^ 
 
 ^su ^a.. 
 
 
 IMAGE EVALUATION 
 TEST TARGET (MT-3) 
 
 
 
 
 1.0 
 
 I.I 
 
 ii^^^ |25 
 
 122 1^ 12.2 
 
 us 
 m 
 
 ■it 
 
 1 4.0 
 
 li 
 
 
 1.25 II U 
 
 1.6 
 
 — 
 
 
 < 
 
 6" - 
 
 
 > 
 
 ^v^ 
 
 "> 
 
 7] 
 
 ^j4 
 
 % 
 
 >^ 
 
 
 ^>^' 
 
 ■^ 
 
 Z/ 
 
 ■<r 
 
 1' 
 
 Photographic 
 
 Sciences 
 
 Corporation 
 
 •SJ 
 
 ,-\ 
 
 ^ 
 
 <^ 
 
 [V 
 
 
 33 WEST MAIN STREET 
 
 WEBSTER, N.Y. 14SB0 
 
 (716)872-4903 
 
 > 
 
 '^ 
 
 •%v. 
 

 *% 
 
 1 
 
 ■SJ 
 
 ^\ 
 
 V 
 
 s^V^O 
 
 i\ 
 
 <^^ 
 
 ^% 
 
 CIHM/ICMH 
 
 Microfiche 
 
 Series. 
 
 CIHM/ICMH 
 Collection de 
 microfiches. 
 
 Canadian Institute for Historical MicroreproductionsV Institut Canadian de microreproductions historiquas 
 
Technical and bibliographic Notas/Notas tachniquas at bibliographiquas 
 
 Tha Inatituta haa attamptad to obtain tha baat 
 original copy availabia for filming. Faaturaa of thia 
 copy which may ba bibliographically unique, 
 which may alter any of tha imagea in tha 
 reproduction, or which may significantly change 
 the uaual method of filming, are checked below. 
 
 L'Inatitut a microfilm^ la meilleur exemplaire 
 qu'il lui a M possible de se procurer. Les details 
 de cet exemplaire qui sont peut-dtre uniques du 
 point de vue bibliographique, qui peuvent modifier 
 une image reproduite, ou qui peuvent exiger una 
 modification dans la mithode normale de filmage 
 sont indiquAs ci-dessous. 
 
 □ Coloured covers/ 
 Couverture de couleur 
 
 D 
 
 a 
 n 
 
 D 
 D 
 
 n 
 
 Covers damaged/ 
 Couverture endommag^e 
 
 Covers restored and/or laminated/ 
 
 I I Couverture restaur^ et/ou pellicul^e 
 
 Cover title missing/ 
 
 I I Le titre de couverture manque 
 
 □ Coloured maps/ 
 Cartes giographiques en couleur 
 
 Coloured ink (i.e. other than blue or black)/ 
 Encre de couleur (i.e. autre que bleue ou noire) 
 
 Coloured pidtes and/or illustrations/ 
 Planches et/ou illustrations en couleur 
 
 Bound with other material/ 
 RelM avec d'autraa documents 
 
 Tight binding may cause shadows or distortion 
 along interior margin/ 
 
 La re liure serrAe peut causer de I'ombre ou de la 
 distorsion l« long de la marge inlirieure 
 
 Blank leaves added during restoration may 
 appear within the text. Whenever possible, these 
 have been omitted from filming/ 
 II se peut que certaines pages blanchea ajout^ea 
 lors d'une restauration apparaissent dans la texte. 
 mais. lorsque ceia Atait possible, ces pages n'ont 
 pas it* filmAes. 
 
 □ Coloured pages/ 
 Pages de couleur 
 
 □ Pages damaged/ 
 Pa^es endommagies 
 
 □ Pages restored and/or laminated/ 
 Pages restauries et/ou pelliculies 
 
 I — ~U Pages discoloured, stained or foxed/ 
 I v/1 Pages dicolories, tachaties ou piqu^es 
 
 □ Pages detached/ 
 Pages ditachees 
 
 r^^Showthrough/ 
 l_J Transparence 
 
 □ Quality of print varies/ 
 Qualiti inigale de I'impression 
 
 □ Includes supplementary material/ 
 Comprend du materiel supplimentaire 
 
 □ Only edition available/ 
 Seule Mition disponible 
 
 n 
 
 Pages wholly or partially obscured by errata 
 slips, tissues, etc., have been refilmed to 
 ensure the best possible image/ 
 Les pages totalement ou partiellement 
 obscurcies par un feuiilet d'errata. une pelure, 
 etc., ont M fiimies A nouveau de fapon i 
 obtenir la meiileure image possible. 
 
 D 
 
 Additional comments:/ 
 Commentaires suppl^mantaires; 
 
 This item is filmed at the reduction ratio checked below/ 
 
 Ce document est filmi au taux de rMuction indiquA ci-dessous. 
 
 10X 
 
 
 
 
 14X 
 
 
 
 
 18X 
 
 
 
 
 22X 
 
 
 
 
 26X 
 
 
 
 
 30X 
 
 
 
 
 bMHaa 
 
 
 
 y 
 
 ' 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 12X 
 
 16X 
 
 20X 
 
 24X 
 
 28X 
 
 32X 
 
The copy filmed here ha* been reproduced thanke 
 to the generosity off: 
 
 IMatropolitan Toronto Library 
 Canadian Hittory Dapartmant 
 
 The images appearing here are the best quality 
 possible considering the condition and legibility 
 of the original copy and in keeping with the 
 ffilming contract specifications. 
 
 L'exemplaire film* ffut reproduit grice i la 
 gAnArositA de: 
 
 Mstropolitan Toronto Library 
 Canadian History Dapartmant 
 
 Les images suivantes ont At* reproduites avec le 
 plus grand soin, compte tenu de la condition at 
 de la nettetA de rexemplaire ffilm*. et en 
 conformity avec les conditions du contrat de 
 ffilmage. 
 
 Original copies in printed paper covers are ffilmed 
 beginning with the ffront cover and ending on 
 the last page with a printed or illustrated impres- 
 sion, or the back cover when appropriate. All 
 other original copies are filmed beginning on the 
 first page with a printed or illustrated impres- 
 sion, and ending on the last page with a printed 
 or illustrated impression. 
 
 Les exemplaires originaux dont la couverture en 
 papier est ImprimAe sont filmes en commenvant 
 par le premier plat et en terminant soit par la 
 dernlAre page qui comports une empreinte 
 d'impression ou d'illustration. soit par le second 
 plat, salon le cas. Tous les autres exemplaires 
 originaux sont filmte en commen9ant par la 
 premiftre page qui comporte une empreinte 
 d'impression ou d'iliustration et en terminant par 
 la dernlAre page qui comporte une telle 
 empreinte. 
 
 The last recorded fframe on each microfiche 
 shall contain the symbol >^ (meaning "CON- 
 TINUED"), or the symbol V (meaning "END"), 
 whichever applies. 
 
 Un des symboles sutv.^nts apparattra sur la 
 derniAre image de cheque microfiche, selon le 
 cas: le symbols — ► signifie "A SUIVRE". le 
 symbols V signiffie "FIN". 
 
 Maps, plates, charts, etc., may be filmed at 
 diffferent reduction ratios. Those too large to be 
 entirely included in one exposure are filmed 
 beginning in the upper left hand corner, lefft to 
 right and top to bottom, as many frames as 
 required. The following diagrams illustrate the 
 method: 
 
 Les cartes, planches, tableaux, etc., peuvent Atre 
 ffilmAs A des taux de reduction difff Arents. 
 Lorsque le document est trop grand pour Atre 
 reproduit en un seul clichA, il est filmA A partir 
 de Tangle supArieur gauche, de gauche A droite, 
 et de haut en bas, en prenant le nombre 
 d'images nAcessaire. Les diagrammes suivants 
 illustrent la mAthode. 
 
 32X 
 
 1 
 
 2 
 
 3 
 
 1 
 
 2 
 
 3 
 
 4 
 
 5 
 
 6 
 
FALSE INSURANCE METHODS. 
 
 By JOHN FERGUSON, M. A., M.D., Ph. D. 
 
 ,ANY have been the hands that have written upon 
 Life Insurance. It is to be profoundly regretted 
 that upon this subject, as upon all others, many 
 have uttered views the nature of which they did 
 not comprehend. Many volumes would not contain the 
 literature that has been given to the public of a most mis- 
 leading character, or expressing views wholly at variance 
 with the fundamental principles that govern Life Insurance. 
 Many societies have been organized upon plans so errone- 
 ous, that one can hardly help thinking the promoters were 
 wilfully deceiving the public. 
 
 Frequently there have been placed before the public 
 schemes of insurance by which the members were to 
 receive $i,ooo in five, six or seven years, for the small pay- 
 ments amounting to two or three hundred dollars. In one 
 case, about $300 paid in by the members in annual por- 
 tions, was to yield the member $1,000 in seven years. Now, 
 it is really amazing that any body of men would have the 
 hardihood to place such a scheme .lefore the people ; an\i 
 it is equally surprising that persons could be found who 
 would join such a society. Nevertheless it had its day of 
 prosperity. The United States have been overrun by such 
 societies. No doubt money has been made through these 
 societies ; but it went into the pockets of the dishonest and 
 unscrupulous founders and organizers of them. The laws 
 in the States and Canada are becoming more and more 
 stringent, and it is to be hoped that we have heard the end 
 of these frauds. By no conceivable means, either of gain» 
 from interest, and confiscation from lapses, could these 
 small contributions be swelled into a thousand dollars in 
 the course of six or s^ven years. 
 
 But, if it is impossible, as bitter experience has taught 
 many, to fulfil the glowing promises made by the promoters- 
 of these short term endowments, on the rates charged the 
 members, so will it be equally impossible to meet maturings 
 endowments at the expectancy of life where the rates col- 
 lected are inadequate for the purpose. When the rates are 
 insufficient, the only difference between a short term en- 
 dowment and a long term endowment, is one of time. In the 
 farmer, the race is a quicker one, and the stop is reached 
 sooner than in the long range endowments. The funda- 
 mental error exists of insufficient rates, and insufficient in- 
 come. No management, however good, can save a society> 
 
where the attempt is made of selling its insurance and en- 
 dowment policies below cost. It would matter not how 
 great the capital of a bank, if the directors decided to give 
 interest on deposits and charge none on advances ; ruin 
 mu^t overtake the corporation. The capital would be all 
 used up in the foolish effort ; and the ultimate depositors 
 would lose, not only their interest, but their principal ; for, 
 after all other moneys had been used, deposits would be 
 used to pay interest upon deposits until nothing was left, 
 if the bank continued in existence for a sufficient length of 
 time. 
 
 Life insurance cannot be carried on in any haphazard 
 method any more than can banking. There are certain 
 well known laws that govern the financing of a life office. 
 One of these laws is the law of mortality. As the result of 
 a vast amount of labor over a large field of observation, 
 and carried on by many of the ablest authorities, a number 
 of mortality tables have been constructed. These tables 
 differ a little from each other ; yet, for working purposes, 
 they show a close and substantial agreement ; and have 
 enabled actuaries to form premium rates, as the cost of 
 giving insurance to persons of different ages. By the tables 
 of mortality it is seen that at different ages the death rates 
 vary, gradually increasing with increasing age. The 
 premium must be so adjusted, for each age, that the con- 
 tributions of every member shall be sufficient to meet death 
 losses and provide for endowments, if there be any. This 
 law is beyond the control of human agency. It is quite 
 true that the death rate on persons newly admitted into a 
 company or society, ought to be somewhat below the rates 
 fixed in the mortality tables. This is the benefit of careful 
 selection. But when a company becomes old and large, 
 the proportion of new members is not so important in this 
 respect as when it was younger, as they bear a smaller 
 ratio to those already in than was the case in the early 
 years of the company or society. Thus, when *he company 
 or society becomes old and large, the benefit from "new 
 blood " is but slight. 
 
 Another law that must not be overlooked is that of inter- 
 est. This is a question of great importance. In a com- 
 pany, with judicious premium rates, and estimating upon 
 4 per cent., at the outside, 4^ per cent., on all reserves, 
 the affairs may be regarded as satisfactory, unless some 
 unforeseen loss is experienced in the investments. But 
 when the premium rates are inadequate, and the accumu- 
 lated reserves a long way below what they ought to be, 
 there is a heavy annual loss on interest account. Take for 
 example a society with a reserve of $1,000,000, whereas the 
 reserve ought to be $2,000,000 ; and, computing at 4 per 
 cent., the annual loss would be $40,000, in addition to the 
 annual loss due to insufficient premiums. It does not need 
 
and en- 
 lot how 
 I to give 
 5.S ; ruin 
 Id be all 
 positors 
 lal ; for, 
 ould be 
 vas left, 
 ;ngth of 
 
 phazard 
 certain 
 e office, 
 result of 
 rvation, 
 number 
 e tables 
 jrposes, 
 nd have 
 cost of 
 e tables 
 th rates 
 !. The 
 the con- 
 st death 
 J. This 
 is quite 
 d into a 
 fie rates 
 careful 
 large, 
 in this 
 smaller 
 e early 
 ompany 
 n ** new 
 
 of inter- 
 a com- 
 )g upon 
 jserves, 
 ss some 
 :s. But 
 iccumu- 
 ; to be, 
 'ake for 
 *eas the 
 it 4 per 
 1 to the 
 ot need 
 
 much thought to see where such a state of things is bound 
 to land the company, or society. Already, the shore is 
 strewn with the wrecks of organizations in whose methods 
 the above error of too low a premium rate had found a 
 place. But some societies make the desperate attempt of 
 carrying on a large insurance business, without reserve of 
 any kind ; and, consequently,without earnings from interest. 
 
 Some societies contend that a reserve is not needed. Its 
 head men coolly say that a reserve is just that much money 
 taken out of the members* pockets more than was required 
 to meet maturing losses. If anything could be proof of 
 profound ignorance of the problems of life insurance, 
 surely such contentions afford it. Taking a wide view of 
 the field of societies carrying on fraternal work in Great 
 Britain and the United States, it is found that the death rate 
 ultimately reaches at least 12 per thousand. In many 
 cases it has been much higher. When a society is old 
 enough to contain members from a^je of 18 years to 99 
 years, then the full swing of mortality will be experienced, 
 in i,OGo,ooo members in American societies it has reached 
 12.42 per 1,000. In the Ancient Order of Foresters, Britain, 
 it has become 12.14 per 1,000. In the Manchester Unity of 
 Oddfellows, the death rate has attained 12.63 PC i^ooo. In 
 a large mass of membership for other British friendly 
 societies, it has been up to 12.57 P®^ 1,000. Here, then, is 
 abundant proof as to what the death rate must become in 
 friendly societies that have existed for many years. This 
 death rate means that $12 to $13 is required annually from 
 each member to meet death losses. When to this the 
 working expenses and lodge dues are added, there is a 
 yearly cost of at least $16 to $18. New societies in the 
 meantime have sprung up. The mortality in them is lower, 
 because the members are more recently selected, and, on 
 the average, younger. For a time these new societies are 
 more attractive, because they are cheaper. The young 
 and healthy members desert the old societies for the new 
 ones, as rats leave a sinking ship. It is then, if never be- 
 fore, that the advocates of the no reserve plan of life in- 
 surance find out the folly of their method ; and the persist- 
 ent members, that they have been contributing their hard 
 earnings for the support and comfort of others, while there 
 remains nothing for them but bitter disappointment. This 
 is no imaginary picture. What is here described has hap- 
 pened time after time ; and will continue so long as men 
 are foolish enough to conduct insurance business on the 
 simple but crude plan of making a post mortem assessment 
 to pay the claim of a deceased member. Thus, "the- 
 reserve-in-your-pocket " plan ends in " the-give-away-all- 
 your-contributions " plan. 
 
 There is another method of carrying on life insurance 
 that is more plausible, but ends, equally with the above, in 
 
disaster and ruin. There is a fixed annual premium 
 charged. This is divided into twelve, six or four equal 
 portions, that are called in at regular intervals. The 
 premium, however, is too low. While the society is young, 
 and most of its members recently selected, there is a small 
 saving in mortality claims. A surplus is in this way ac- 
 cumulated, and the members think that everything is 
 going on in a lovely manner. All claims have been paid, 
 and there is money in the bank. What more could be de- 
 sired ? But the rates are too low. When the full swing of 
 mortality is reached, no further additions to the surplus can 
 be made. Nay, from the surplus, deductions, to pay 
 claims, have to be made from time to time to avoid the 
 necessity of an assessment. In time, like the jar of meat 
 in the fablv^, the top is off, then it is half gone, and finally 
 it is all gone. The society is then one advanced in years, 
 with a high death rate, and no surplus. For every claim 
 there n* 'it go forth an assessment. Need it be added that 
 the e" 3 then come. 
 
 If a . npanyor a society attempts to juggle with figures, 
 the figures, in due time, will juggle with the coKipany or 
 society. Take as an example 82,581 persons aged 35 years, 
 and carry $1,000 insurance on each through to the age of 
 99 years, when the last is supposed to die and become a 
 claim. Allow 4 per cent, on all moneys on hand, and it 
 will be found that the premium each must pay so long as 
 he lives, is $19.87. This, of course, is on the assumption 
 that every one of the persons continues a member until he 
 dies. This premium will not allow a.ny port'on for expenses. 
 These must be found in addition to the above rate. But a 
 certain society has undertaken to give insurance, and, I1 
 addition, pay the claim when the person reaches his ex- 
 pectancy, which would be 68 years, on a premium of $9.36. 
 This premium is utterly insufficient for life purposes, and 
 still more so for endowment policies. 
 
 We hear a great clatter about lapses, and the vasi sums 
 that a society can make in this way. Let us look into this 
 contention. In the first place, a post-mortem assessment 
 so<'iety makes nothing by lapses. What the members pay 
 in, by assessment calls, is paid out in death claims. On 
 the other hand, the society loses by lapses. It has been put 
 to the test and proven, by no less an authority than G. D. 
 Eldridge, that the lapses occur mainly among those re- 
 cently taken into the society, and still healthy. The im- 
 pared and older members remain on. In this way, the 
 death rate among the persistent members is actually 
 raised, as shown in table on the next page. 
 
 According to this table, it will be seen that the death 
 rate among the persistent members is increased by one- 
 sixth on account of the lapsing of healthy members. Grant 
 that the premium rate was sufficient during the early years 
 
 it 
 
x 
 
 i-" ' - . - -=a^ 
 
 MORTALITY RATE — YEARS O TO lO OF INSURANCE. 
 
 
 
 RATE PER 1,000 
 
 • 
 
 Age of 
 
 Total 
 
 Persistent 
 
 Lapsed 
 
 Entry. 
 
 Entrants. 
 
 Members. 
 
 Members. 
 
 ao 
 
 4.227 
 
 5 230 
 
 4.048 
 
 25 
 
 4-447 
 
 5-466 
 
 4-234 
 
 30 
 
 4 793 
 
 5-839 
 
 4.528 
 
 35 
 
 5 345 
 
 6.429 
 
 4 995 
 
 40 
 
 6.221 
 
 7365 
 
 5-734 
 
 45 
 
 7-6i5 
 
 8.844 
 
 6.906 
 
 50 
 
 9-834 
 
 II. 201 
 
 8.753 
 
 55 
 
 13.291 
 
 14.928 
 
 II 706 
 
 60 
 
 18.813 
 
 20.835 
 
 16370 
 
 65 
 
 27-565 
 
 30.197 
 
 23-733 
 
 70 
 
 41.61 1 
 
 45-035 
 
 35-480 
 
 74 
 
 58.432 
 
 62.945 
 
 49 586 
 
 of a society's history to gather a small surplus by confiscat- 
 ing the savings on lapsed members, it will speedily be 
 swept away by this increased mortality among those that 
 remain. Thus it happens that the very thing upon which 
 such a society calculates as its great source of strength, 
 namely, its lapses, proves, in turn, one of the main causes 
 of its extinction. This statement has been bluffly denied, 
 but it cannot be controverted. To deal with the lapse rate 
 in an unscientific manner is just as dangerous as has been 
 shown to be the case with the improper application of the 
 mortality rates. Both lapse and mortality rates, however, 
 have been used in a rather free and easy, but thoroughly 
 unscientific fashion. 
 
 From 22 of the largest mutual assessment societies in the 
 United States reporting to the bureau of the Mutual Life 
 and Accident Underwriters' Association, for the purpose of 
 deciding upon deaths and lapses, we find the following to 
 be the results of actual experience. Altogether 450, 154 
 lives from the ages of 18 to 65 were reported. From this 
 large experience we gather the results given in the table 
 on page 6 for a period of i6 years. 
 
 There we have the most conclusive proof that as a society 
 grows old, the mortality on any group of member increases. 
 The next addition of members will follow exactly the same 
 course. If the society ceases taking in members and has 
 not the proper reserve on hand it must speedily collapse. 
 If, on the other hand, it makes extensive additions to its 
 membership each year, the death rate is held down for a 
 time ; but a time comes when the society becomes so large 
 that the requisite new membership is more and more diffi- 
 cult to obtain. The members in, and growing old yearly, 
 cannot be counterbalanced by new additions. With a 
 
Policy Year. 
 
 Deaths per 1,000. 
 
 Lapses per 1,000. 
 
 I 
 
 2.286 
 
 81.830 
 
 2 
 
 5-865 
 
 205.122 
 
 3 
 
 7.734 
 
 1 1 1.709 
 
 4 
 
 8768 
 
 81.628 
 
 5 
 
 9-35» 
 
 67.201 
 
 6 
 
 Jo-777 
 
 57- 083 , 
 
 1 
 
 " 145 
 
 50.952 
 
 12.472 
 
 48.330 
 
 9 
 
 13.707 
 
 43.601 
 
 10 
 
 '5502 
 
 40.538 . 
 
 II 
 
 ^8.559 
 
 40.830 
 
 13 
 
 17 424 
 
 48.74? 
 
 »3 
 
 17.730 
 
 49-349 : 
 
 14 
 
 21.788 
 
 . , 45.803 
 
 15 
 
 21.772 
 
 30610 
 
 16 
 
 27.595 
 
 32.523 
 
 membership of 100,000, it is very difficult to keep down the 
 mortality by fresh additions. The necessity for a proper 
 reserve is made clear by the above. 
 
 Another example, from the actual experience of assess- 
 ment companies and societies reporting- to the bureau 
 above mentioned, shows that of 12,145 members, at the age 
 of 40, who had been carefully selected, the death rate 
 among the persistent members was as follows per r,ooo: 
 in the first policy year, 1.482; second year; 4.758; third 
 year, 6.741 ; fourth year, 6.413 » ^^'^h year, 8.884 ; sixth 
 year, 11.392; seventh year, 8.306; eighth year, 5.513; 
 ninth year, 11. 601 ; tenth pear, 7.692 ; eleventh year, 17.543 ; 
 twelfth year, 18.237. 
 
 Ag-ain, on 16,977 members, entering at age 40, the death 
 rate per 1,000 among the persistent members was as 
 follows, from year one to year sixteen of the policies : 1st, 
 1.4 ; 2nd. 6 ; 3rd, 7 ; 4th, 7 ; 5th, 8 ; 6th, 1 1 ; 7th, 7 ; 8th, 6; 
 9th, 9; loth, 10; nth, 18; 12th, 11; 13th, 12; 14th, 16; 
 15th, 21 ; i6th, 26. These figures show the increase in the 
 death rate with the in-:rease in the aere of the society in a 
 very positive manner. Unless the lapsing members leave 
 a sufficient sum behind them for the privileges they enjoyed 
 while members, the assessments are bound to become 
 excessively high upon those who remain on the books of 
 the society. Mr. Eldridge says : ** Let the first considera- 
 tion be to protect the persistent member ; when this is done 
 and not until this is done, have we a right to consider the 
 claims of the individual who forfeits his contract and with- 
 draws from membership. " In nearly all societies the very 
 reverse is the case. 
 
 (< 
 
As another example of the influence of deaths and lapses, 
 the following' table has been constructed by Mr. Eldridge 
 from actual experience. It is based upon the movement 
 that takes place in 100,000 persons insured at the age of 30. 
 The table is given in periods of 5 years : 
 
 Ages 
 
 Numbf^rs 
 
 Deaths 
 
 Lapses 
 
 Decre- 
 ment. 
 
 Residue. 
 
 30 
 
 100,000 
 
 4.526 
 
 13.087 
 
 '7.613 
 
 82,387 
 
 35 
 
 82,387 
 
 3.625 
 
 8,362 
 
 11,987 
 
 70,400 
 
 40 
 
 70,400 
 
 3.225 
 
 6,337 
 
 9.562 
 
 60,838 
 
 45 
 
 60,838 
 
 3.322 
 
 4,808 
 
 8,130 
 
 52,708 
 
 5(> 
 
 52,708 
 
 3.488 
 
 3.720 
 
 7,208 
 
 45.500 
 
 55 
 
 45.500 
 
 3,875 
 
 2.883 
 
 6,758 
 
 38,742 
 
 60 
 
 38,742 
 
 4.973 
 
 2,020 
 
 6,993 
 
 3 '.749 
 
 65 
 
 3 '.749 
 
 6,091 
 
 '.5'8 
 
 7,609 
 
 24,140 
 
 70 
 
 24,140 
 
 6,414 
 
 1,111 
 
 7.525 
 
 16,615 
 
 75 
 
 16,615 
 
 6,446 
 
 662 
 
 7." 08 
 
 9.507 
 
 80 
 
 9,507 
 
 5.308 
 
 ^3^ 
 
 5.44' 
 
 4,066 
 
 85 
 
 4,066 
 
 3.059 
 
 I 
 
 3,060 
 
 1,006 
 
 90 
 
 1,006 
 
 924 
 
 
 
 924 
 
 82 
 
 95-99 
 
 82 
 
 82 
 
 
 
 82 
 100,000 
 
 
 
 
 
 55.358 
 
 44,642 
 
 • 
 
 From the above table it is clear that il every member 
 carried $1,000 insurance, the total amount to begin with, at 
 age 30, would be $100,000,0 )0. Out of this amount, $55,- 
 358,000 actually becomes claims. From those that make 
 payments into the society must be raised this large sum. 
 If, in the earlier years, a sufficient premium be not charged, 
 then, as a matter of course, a distressingly high one will 
 have to be charged in the later years. Now, what is true 
 of the above loo,ooo persons, at age 30, is true of any 
 number at any other age. Thus it becomes clear that the 
 " new blood" will have all it can do to take care of itself, 
 without handing over its strength and accumulations to fan 
 into a feeble life the '* old blood " in the society. 
 
 L. G. Fouse, one of the ablest of living actu^iries, has 
 shown that after a society has taken every benefit from the 
 confiscation of the contributions of lapsed members the 
 lowest premium limit for the age 40 is a premium of 
 $17.03. This is for ordinary life policies This premium 
 would not stand the strain of endowments at expectancy. 
 But the society just referred to offers to pay claims when 
 they mature by death and art endowment at expectancy, 
 which, for age 40, is 69 on a premium of $10.56. When Mr. 
 Fouse made his estimate of $17.03 he was taking* into 
 account the death and lapse rates as determined by the 
 experience of American companies and societies. The 
 
 7 
 
above premium of $17.03, paid in annually and improved at 
 4 per cent., is only adequate to pay the death claims that 
 occuf amon^ the members that persist in the society after 
 Ihe earnings of the lapsed members have been forfeited for 
 the benefit of those who did not lapse. How then, it may 
 fairly be asked, can any society pay death claims and 
 endowments at 69 on the small premium of $10.56? The 
 answer is, ♦' It cannot be done." 
 
 I estimated some time ago to a large society that the 
 very lowest net premium it should charge for ordinary life 
 policies at age 40 years was $17.02. This was obtained 
 independently, and closely agrees with the rate just quoted 
 from Mr. Fouse. As has been already stated, we have 
 heard no end of clatter about lapses. When one looks into 
 the statements of the gains to a society Irom this source, 
 the conclusion is forced home that the promoters of 
 societies either knew nothing about the subject or sought 
 to deceive the public. In conversation with many leading 
 men in fraternal insurance societies, I am of the opinion 
 that they do not understand the effect of lapses and that 
 their knowledge upon the subject is too indefinite to be of any 
 value whatever. But "a little learning is a dangerous thing." 
 
 When a society starts out with a premium of $10.56 for 
 age 40 years, and promises to pay death claims out of this 
 and an endowment at the expectancy of life, it is undertak- 
 ing to do the impossible. No amount of capital could build 
 a railway to the moon. The capital might be foolishly 
 spent in material for the road, but no road would be 
 built. In like manner when a number of men undertake to 
 carry on an insurance society, and their financial plans are 
 unsound, no other ending can result than the absorption of 
 all the moneys contributed in the effort to carry on the en- 
 terprise, until the members become disgusted and leave the 
 organization to its fate. For a few years after the 
 admission of a batch of members there is a saving in mor- 
 tality. The actuarial estimate is not reached. On the 
 small premium paid, a small saving, or surplus, is obtained. 
 This, however, is consumed a few years later, and that 
 batch of members have to fall back upon the savings of 
 members who have been taken into the society at a later 
 period ; or| in other words, they have to depend upon the 
 *' new blood." Were it not for this, they would have to put 
 their hands into their pockets for special assessments. 
 
 This *' new blood," in time, will have to fall back upon 
 still other " new blood." In this way the process goes on 
 until there is so much "old blood" in the society that it is im- 
 possible for the organizers to secure enough "new blood" to 
 prevent decay and death. The above premium rate of $10.56 
 is only a few cents more than the natural premium rate for the 
 same age — 40 years. But every actuary knows that the 
 natural premium rates are only sufficient for one year, and 
 
 8 
 
 rcqi 
 in tl 
 sele 
 doej 
 
 I 
 
 I 
 
the 
 
 I 
 I 
 
 required to be advanced each year to the extent indicated 
 in the table of natural premiums. As the result, however, of 
 selection, the death rate for a few years after admission 
 does not come up to the actuarial standard, and, conse- 
 quently, there is a slight saving in this way. This enables 
 the society to accumulate a small reserve, or surplus, on 
 each new member for a few years ; but this surplus is soon 
 consumed again. The member becomes older, and the 
 cost of carrying his insurance increases. A time soon 
 comes when all that the member pays in is paid out Then the 
 cost of carrying the risk exceeds the premium paid in, and 
 some of the surplus has to be used. But as the septus, 
 gathered from these small rates, is insufficient, it will not 
 stand the strain. What thus happens of the individual risk 
 happens of a large number ; and, therefore, the whole 
 organization must become insolvent. 
 
 But the question may be asked, what influence have 
 lapses upon societies ? It has already been shown that one 
 of the evil effects of lapses is to increase the death rate 
 among persistent members by one-sixth, as most of the 
 discontinuants are healthy and young. Their place, how- 
 ever, is taken by others freshly selected and examined. In 
 this way the death rate over the entire membership is 
 favorably affected. There is no longer any need for 
 stumbling along in a guessing manner regarding this im- 
 portant feature of fraternal insurance. By watching care- 
 fully the movements of the members in large societies, such 
 as the Ancient Order of Foresters, the Manchester Unity 
 Odd- Fellows, and many large American societies and 
 companies, the lapse rate has been determined with great 
 exactness. Indeed, it has been found to be almost as con- 
 stant as the death rate. Meech and Fouse, in America, 
 and Neison, in Great Britain, have gone into the whole 
 question of lapses in societies very thoroughl/. Here is 
 what Mr. Fouse says ; Observers have noticed that there 
 is practically as much regularity in the lapse rate as there 
 is in the death rate. All observations made prove this. 
 The report of the Executive Committee to the Sixteenth 
 Annual Convention embodies the observations with refer- 
 ence to the death and lapse rate according to age and 
 policy years, of 379,780 lives. With the exception of the 
 data furnished by the thirty American offices, embracing 
 over 1,000,000 lives, these are, perhaps, the most extensive 
 data that have ever been used for the construction of 
 tables. The time is long and the number is great enough 
 to establish the law of decrement, both by death and lapse ; 
 and furnish us directly, from our own experience, the means 
 of making accurate tests as to our condition, and enable us 
 to determine what is necessary to perpetuate the existence 
 of our several associations." 
 
 The above is plain language, and comes from one of the 
 
best living authorities upon the whole field of life insurance. 
 The death and lapse rates being known, it is an easy mat> 
 ter to calculate the rates that ought to be charged for in- 
 surance. It is in this way that Mr. Fouse determined the 
 net premium for age 40 to be $17.03, at a 4 per cent, basis. 
 . ' this is the very lowest sum that can be charged for or- 
 dinary life insurance at this age, and allow nothing for ex- 
 penses, possible losses in investments, lowering of the rate 
 of interest, extra mortality due to unhealthy seasons, how 
 can it be possible to carry on life insurance and endow- 
 ments a.t expectancy on a premium of $10.56 ? But we are 
 told that assessments can be made, if required. Just so 
 with the premium of $17.03. It is construcLed upon the flex- 
 ible system, and provides for the possibility that it may not 
 be sufficient ; and that a a assessruent may occasionally 
 have to be made. This is what should be understood as 
 the assessment system. Not to make assessment whenever 
 a claim occurs ; or to start out on a premium rate ridicu- 
 lously too low, and, later on in tho history of the associa- 
 tion, bolster up the tottering structure by extra calls. No. 
 The true assessment plan is quite different. It consists it> 
 fixing the rates at such an amount as will, in all proba- 
 bility, prove sufficient ; and still reserve the right to make 
 at times a special extra call to adjust the reserve on hand, 
 if, as the result of a careful valuation, it is found to be in- 
 sufficient. Here we have the level premium plan, with the 
 safeguard of a call to adjust the financial standing of the 
 order, or society. This is known as the flexible premiumplan. 
 
 On this plan of insurance, conducted at the lowest rates 
 consistent with safety, there can be no surrender values. 
 Everything that lapsing members leave behind them is 
 confycated to the benefit of the persisting members. Tak- 
 Lij^ it for granted, as the outcome of much experience, 
 s c* ns that collected by Meech, Fouse and Neison, that 
 t' ere will be a certain lapse rate in addition to the death 
 rata, the rates are struck so as to carry those only who re- 
 main in the society, by forfeiting the gains from those who 
 lapse. But to carry out this system of assessment insur- 
 ance a valuation of the business should be made at short 
 intervals, certain!)' not further apart than five years. At 
 each of tliese valuations, if the reserve or surplus in hand 
 is too small, it should at once be adjusted by a special levy 
 or assessment. But how is this to be done ? 
 
 The answer to this question involves several other princi- 
 ples in the science of life insurance. It has been shown 
 that by applying the principles of life >3u ranee mathematics 
 to a society, so as to calculate on lapses, as well as deaths, 
 a premium can be obtained that furnishes insurance at low- 
 est rates consistent with safety. In the same manner, by 
 applying our knowledge of lapses and deaths, commutation 
 sringle premiums can be obtained and the annuity value of 
 
 10 
 
 : 
 
 ran 
 
\ 
 
 I 
 
 one dollar at any given rate of interest. Having obtained 
 the single premium rates, and khe annuity rates, the insur- 
 ance in force in any society can be put to the test of a 
 valuation. Errors in the amount of surplus on hand can 
 therefore be detected and corrected while still within the 
 range of cure. Having found the commutation single 
 premium, the annual premium, and the annuity value of one 
 dollar, at a given rate of interest, say 4 per cent, on the 
 decrement method, or on the death and lapse rates com- 
 bined, the valuation can readily be made. It is now an 
 easy matter to find out the value of the future contributions^ 
 of the members of the society. It is also easy to determine 
 what the present value of the future claims amount to. 
 The present or future premiums, added to the surplus on 
 hand, must equal, at least, the present value of future 
 claims. If the present value of future claims is greater 
 than the sum of the surplus and the present value of future 
 premiums, then the surplus is not sufficient, and should be 
 raised by making a call upon the members. The real ques- 
 tion is not that there is a large surplus on hand ; but the 
 other, and entirely different question, is *he surplus on hand 
 the proper one to hold ? There are societies in existence 
 with large memberships, and a large apparent surplus. 
 This surplus is large enough to give these societies the 
 appearance of stability, and yet wholly insufficient for the 
 purposes to which it is being applied. Assessments will 
 have to be made thick and fast before long, or these 
 societies must go out of existence. There is no middle road. 
 
 In the fraternal insurance societies of Canada and the 
 United States, there are hundreds of thousands of members^ 
 carrying billions of insurance, and paying in and out mil- 
 lions of dollars, and yet no valuation. Many of these great 
 organizations are drifting along, regardless 6f all the ad- 
 monitions of science and experience. Others, again, are 
 making an effort to place their business on a sound basis. 
 In some societies the plan is so radically wrong that noth- 
 ing can be done with it but discard it altogether for a cor- 
 rect one, if it be not too late now to make the change. In 
 an ordinary death assessment society, no valuation can be 
 made of the business, as there is no fixed premium to serve 
 as a starting-point for such. Money is called when required, 
 and paid out when it comes in. There is no surplus on 
 hand, and no fixed premium to take stock by ; but, like a 
 rudderless ship, the society is drifting away, until ic strikes^ 
 the rocks, and becomes disorganized and defunct. 
 
 Still another foolish device for the creation of a surplus is 
 being tried in some quarters. It is that of setting aside a 
 certain portion of the post mortem death assessments as a 
 reserve fund. But this plan will not keep down the deatlv 
 rate ; and when this becomes twelve or thirteen per thou- 
 sand, some of the surplus will be used in paying claims. In. 
 
 II 
 
course of time this will be all consumed. These societies 
 will then have a hig-h death rate, and no surplus. Need I 
 -draw the conclusion ? 
 
 The whole question comes to this : No insurance com- 
 pany or society can continue in existence without a Reserve. 
 This statement cannot be controverted. This being the 
 •case, the point to determine is, what is the proper Reserve ? 
 The answer to this is twofold. First, there is the Legal 
 Reserve of chartered companies. This Reserve is con- 
 structed on the afsumption that all who become insured 
 will continue on until they die, or live their endowment 
 periods, and are paid their claims. This reserve is higher 
 than is actually required in practice, but affords the advan- 
 tages of surrender values, paid up insurance, extended in- 
 surance, the power to borrow on a policy, and the distri- 
 bution of profits. In other words, although more is taken 
 from the policy-holder than is absolutely necessary, 
 ^fter working expenses, the extra comes back to him 
 again. And then the policy-holder is in a company that is 
 ■absolutely stable, under the laws of Canada as they now 
 exist. Secondly, there is the Reserve that is founded on the 
 assumption that many of those who insure will lapse. 
 This has been determined, as has the death rate, and ad- 
 vantage is taken of it in advance. The Reserve in this 
 plan is less than in the first, and, consequently, the policy- 
 holder has a smaller premium to pay. But, for this one 
 advantage, he must offset the following disadvantages : 
 He is liable to an extra call at any time ; any surplus to 
 'his credit is forfeited to the benefit of others, if he lapses ; 
 there are no profits on his policy ; there is no surrender 
 value ; there is no paid up insurance ; and there is no ex- 
 tended insurance. In other words, the Legal Reserve 
 companies charge too much, and give the surplus back ; 
 while the Lapse Reserve company or society charges so 
 close to the margin that extra calls maybe necess; ry at 
 any lime. As one able writer has put it, *' a small surplus 
 13 better than a deficit." To give profits begets confi- 
 dence ; to makes special calls creates mistrust. 
 
 The above are the only two ways in which the business 
 of life insurance can be managed. Either can be made 
 permanent by careful watching and frequent valuation. At 
 these valuations, the Legal Reserve company gives profits ; 
 whereas, at the valuation periods, the 1 pse or Decrement 
 Reserve company may have to make an extra levy in ex- 
 cess of the regular premium. 
 
 . Fraternity is a grand thing ; but why not have the 
 fraternity conducted on a sound basis? It is just as easy 
 to carry on the work of an association on such a financial 
 plan as will work out equitably to all the members, as it is 
 on one that will not so end. A man joining a society at 20, 
 Ihas an expectancy of 45 years ; while one joining at 40, 
 
 12 
 
 i 
 
com- 
 
 4 
 
 has an expectancy of 29 years. These should be charg^ed 
 such premiums as make each pay for what he g^ets. It is 
 radically wrong* that a man of 40 should pay the same as 
 a man of 20. A graded assessment does not meet the diffi- 
 culty. The very next year the grade is wrong. There are 
 only two ways to make each pay equally, firstly, to adopt 
 the level premium rates, either on the Legal Reserve or the 
 Lapse or Decrement Reserve plan. These rates may be 
 divided into twelve portions, and paid monthly. It is still 
 a level premium, however. Or, secondly, to charge the 
 natural premium rates and change from year to year, as 
 the members advance in age. By this plan a member in 
 his eightieth year would be paying about $140 a year. 
 
 It will not do for members to make light of the funda- 
 mental errors that exist in these organizations. Take a 
 member, aged 20 when he joins. Grant that he remains a 
 member for 40 years. Allow that he paid on an average 
 $10 a year in assessments to carry his $1000 of insurance,, 
 which is a low estimate to make, for, while his first few 
 years may be under this, his latter years will be above this 
 
 estimate, 
 years of 
 
 At the end of this forty years, when he is 60 
 age, the society suspends operations. A high 
 death rate, and frequent assessments, brought it to an end. 
 Now, allow only 4 per cent, on the money he has paid in 
 during these years, at $10 a year, and it will be found that 
 he has contributed to the defunct concern $988.27. All 
 this he does for the satisfaction of belonging to a fraternity, 
 and seeing his money going to assist others, whom he 
 never saw, and in whom he has no other interest than that 
 they are members of the same society. But this member 
 is not contributing his money on this understanding. Had 
 he been informed when he joined that after paying in for forty 
 years, and contributing, in principal and int^est, $988.27, 
 the society would become defunct, and leave him, an old! 
 man of sixty, out in the cold, he certainly would not have 
 joined. In the meantime he may have become uninsurable ;. 
 but, even if still in good health, and he seeks new insurance, 
 he finds his premiums are very high on account of his age. 
 Thus it is that under the guise of fraternity, a vast 
 amount of injustice has been perpetrated. The members- 
 often do not know any better, and, taking the statements 
 of the leading spirits in the order, look upon their insurance 
 as perfectly good. Mr. Neison, the distinguished British 
 actuary, condemned such societies in the strongest lan- 
 guage. While it must be admitted that the good fraterni- 
 tie& have done in many ways is immense, it must be also 
 admitted on the other hand, that very much injustice has 
 been done through their agency, as shown by the example 
 just given, which is only one of many that have happened, 
 and that must still happen under the present method of 
 managing these societies. 
 
 13 
 
Read what Mr. George D. Eldridg'e, a very able au- 
 thority on assessment insurance, has recently written : 
 "That the ten years next to come will prove with them 
 (the societies) a crucial period, can hardly be gainsaid ; al- 
 ready it is evident that the master minds in several organi- 
 zations recognize that illy adjusted methods of assessments 
 are cumbering the orders with members who are not pay- 
 ing for the protection they are receiving, but whose pres- 
 ence is making more difficult the maintenatVce intact of the 
 roll of members under the gradually increasing assessment 
 rate, burdening alike the new entrant and the member of 
 many years standing. Fraternity and brotherhood are 
 proving themselves unable to stay the action of the law of 
 mortality, although they are proving themselv "s powerful 
 forces to withstand the tendency towards disintegration, 
 which, under similar circumstances, would make havoc with 
 a business organization. As the bond of security which 
 money constitutes may be strained to the point of breakage, 
 which is insolvency, it is not impossible that the bond of 
 fraternity and brotherhood may prove to have its limit of 
 resistance, beyond which would lie disintegration." After 
 referring to the low rate of mortality in relation to insur- 
 ance, he urges that societies adopt proper methods, and he 
 states : " When this is done the bond of fraternity or 
 brotherhood, instead of losing its power, will be increased 
 many fold, and the future of the orders can be niade as as- 
 sured as their work is beneficent." 
 
 In these opinions, Mr. Eldridge is undoubtedly correct. 
 If the financial system is wrong, the bonds of brotherhood 
 cannot ultimately hold the members together ; and a point 
 is reached " beyond which lies disintegration." It is 
 equally true that a correct method is just as easy to man- 
 age as an in^rrect one. The argument, that the adoption 
 of correct rates would apparently increase the payments of 
 members, has no place in the discussion. Insurance can- 
 not be sole below cost without the result following of the 
 insolvency of the society or company that is foolhardy 
 enough to make the attempt. Mr. Fouse, the scholarly 
 avivocate of the Lapse of Decrement Reserve System, 
 condemns the unwarranted assertions that have been made 
 by some advocates of the assessment system, that insur- 
 ance can be furnished at the low prices they claim. 
 
 Why should societies shrink from a valuation of their in- 
 surance ? If they are in a sound financial position, would 
 not the knowledge of this be a great satisfaction to the 
 members ? If they are not in a sound financial condi- 
 tion, can this fact be discovered and made known too 
 soon ? The words of the Rev. C. J. Radley, who took so 
 much interest in the Ancient Order of Forester^ in Great 
 Britain, are of special value. In addressing his fellow- 
 members, h stated that ** it should be distinctly under- 
 
ble au- 
 ^ritten : 
 :h them 
 lid ; al- 
 organi- 
 isments 
 lot pay- 
 »e pres- 
 :t of the 
 sssment 
 mber of 
 od are 
 law of 
 owerful 
 ^ration, 
 oc with 
 ' which 
 iakagfe, 
 bond of 
 limit of 
 After 
 o insur- 
 and he 
 nity or 
 :reased 
 e as as- 
 
 jorrect. 
 lerhood 
 a point 
 It is 
 man- 
 doption 
 lents of 
 ce can- 
 of the 
 olhardy 
 jholarly 
 system, 
 n made 
 ,t insur- 
 
 iieir in- 
 , would 
 to the 
 condi- 
 wn too 
 took so 
 Great 
 fellow- 
 under- 
 
 stood that in remedying deficiencies, delays are doubly 
 dangerous, and after it is once known, the solvency is less 
 than 20S. in the £,i every payment made in full reduces the 
 chances of the remainder of the members." 
 
 The researches of Meech, Fouse, Neison, and Eldridge, 
 have rendered it possible for societies to value their insur- 
 ance, making a fair allowance for the profits to be derived 
 from lapses or secessions. For the leaders in societies to 
 carry on their work, and neglect this plain duty, can 
 hardly be regarded as anything less than criminal negli- 
 gence. It would be a similar act of fc^ly if a bank with a 
 large capital, large deposits, large discounts, failed to take 
 stock of its affairs, and, consequently the directors did not 
 know how its financial matters stood. The universal 
 demands of the members of insurance societies would be, 
 *' Give us a sound system ; we will pay the rates necessary 
 to produce solvency." The first great consideration that 
 ought to govern the action of every member should be that 
 he is not paying into a concern that in the very nature of 
 things must go down as the members gradually grow older, 
 and ever increasing death and sickness rates have absorbed 
 all the contributions of the persistent members, "leaving 
 nought but grief and pain for promised joys." 
 
 We have heard far too much of the good done by friendly 
 societies, when the method of doing it was not wise nor equit- 
 able. It seems, on the surface, a benevolent act to pay the 
 family of a deceased member $i,ooo, to help them along in 
 the time of bereavement. But to do this, loo members must 
 contribute each $io, or i,ooo members $i. If these contri- 
 buting members are sure that when their turn comes to go 
 their families will receive similar benefits, then all is right ; 
 but if there is no certainty of this ; indeed, if there is every 
 certainty that they will not, then the work of fraternity 
 becomes a fraud. The paying members fully expect in their 
 turn to be treated as they are treating others. They are living 
 in a hope that f annot be realized. One very large fraternal 
 society, a short time ago, officially announced that the aver- 
 age age of its members was about five years greater than 
 the average at which they had been admitted. Could there 
 be any stronger proof than this, that, without a proper re- 
 serve on hand, *' new blood" will not save such an institution ? 
 
 In conclusion, I would state that all companies or organ- 
 izations "oing insurance may be classified as follows, after 
 Eldridge : 
 
 r. The Limited Premium, or Legal Reserve Companies. 
 
 2. The Flexible Premium, or Assessment Companies, 
 collecting fixed periodical payments, with the reserved 
 rights of additional assessments. 
 
 3. Post-mortem Assessment companies, embracing, 
 
 (a) Fraternal orders. 
 
 (b) Business organizations. 
 
 15 
 
It has been already shown that, if the business manage- 
 ment is careful, the first class is on a permanently stable 
 basis. It has also been shown that if the rates collected 
 are sufficient, and the standing of each company is sub- 
 jected to frequent valuations, the second class, with good 
 management may also be rendered stable, and kept, from 
 valuation to valuation, in a solvent condition. Further, it 
 has been shown that so far as class three is concerned 
 every principle of life insurance is violated, and sooner or 
 later, such organizations must come i.) destruction and 
 pass out of existence, after the expenditure of much time 
 and money in the effort to perpetuate a huge blunder. 
 These huge blunders are the outcome of empirics working 
 with tables and rates the meaning of which they do not 
 understand. As an illustration of this, a leading society man 
 asked me a short time ago : ** Why did the * old line ' com- 
 panies charge a man aged 23 years about $i6 for a life policy, 
 when the death rate at that age was about 7 per thousand ? '' 
 This is a fine example of how these tables are misapplied. 
 Mr. Fouse has distinctly stated that though the death 
 rate may be below that expected, the regular premium 
 should be collected, as the law of averages is bound to 
 prevail. Mr. Eldridge has declared that he knows of no 
 reason for supposing that assessment societies can furnish 
 life insurance, as such, cheaper than regular companies. 
 In other words, the law of mortality must be met in the 
 society as in the company. Both these gentlemen are 
 actuaries, and connected with very large assessment com- 
 panies. But they see, both from experience and study, that 
 life insurance must cost a certain amount, and they are too 
 fearless and honest to hold out any false hopes. 
 
 There is actual history, however, to fall back upon. The 
 leading asse^ment companies of the United States have 
 been for years reporting to a central bureau their actual 
 death rate. The result is that 22 societies had a death rate 
 in the sixteenth year of 30 per 1,000. If any, or all, of these 
 societies had no reserves on hand, and issued 30 assess- 
 ments in one year, it would soon be seen whether the 
 mutual or fraternal bond could hold them together or not. 
 It is utter folly to expect always a low death rate because 
 it happens to be so in the early years. 
 
 Now for the remedy. Let societies making use of the 
 post mortem assessment system abandon it, and adopt a 
 suitable table of rates and ample provision for frequent 
 valuations. In the case of other societies, issuing a certain 
 number of regular assessments yearly, the advice of com- 
 petent experts should be taken at once to determine 
 whether the amounts collected are sufficient ; and, if not, 
 to have them adjusted, and then keep them right by the 
 safeguard of taking stock in the form of a valuation. With- 
 out this, all else is guesswork. 
 
 16