LIFE INSURANCE.* IN the United States, where the character of the people is eminently active and enterprising, and the disposition of most men is to hazard their capital boldly in the operations of commerce or schemes of improvement, with perfect confidence in their own resources of mind and physical powers, it happens more frequently, perhaps, than in any other country, that the best laid plans and the most glowing visions of future prosperity are suddenly cut short by the relentless approach of death. A family, reared in the lap of plenty, with brilliant expectations, suddenly finds itself without resources, and the aged and feeble exposed to unwonted hardships. The main spring of action, in the minds of most men, is to provide for their families. Every feeling of laudable pride, and every kindly sentiment of our natures, urges to this object. When it is attained through the accumulation of a competency, how often do men withdraw from the active pursuits of business. The great care of life being satisfied, the head of a family becomes impressed with the consoling consciousness that, let death overtake him when it will, his duty is discharged towards those who are dependent upon him, and his death will not involve penury and want upon his dearest connectious. How few, however, of all those who labor and toil through a long life of divers vicissitudes, finally arrive at this desired consummation! Almost every undertaking in life is attended with great risk and uncertainty, and in whatever occupation men may engage with confidence, they will generally encounter obstacles to baffle their calculations, paralyze their industry, and frustrate their intentions. As we have stated, death, which enters but little into the calculations of active and sanguine men, is the most frequent agent in thwarting their designs and making destitute their families. How frequent is the exclamation among deserving men: "If my life is spared for a given time, my family will be placed above fear of want!" Yet how seldom does it occur to those men that, while they insure their house against fire, they neglect to insure their lives against that contingency, which alone will prevent their families from being destitute. By the contracts of Life Insurance the insurers engage that he shall not die within a limited period, and if he does, a sum, agreed upon, shall be paid to his family, or those entitled to receive it by the terms of the policy. In making such an arrangement, the individual leaves his mind and exertions entirely unshackled. If he lives, he feels confident that his own resources are sufficient for the attainment of the desired object. If he dies, he has provided a sure fund for the same end. It is, nevertheless true, that notwithstanding the shrewd appropriation of means, so general among citizens of the United States, insuring of lives has not been generally adopted. This may arise mostly from want of acquaintance with the practical operation and its result. Indeed, life insurance is not of very long standing in any country. The first institution in England was in 1706, and the benefits derived from that, appear to have given a spur to the multiplication of companies. The principle of life insurance is a most complete exemplification of Bacon's inductive system, from individuals to genera, and from observation to axiom. It is with the future and the doctrine of chances, as guided by the experience of the past, that all life insurance has to do. In the calculation by which a company undertakes to assure, which is the term mostly applied to life risks, an individual that he shall not die within a given time, it is governed by the known laws that affect the mass. Nothing is more certain than that death will overtake an indi *1st. Litten on Life Insurance. 2d. Return of Life Insurance Companies of New-York, agreeable to standing order of the Chancellor of state. vidual, and nothing more uncertain than the age at which he will die. Yet from accurate statistical observations of the number of persons who die in any particular locality, at each age of their lives, the proportion of the mass who die at each age is ascertained with accuracy, and on this proportion is based the calculation which seeks to make the amount of premiums paid until death, equal to the sum to be paid at death, together with the expenses and profits of the company. By ascertaining the number of persons in 1,000 who die at any given age, can be found the chances of life of those who live, and from these chances are deduced the value of an annuity or insurance on a life at any age. Thus, if it is found in successive years, that out of 100 persons 60 die at a certain age, then 40 survive it. The chance of any one out of the hundred that he will die at that age is, therefore, 60-100. If, then, an association should engage to pay $1 for each death at that age, it would have to disburse $60; to do this it must charge the whole hundred such a premium each, as will make good that sum, besides expenses and profits. If these two items should be $10, then the company must collect from 100 $70, in order to pay 60 persons $60. The premium will therefore be 70 cents each. But as the 70 cts. would be received at the beginning of the year, the company would invest it so as to yield an interest of 6 per cent. Deducting that interest, therefore, it would charge $66 04 only each, which would make good the 70 cts. at the end of the year. It is obvious that the first element of the calculation is an accurate table of the chances of life, compiled from actual observation in any locality. In England there are two tables in use; one framed by Carlisle, believed to be the most accurate for England, and one called the Northampton table. From the table of Carlisle it appears, that out of 10,000 persons born to gether, 4,000 will reach 56 years, and that of the number 124 will die in their 66th year. Hence the chance that a person 56 years old will die at the age of 66 is 124-4,000. Now, if a company agree to pay $100 on the condition that he dies in his 66th year, it must be considered that at 4 per cent. per annum, the present value of $100, recurrable 10 years hence, is $67,556. If, then, its receipt at that time depends upon the death of a person 56 years old, its value will be 124-4.000 of $67,556, or $2,094. Upon these principles rest all life insurances and annuities. Observations of mortality are made through successive years, showing the chances of life at different ages, and in the different sexes; for they find female longer than male lives. The expenses of management and profit are settled. The average rate of interest at which can be made investment of their premiums and of their capital, if they have any, is estimated. And from these they can make out, and have at different times made out, a tariff of proportionate premiums for sums to be paid in gross at death, commencing at any age, for any number of years, or for a whole life. A contract can be made understandingly, the loss is properly divided, and the grand aim of insurance attained. The profit of a company depends upon the accuracy of its calculations as to the duration of life. If from any cause they charge too low a premium, they undermine the first principle of insurance, viz. the security of the insured person. It has been the case, however, that they err on the other side. That is to say, if a table shows 60 persons die of a certain age, they may estimate the number at 65 or 70, and charge accordingly. This was the case with the Equitable Society of London. For 15 years it used tables which gave the average of lives below the actual average, and its profits were immense, and it has since reduced its premium charges 25 per cent. The insurers may make themselves safe; and the insured must remember that it is upon the office's so doing, and calculating their premiums so high as to render the payment of losses, when they occur, absolutely certain, that their own security depends. It is the interest of the insured, even more than of the insurers, that there shall be no loss by cheap and inadequate premiums: for, an insurer to insist upon reducing premiums, or patronizing a company who put them too low, is to cut away his own support, and subject himself to loss of premium. and his heirs to loss of the sum insured by the bankruptcy of the unwise office. Pre miums must be calculated somewhat higher than the bare mathematical rates, in order to afford leeway for the extent of time through which a contract for life insurance runs. The duty of the office is, to regulate its premiums as near the line of safety as it can; and then, the representatives of those who die insured, will certainly receive what was contracted to be paid upon the happening of that event. Life Insurance companies are of three classes. The first of which are, common joint stock companies, where individuals subscribe a capital, take risks, and divide all the profits among the stockholders. These are called Proprietary Companies, and have been popular from the supposed security derived from the subscribed capital, although we know of no instance when that capital was ever available. The second class are mixed companies, which are joint stock institutions, with individual stockholders; but instead of contracting to pay fixed sums at the termination of the life insured, they, first paying the stockholders' simple annual interest, and setting aside a contingent fund, divide the balance of their net profits among those who have taken out policies for life at their office. The subscribing shareholders supply a capital, and take upon themselves the risk of loss, and then divide a certain proportion, generally two-thirds, among the assured. The third class of companies are the mutual. In this class, the whole of the profits, after deducting expenses and a proportion to accumulate a guarantee fund, are divided among those who are holders of policies for life. Every one insured is, during the existence of his policy, a partner in the concern, and is mutually the insurer as well as the insured. The greatest degree of popularity and usefulness appears to be effected by the latter societies. The main inducements held out by the mixed and the mutual societies, are the division of the profits. The way in which this division is actually effected, is as various almost as the societies are numerous. There are two general methods that have been adopted, which are the following:At stated periods an investigation takes place, a balance sheet is made, and the proportion of the profits to be di -- vided among the holders of policies for life, are apportioned to the individuals, either by addition to the amount, which they insured, and paid their premium, originally, and which they are to receive when the policy falls in; or, their proportion is applied under known rules, to diminishing the annual premiums that they are to pay in future. The details of these two methods are very various. 66 For a more full understanding of our subject, we give some of the rules of division in the English companies. The Alliance Office requires, that life policy holders shall have five successive annual premiums. It may be proper to remark, that the dividends are always confined to insurers for a whole life, which is an inducement for such policies, and such actually form by far the greatest proportion of the contracts made. The Law Life," requires three annual payments to entitle to a dividend. One society limits dividends to holders of whole life policies, of £100 and upwards. Another requires that it shall be one of the five thousand policies of oldest date in the office, and shall have paid six successive annual premiums to be entitled to a dividend. The general proportion of the profits so divided is two-thirds; but some divide three-fourths, others all, after a moderate deduction for guarantee and expenses of management. Another, after a deduction like the last, divides equally between stockholders and assured. Another, takes one fifth for a guarantee before division. The Rock," sets aside £5,000 first, then divides the remainder of the net profits into three parts: one to be added to the capital, as proprietor's fund, and the other two-thirds to be divided, as stated in the contract policy, when made. Another, divides two-sixths among the policy holders; and another, intending to return to the stockholders the sum subscribed, together with one hundred per cent. additional, sets aside one-tenth of the profits for this purpose, and divides the remaining nine-tenths between the assured and the shareholder, in the proportion of eight to the former, and one to the latter.While another office makes a positive addition of ten per cent. every tenth year, to all sums insured for a single life; and still another, the Mutual Life Insurance Company, London, established in 1824, adds to each policy as it falls in, not waiting for any fixed periods of dividends, its full proportionate share of these accumulated profits; and is, therefore, equally advantageous to old and new members. The advantage of reducing succeeding premiums, which is the other mode of sharing the profits, may be sometimes greater than that of adding to the amount of the policy when it falls in. For instance, when an annual payment becomes onerous or inconvenient, or when a debtor insures another's life, and wishes, of course, to secure himself at as cheap a rate as possible, and with the least outlay.Some offices combine the advantages of both methods, by making the addition to the policy at the stated dividend year, and thereafter applying the interest of the amount so added, to reducing the succeeding annual premiums; while another office stipulates that the additions shall be payable, without interest, at the time the policy falls in. In some societies, it is optional with the insured, to have the dividends applied as an addition to the policy, or to reduce the future premiums. In some, this option is confined to those insuring for their own lives, and in some, it must be declared at the making of the policy; in others, within three calendar months after the declaration of the dividend. This great variety is a consequence of the struggle for popularity of competition; but, fortunately, it also embraces points of advantage to the insurers, adapted to their various circumstances and situations. He who would profit by such useful and philanthropical institutions, should remember that their very essence is caution. He should, therefore, not be misled to overlook safety, in the unwise wish to get a cheap premium. Nor does it follow that money paid for premiums on a life are lost, when the insured did not die. One may continue his insurance for a whole life, at a little higher premium, which is the best kind of life insurance, much better than for years. If, then, at time the payment of the premium should become onerous, or the end for which he wished security, answered, he can sell his interest, and transfer the any policy to some one to whom the payment would be convenient, and who would gain by it, as being an old policy, the premium is less than if a new assurance was made. Or one can surrender it to the company for an equivalent calculated upon known, fixed, and equitable principles, depending on the time for which it was insured, the probability of the policy's falling in, and the amount of premium already paid; or, still again, one can pledge the policy and borrow money from it, either from the company itself, or from others. In some organizations of companies, the mixed or mutual, a life policy that has been running some time, may become of very great marketable value. If a creditor is in danger of losing his debt, in case a person who owes him should die suddenly, he may insure his debtor's life. It is necessary in this case, however, that the party insuring should have not only a legitimate interest in the person whose life is insured at the time the policy is taken out; but that the interest should continue down to the hour of his death. In this case insurance is regarded as an indemnity against the loss of the debt. This principle was established in England in the case of the Hon. William Pitt, the celebrated minister. He owed his coachmakers £1000, and they had his life insured for £500. After his death Parliament paid his debts, and among others, the coachmaker's bill, but they brought an action against the company for the insurance, and lost the case on the ground that the debt Mr. Pitt owed, then had been paid before they commenced the suit. In the great competition for business among the companies, which has sprung up of late years, many of the restrictions that formerly were rigidly adhered to. The above requirement, that an insurance of another's life should have an interest in that life, is with the English companies, now scarcely regarded, although in full force in the United States By a law of April 1, 1840, the state of NewYork enacted a law, of which the 1st section explains itself as follows: Section 1st.-It shall be lawful for any married woman, by herself and in her with his assent, as her trustee, to cause to name, or in the name of any third person, be insured, for her sole use, the life of her husband for any definite period, or for the term of his natural life; and in case of her surviving her husband, the sum or net amount of the insurance becoming due and payable by the terms of the insurance, shall be payable to her, to and for her own use, free from the claims of the represen tatives of her husband, or of any of his creditors: but such exemption shall not apply where the amount of premium annually paid shall exceed $300. Section 2d.-In case of the death of the wife before the decease of her husband, the amount of the insurance may be made payable, after her death, to her children for their use, and to their guardian, if under age. It is, undoubtedly, the case that the prevalence of peace, and the general improvement which has taken place in the condition of most people, particularly in England and the United States, that the value of life has considerably enhanced, and tables which indicated correctly a certain degree of mortality 30 years since would now be above the actual average of deaths, and consequently the officers may safely relax some of those more rigorous requirements that formerly were necessary to the safety of the insured, as well as insurers. The small sums that offices demand annually, for the engagement to pay a certain sum in the event of death, cause the institution to assume the form of saving's banks. Small deposites, made occasionally with a company, can be converted into a life insurance. In this manner, an insurance would cost but little, and economy in expenses, a retrenchment of some unnecessary luxuries, would fortify a family against the consequence of the untimely death of its head. There are, too, contracts of survivorship; insurances made upon two or more lives, an amount to be paid upon the contingency of one dying before the other; and insurances upon joint lives, the amounts to be paid at the death of either of the persons. Contracts for deposits, endowments, and trusts, whether for a marriage settlement, provision for children, or guardianship, at simple or compound interest, do not need any explanation; suffice it to say, that life insurance companies, in practice, will carry out their proposals of bargaining "wherein the contingency of life or death is concerned, and their payments are made fully and fairly upon legal proof of life or death, as the contract may be." MUTATIONS OF TIME. SPRING had put forth her blossoms, and the earth |