Page:Encyclopædia Britannica, Ninth Edition, v. 13.djvu/181

LIFE.] INSURANCE 100 the sum insured becoming payable only if death should occur within the time specified in the policy. Such insurances may be effected on single lives or on two or more lives, and (in the latter case) may be payable either if one life or all the lives should fail within the period, or only if one life should fail before another, as in the case to be next mentioned. 2. Survivorship Insurances, or Insurances on one Life against Another. In these the sum insured is payable at the death of A if that should happen in the lifetime of B, but riot otherwise. Should B predecease A, the transaction falls to the ground. Besides these there are transactions of other kinds dealt in by life insurance offices such as deferred insurances, where the risk does not commence until the expiry of an assigned period ; deferred and survivorship annuities ; insurances against issue, for the benefit of expectant heirs ; and the like. The system is indeed adapted to nearly every contingency of a pecuniary nature connected with human life. .sur- It may be observed that, while life insurance has much " in common with fire and marine insurance, there are some essential differences between it and them. The insurance of houses and goods against fire, or of ships and merchandise against the casualties of the sea, is a contract of indemnity against loss, and in like manner an insurance on human life may be regarded as indemnifying a man s family or his creditors or others interested against the loss of future income by his premature death. But it does not necessarily take the value of such income into account, nor does it relate to any intrinsic value of the subject of the insurance the life of the insured party. Again, in fire and marine insurance loss may be either total or partial. In life insurance the event insured against cannot take place in any limited degree, and there is thus no partial loss. And again (in the first and larger of the two classes into which life insurances are divided) the event is certain to occur, and the time of its happening is the only contingent element. In the other kinds of insurance the events are wholly of a contingent character. The idea of distinguishing in terms between contracts which differ so widely in reality appears to have early suggested itself. Mr Babbage in his Comparative View of the various Institutions for the Assurance of Lives, published in 1826, says "The terms insurance and assurance have been used indiscriminately for contracts relative to life, fire, and shipping. As custom has rather more frequently employed the latter term for those relative to life, I have in this volume entirely restricted the word assurance to that sense. If this distinction be admitted, assurance will signify a contract dependent on the duration of life, which must either happen or fail, and insurance will mean a contract relating to any other uncertain event, which may partly happen or partly fail. Thus, in adjusting the price for insurance on houses and ships, regard is always had to the chance of salvage arising from partial destruction." The distinction proposed by Mr Babbage has not always been observed. Some writers appear to prefer the term insurance where life is concerned as well as in other cases ; some continue to use the terms indiscriminately ; while other recent writers have sought to establish distinctions of a novel character between them. One of these is that a person insures his life, his house, or his ships, and the office assures to him in each of these cases a sum of money pay able in certain contingencies. Another is that assurance represents the principle and insurance the practice. Of these two suggestions we prefer the former ; but, as the more conventional distinction of Mr Babbage is still very widely recognized, we shall adhere to it throughout the remainder of this article. Calculation of Premiums. The general principles of life contingency calculations are explained in the article ANNUITIES, and it is there shown that such calculations are made by means of mortality tables, which exhibit the Mo.-- numbers of persons who out of a given number born or tality living at a particular age live to attain successive higher tables - ages, and the numbers of those who die in the intervals. A full account of the numerous tables of this kind which have been framed from time to time does not fall within the scope of the present article, but, before passing on to show the application of mortality tables in the various calculations relating to assurances upon lives, it may be useful to mention those tables which have been chiefly employed by assurance offices. Passing over the earlier tables of Halley, De Parcieux, and others, which for all purposes of calculation have long been obsolete, and which, however much they contributed in their day to the development of assurance, possess now only an historical interest, we pause first at the Northampton North- Table. This was constructed by Dr Thomas Price from the i pton registers kept in the parish of All Saints, Northampton, for Table - the forty-six years 1735 to 1780. Owing to certain faults in its construction, the table gives the chances of death too high at the younger ages, and consequently requires large premiums for assurances; while at the more ad vanced ages the chances of death are disproportionately low. For a long time, however, this table occupied the foremost place as a basis for life contingency calculations of all kinds, and even after the introduction of other tables, which are now recognized as more accurate, it continued to receive a large share of popularity. The rates of many assurance offices of high standing were calculated from it, and until a comparatively recent date it remained in use by not a few of them. The Carlisle Table was constructed by Mr Joshua Milne Carlisle from materials furnished by the labours of Dr John Table. Heysham. These materials comprised two enumerations of the population of the parishes of St Mary and St Cuth- bert, Carlisle, in 1780 and 1787 (the numbers in the former year having been 7677 and in the latter 8677), and the abridged bills of mortality of those two parishes for the nine years 1779 to 1787, during which period the total number of deaths was 1840. These were very limited data upon which to found a mortality table, but they were manipulated with great care and fidelity. The close agreement of the Carlisle Table with other observations, and especially its agreement in a general sense with the experience of assurance companies, won for it a large degree of favour. No other mortality table has been so extensively employed in the construction of auxiliary tables of all kinds for computing the values of benefits depending upon human life. Besides those furnished by Mr Milne, elaborate and useful tables based upon the Carlisle data have been constructed by David Jones, W. T. Thomson, Chisholm, Sang, and others. The graduation of the Car lisle Table is, however, very faulty, and anomalous results appear in the death-rates at certain ages. The mortality experience of the Equitable Assurance Equit- Society, the pioneer of the modern system of assurance, d>te ex - has formed the basis of several tables. Of these two in l rTeilce - particular have been used to a considerable extent by assurance companies. The first was a table constructed by Mr Griffith Davies and published by him in 1825. It was deduced from accounts given by Mr W. Morgan, the actuary of the society, of the ratio which the death-rates among the members bore to those indicated by certain well-known tables at different ages. The other table was constructed by Mr Arthur Morgan from the statistics of membership of the society from its commencement in 17G2 down to 1829. This table was published in 1834. xiir. 22