Page:The American Cyclopædia (1879) Volume X.djvu/433

LIFE INSURANCE 427 account of the greater prevalence here of en- dowment insurance, which requires a more rapid accumulation of reserve; and for the same reason the American ratio of death claims to funds is a little smaller than it would other- wise be. In a well managed company it de- creases a little as the age increases. When the reverse happens, and where for successive years it exceeds 15 per cent., danger arises. The pre- mium income of the British offices was $52,- 388,610, while that of the American was $96,- 000,088. This large excess of the American premium income in proportion to the insurance is perhaps slightly due to the practice of di- minishing the premiums in some British offices by enlarging the reserve, as a mode of return- ing surplus ; but it is chiefly due to the much larger proportion of endowment insurance done by American offices. The distribution of $38,- 000,000 a year among families bereaved of their heads' by death produces a degree of pub- lic satisfaction not to be seriously disturbed by cases of failure or traits of imperfection. The attending evils have always been keenly felt, but they have been submitted to with little complaint for the sake of such good as could be found nowhere else. The early abuses of life insurance in England were checked by a statute (14 George III., c. 48) enacting that "no insurance shall be made by any person or persons, bodies politic or corporate, on the life or lives of any person or persons, or on any event or events whatsoever, wherein the person or persons for whose use, benefit, or on whose account such policy or policies shall be made, shall have no interest, or by way of gaming or wagering ; and that every as- surance made contrary to the true intent and meaning hereof shall be null and void to all intents and purposes whatsoever." This stat- ute has been held to apply only to the incep- tion of policies. It takes no effect when the insurable interest ceases during the term, as it usually does when a person insured for the whole life lives to a great age. To carry out the intent of the statute in regard to such pol- icies is an unsolved problem, which will prob- ably require for its solution a stipulation in the policy of a proper surrender value. The crea- tion of corporations in America with power to insure lives and grant annuities dates back be- yond the revolution. Dr. Richard Price and his friend Benjamin Franklin interested them- selves in prescribing rates and rules for one which was chartered in the province of Penn- sylvania as early as 1769, for the benefit of the families of Episcopal clergymen. The "Mas- sachusetts Hospital Life Insurance Company " and the " New York Life and Trust Company " may be mentioned among the pioneers of the early part of the century, none of which have ever obtained much business. Four companies started successively in 1843, 1844, 1845, and 1846, in New York, Massachusetts, New Jer- sey, and Connecticut, were the first to 'win success. They now combine almost one third of the insurance and considerably more than one third of the accumulated funds. The ex- isting companies are nearly as numerous as in Great Britain, and perhaps as various in qual- ity ; but the number of failures has not been as great nor attended with as much disas- ter. The rapidity of the growth of life insu- rance after 1843, and especially since 1858, is remarkable. Thirteen companies, including the four above referred to, reported to the state of Massachusetts in 1858 an aggregate of 42,450 policies, insuring $116,348,995. The same companies in 1869 reported 298,661 poli- cies, insuring $907,187,407, having increased more than seven fold in 11 years. The in- crease during the last four years has been less rapid, the same companies reporting in New York, in 1873, 346,884 policies, insuring $985,- 752,299. It will be observed here that the number of policies increased faster than the amount insured, which is accounted for by the large number of small " paid-up " policies taken as surrender value of larger annual premium policies. The most striking and significant fact in the history of American life insurance, however, is the 404 fold increase of endowment insurance in those 11 years, coupled with its non-increase, if not decrease, since. The Brit- ish life insurance companies are remarkable for their great variety of policies ; for though or- dinary whole-life policies, payable by annual premium during life, together with "paid-up" additions, called "bonuses" or reversionary dividends, constitute the bulk of their business, most of them issue a few joint-life and sur- vivorship policies, ordinary w r hole-life, pay- able by single or a limited number of premi- ums, or by ascending or descending scales of premium, short-term, pure endowment, and endowment insurance policies. The exact amount of the last class cannot be ascertained from the blue books under the recent act, be- cause the policies are classified in the returns only in valuation years, which occur annually in only a very few companies, but usually in periods of from three to ten years. An exam- ination of the returns for the first two years under the act shows $14,832,698 of endow- ment insurance out of $652,393,091 of all sorts, or about 2*27 per cent. ; and this is probably about its ratio for the whole. These policies are issued in Great Britain for premiums sub- stantially the same as in this country, which enhances the interest of the inquiry why they should, for ten years at least, have been so much more abundantly popular here. The following tables from the New York "Insu- rance Times " of 1873, drawn from the Massa- chusetts and New York insurance reports, fur- nish a foundation for the study of a most im- portant phase of this subject. The first gives the amounts outstanding, divided into three classes, of the insurance reported by all the companies in 15 successive years, and the per- centage of the endowment insurance to the whole. The second table gives the annual in-