Page:The American Cyclopædia (1879) Volume X.djvu/435

LIFE INSURANCE 429 members of a corporate body entitled the "British Institute of Actuaries," which has power to maintain a high standard of scien- tific attainment, meets statedly to discuss all mathematical questions pertaining to life in- surance, and publishes a journal devoted to the subject. The conservative influence of this body is very obvious, and the soundness of so large a portion of the British companies is doubtless due in some measure to it and a similar organization in Scotland. But, the members being generally connected with the companies in subordinate rather than com- manding positions, it is equally obvious that the institute has no great power of progress or reform. Its labors in developing the law of mortality, as exemplified in the general population, in particular occupations, and in insured lives, have been of great value, and practically conclusive. But beyond the bet- ter adjustment of rates, it has not originated many practical improvements, nor eliminated many of the errors and imperfections which time has shown in the work of Dr. Price. There is a marked illustration of this in its relation to Dr. William Farr, a member of the institute and actuary in the registrar gener- al's office. His masterly manipulation of the British census returns has given him the high- est place in the world among statisticians. Twenty-five years ago, in his letter to the re- gistrar general, given in the 12th annual report of that officer (1849), he demonstrated and be- gan to advocate an improved plan of life in- surance, founded on a recognition of a more distinct right of the policy holder to a certain portion of the fund arising from the premi- ums. The scientific and practical merit of the system seems to have been tacitly admitted by the institute ; yet it has not been adopted by any of the old companies, and the several new ones that have been started to carry it out have either died of inanition or are in danger thereof. Dr. Price insisted on nothing more strenuously, as essential to safety, than that every life insurance company should be headed by some thoroughly scientific person. The success and permanence of the business de- pends fully as much on the rarer qualities of medical and mathematical ability as on the more common quality of commercial skill. Elements of Life Insurance. The principle of equity at the foundation of a mutual life insurance company is, that payments shall be proportional to risks. Each member must pay toward the death claims which may occur in a given time a sum to be determined by the company's risk of having to pay the claim arising from his own death in that time. The first question is, how to measure this risk. As the probability of dying within a given time is greater, other things being equal, as the age is more advanced,- the insurable por- tion of life is, for simplicity, divided into equal units of time, during each of which the risk is assumed to remain the same, while it differs in successive units, increasing as the age ad- vances more and more rapidly according to a definable law. The unit of time commonly assumed is one year, and there is a great con- venience to the calculations in assuming that premiums and interest are payable also by coincident yearly rests. The law or table of mortality deduced by the British actuaries from observations on insured lives, first pub- lished in 1843, and amply confirmed by later observations, is given below, with the chances of death each year out of 1,000, and the con- sequent natural premiums payable at the be- ginning of each year of age to insure $1,000 payable at the end of the year, provided death should occur within it : ACTUARIES' TABLE. From the combined experience of 17 English Companies. AGE. Living. Dying. Chances out of 1,000 of dying in one year. Natural premium to insure $1,000 for one year. 10. .. 100,000 676 6-76 $6 50 11. .. 99.324 674 6-79 653 12. .. 98,650 672 6-81 6 55 18. .. 97,978 671 6-85 6 59 14. .. 97.307 671 6-90 6 63 15. .. 96,636 671 6-94 6 68 16. .. 95,965 672 7-00 6 73 17. .. 95,293 673 7-06 6 79 18. . 94,620 675 7-13 6 86 19. .. 93,945 677 721 6 93 20. .. 93,268 680 7-29 7 01 21. .. 92,588 683 7-38 7 09 22. .. 91,905 686 7-46 7 18 28. .. 91,219 690 7-56 7 27 24. .. 90,529 694 7-67 7 37 25. .. 89,635 698 7-77 7 47 26. .. 89,137 703 7-69 7 58 27. .. 88,434 708 8-01 7 70 28. .. 87,726 714 8-14 7 83 29. .. 87,012 720 8-28 7 96 80... 86,292 727 8-42 8 10 81.... 85.565 7S4 8-58 8 25 32.... 84.831 742 8-75 8 41 83.... 84.089 750 8-92 8 58 84.... 83,839 758 9-10 8 75 85... 82,581 767 9-29 8 93 86.... 81,814 776 9-48 9 12 87. .. 81,038 785 9-69 9 81 38. .. 80,253 795 9-91 9 53 39. .. 79,458 805 10-13 9 74 40. .. 78,653 815 10-36 9 96 41. .. 77,888 826 10-61 10 20 ' 42. .. 77,012 839 10-89 10 48 43. .. 76,178 857 11-25 10 82 44. . 75,816 881 11-70 11 25 45. .. 74,485 909 12-21 11 74 46. .. 73,526 944 12-84 12 35 47. .. 72,582 981 18-52 18 00 48. .. 71,C01 1,021 14-26 18 71 49. .. 70,580 1,063 15-06 14 48 50. .. 69,517 1,108 15-94 1583 51. .. 68,409 1,156 16-90 16 25 52. .. 67,253 1,207 17-95 17 26 53. .. 60,046 1,261 19-09 18 36 54. .. 64,785 1.816 20-31 19 58 55. .. 63,469 1,875 21-66 20 88 56. .. 62,094 1,436 28-13 22 24 57. .. 60,658 1,497 24-68 23 73 58. .. 59,161 1,561 26-89 25 87 59. .. 57,600 1,627 28-25 27 16 60. .. 55,978 1,698 30-84 29 17 61. .. 54,275 1,770 32-61 81 86 62. .. 52.505 1,844 85-12 38 77 68 50,661 1 917 87-84 86 38 64. .. 48,744 L990 40-88 39 26 65. .. 46,754 2,061 44-08 42 39 66. .. 44,693 2,128 47-61 45 78 67. . 42.565 2.191 51-47 49 49 68. .. 40,874 2,246 55-63 53 49 69. .. 88,128 2,291 60-09 57 78 70. .. 85,837 2,827 64-98 62 44