some idea of the magnitude of the business of life insurance may be formed from the following statistics of the New York state companies for the year 1873: Number of companies 27 Number of policies in force 886.781 Amount insured $1,051,099,364 Gross assets 180,895,403 Gross liabilities except capital 158.516,842 Surplus as regards policy holders 22,379,061 If to these amounts we add those of the compa- nies of other states doing business in the state of New York, they will be almost exactly doubled. LIFE PRESERVER. See LIFE BOAT.