A man in office without means must abandon the hope 
 of making the future of his family luxuriously com- 
 fortable. All a man can do under existing circumstances 
 to safeguard his family is to get his life insured. 
 
 WM. H. TAFT. 
 
 LIFE INSURANCE 
 AND ITS BENEFITS 
 
 By HON. WM. H. TAFT 
 
 Ex-President of the United States 
 
 WRITTEN ESPECIALLY FOR THE SPECTATOR 
 
COPYRIGHT, 1913, BY 
 
 THE SPECTATOR COMPANY 
 
 NEW YORK 
 
A man in office without means must abandon the hope 
 of making the future of his family luxuriously comfortable. 
 All a man can do under existing circumstances to safe- 
 guard his family is to get his life insured. 
 
 WM. H. TAFT. 
 
 LIFE INSURANCE 
 AND ITS BENEFITS 
 
 BY HON. WM. H. TAFT 
 
 vv 
 
 Ex-President of the United States 
 
 THE SPECTATOR COMPANY 
 
 CHICAGO OFFICE: 135 WILLIAM STREET, 
 
 INSURANCE EXCHANGE NEW YORK 
 
EX-PRESIDENT TAFTS SPLENDID INDORSE- 
 MENT OF LIFE INSURANCE 
 TP HE special article written for the Quinquennial Number 
 
 J of THE SPECTATOR by Ex-President William H. Taft 
 should prove of inestimable value in spreading the gospel of 
 life insurance and in removing any distrust in the system that 
 may possibly lurk in the minds of the uninformed public. Mr. 
 Taft is known to be a man of conservative temperament and 
 deep sincerity. In a letter addressed by him to the Editor, 
 when submitting his manuscript of the article printed in other 
 pages, he wrote : 
 
 I hope the article will not seem too long to you and will not be 
 setting up too many elemental principles. I believe every word I 
 have said, and would not wish to write an article in which I did not. 
 
 Anything that Mr. Taft writes about life insurance is 
 bound to i aspire universal confidence and will be accepted as 
 conclusive by millions of Americans. Moreover, Mr. Taft 
 practices what he preaches. He now carries $60,000 of life 
 insurance and $ib, r ooo of accident insurance. His strong and 
 unselfish sense of duty is reflected in the following paragraph 
 of his article, which should be an inspiration to his country- 
 men: 
 
 There is no cause that I know of that works on a conscientious man 
 who loves his wife and his children so much as the prospect of leav- 
 ing them helpless in the world and dependent on others; and there 
 is nothing comparable to the relief from this worry that the in- 
 strumentality of life insurance offers to a man who has a family and 
 who has only his brains and his hands to support them from year to 
 year, and who must regard his possible death as the launching of those 
 near and dear to him upon a helpless sea of trouble and want. 
 
 Mr. Taft believes that the people generally share his ideas 
 as to the necessity of carrying life insurance and he testifies 
 to that belief as follows : 
 
 It is to the lasting credit of the American people that they are 
 coming more and more to realize the necessity for life insurance and 
 are in constantly increasing numbers availing themselves of its benefits. 
 This fact is significant of the love of home and family that charac- 
 terizes the average American and of the sense of responsibility that is 
 his highest domestic virtue. ,, r . 
 
LIFE INSURANCE 
 AND ITS 
 
 ^1^ 
 
 BY HON. WILLIAM H. TAFT, EX-PRESIDENT OF THE UNITED 
 
 STATES. 
 
 (Special Contribution to The Quinquennial Number) 
 
 HAVE been asked by the Editors of THE SPEC- 
 TATOR to say what I think about life insur- 
 ance, and as I have thought a good deal about 
 it, and, for a man of very moderate means, 
 have invested a good deal in it, I am quite 
 willing to say what I do think about it, and 
 why I favor it as one of the great institutions 
 of modern society. 
 
 SECURITY ONE MOTIVE FOR SAVING 
 Two things must be provided for in order to induce men 
 who have made money, or are making it, to save it. First, they 
 must have confidence that, being saved, it can be kept in a 
 safe place, so that they can have it when they would. This 
 means not merely a condition of law and courts by which they 
 can enforce the right of ownership and recover the money, 
 but a security by which, without anything but the expression 
 of a desire for it, the savings will be forthcoming. The ma- 
 chinery must be evident which will retain the money where 
 the owner can get at it and be sure to have it when he needs 
 it. Hence, the enormous use of the savings banks for the 
 deposit, by the comparatively poor, of small savings, which, 
 in the aggregate, run up into billions of dollars, and far out- 
 strip the total capital of the multi-millionaires whose ac- 
 quisitions at times give so much concern to public-minded 
 citizens. 
 
 * Copyright, 1913, by The Spectator Company, New York. 
 
 285880. 
 
IN FORM OF INTEREST SECOND MOTIVE 
 
 In Addition to the security of payment, another element 
 enters into the motive for saving, and that is the compensation 
 paid to the saver for the use of what he has saved. In respect 
 to this, of course, the greater the security, the less the interest. 
 This principle is exemplified in the operation of the postal 
 savings banks which have just been established in the United 
 States, though they long had proved useful in foreign coun- 
 tries. The postal savings bank is an institution to stimulate 
 saving on the part of those who will trust no one except the 
 government. They will trust no bank, and unless they can 
 secure government guaranty of return they will save their 
 money when they save it by carrying it on their persons, 
 or by concealing it about their houses. As this is rather an 
 unsafe method and frequently results in loss, it fails to stim- 
 ulate savings as does the security offered by the government 
 in a postal savings bank. The succession of events in the use 
 of postal savings banks is instructive. After the ignorant 
 foreigner, who trusts only the government and with whom 
 security is of sole importance, has made deposits in the postal 
 bank, he begins to learn, by the receipt of two per cent a year 
 on his money, that there is some virtue in interest ; and study- 
 ing the question more, he learns that he can secure greater in- 
 terest at a savings bank, and this leads him to risk something 
 in security to increase his returns, and so he becomes a de- 
 positor in the savings bank. 
 
 WORLD'S CAPITAL CHIEFLY MADE UP OF SMALL SAVINGS 
 
 These plain statements of fact that I have just made are 
 commonplace and prosaic enough, and yet it is necessary to 
 formulate them in order to bring home to the ordinary citizen 
 what so frequently escapes him in dealing with economic ques- 
 tions that the capital of the world, upon which the business 
 of the world is done, and which grows apace from year to 
 year and is represented in new railroad construction, enlarged 
 
 6 
 
industries, manufactures, agricultural production and all 
 forms of commercial progress, is not chiefly made up by the 
 aggregation of a comparatively few large contributions from 
 the so-called capitalists and bankers of the world, but it is 
 made up far more through these innumerable agencies for 
 saving the small deposits of the multitude. 
 
 LIFE INSURANCE A MOST IMPORTANT INSTRUMENT IN AMASS- 
 ING SMALL SAVINGS AND APPLYING THEM AS CAPITAL 
 
 Life insurance is a somewhat more complicated and intri- 
 cate machine for saving, but one which, in its way, is grow- 
 ing to be as important as the savings bank. Life insurance 
 presents peculiar advantages in securing a great amount of 
 comparatively small savings by one of the largest classes in 
 our social structure. I refer to the professional, salaried and 
 skilled labor classes. 
 
 PERMITS A TRANSMUTING OF ONE'S PROFESSIONAL SKILL 
 INTO MONEY 
 
 The simple life insurance contract, by which, in consider- 
 ation of the payment of a fixed sum per year during the life 
 of the insured, the company agrees, at the end of that life, to 
 pay the representative or family of the insured a certain sum, 
 is really a plan by which the insured transmutes into money, , 
 to be paid at his death, a certain part of the value of his skill, I 
 experience and professional knowledge. Take a physician, 
 who spends all the time of his life until he is twenty-five in 
 preparing himself for his profession. During the next forty- 
 five years certainly he must earn all that he possibly can, not 
 only to enable -him to live during that forty-five years and 
 bring up a family, but also to accumulate something to rep- 
 resent the value, as capital, of that which he spent his youth [/ 
 and young manhood to acquire in the way of professional skill. 
 Suppose, now, that instead of living to be seventy, he dies at 
 thirty-five; then he has lost, and his family have lost, that 
 
potentiality of earning a handsome income during thirty-five 
 years that would have been his had he lived to the age of the 
 Psalmist. But by sharing a part of his annual income in pre- 
 miums for life insurance he secures the opportunity to appro- 
 priate to the use of his family a partial money equivalent of 
 his professional skill and experience for the probable length 
 of his life, even though his life may be prematurely ended. 
 The same thing is true of the salaried teacher, the salaried 
 man engaged in any clerical or other skilled work, whether his 
 income be called salary or wages. 
 
 INSURANCE GIVES ONE MAN THE BENEFIT OF THE AVERAGE 
 LIFE OF MANY HEALTHY MEN 
 
 The insurance company, because it has a very large number 
 of risks, by proper medical examination can exclude bad risks 
 and fix the premiums to be paid so as to reduce the probability 
 of loss on all the risks. In other words, the company averages 
 and neutralizes the losses from the short-lived by the pre- 
 miums received from the longer lives of others similarly situ- 
 ated. The insured may thus acquire, through this adjustment 
 by the insurance company, the benefit in money's worth of the 
 average chance of life of a large class of healthy men similarly 
 situated. If a man lives, the more he contributes to his life 
 insurance, the less it costs him per year, because the greater 
 the dividends he will receive from the profits of the company 
 itself, assuming that it is a mutual company, as many of the 
 modern companies are. 
 
 INSURANCE ONE OF GREAT BENEFITS OF MODERN SOCIETY 
 FOR PROFESSIONAL AND SALARIED MEN AND WAGE- 
 EARNERS 
 
 I regard the opportunity that professional, salaried and 
 skilled labor men have to invest in life insurance as one of 
 the great benefits of our modern society. I would not mini- 
 
mize the advantage of life insurance to capitalists and busi- 
 ness men, by insurance in various forms of policies, to make 
 up for the possible losses they may suffer in their ordinary 
 investments and business, but I am discussing the phase of 
 life insurance that comes home to. me with the greatest force. 
 
 CHIEF BENEFIT OF INSURANCE CONTRACT ITS DURESS-WIELD- 
 ING EFFECT TO COMPEL SAVINGS 
 
 The most beneficial feature of life insurance seems to me to 
 be the duress that the terms of the contract exercise over the 
 policyholder to save. No matter how long he lives, the terms 
 of the contract are such that, with the penalty of forfeiture 
 for non-payment of premiums before each holder of a policy, 
 he will strain every nerve and resort to every honorable re- 
 source to have the money ready upon the day appointed to 
 meet his annual premiums. It is this sense of obligation, 
 stronger than any I know in our commercial and business 
 world, that makes life insurance so useful to the great ma- 
 jority of those who resort to it and assume its burdens. Your 
 income may be such at one time that you lightly assume the 
 obligation. At another time, when your expenses increase, 
 the burden of the payment becomes heavier ; but the very ex- 
 istence of the burden is a restraint upon the increase of ex- 
 penses and works always for the benefit of the insured and his 
 family. 
 
 Of course, life insurance has a great many other uses than 
 the mere provision against the death of the salaried and pro- 
 fessional class, and it has a great many forms different from 
 that of the straight life policy ; but they all of them necessarily 
 involve the principle of saving of the premiums contributed 
 for a long time and investing them in dividend-paying invest- 
 ments until the event happens, upon which either the principal 
 or dividends are to be paic} to the policyholder, 
 
ANOTHER BOON OF LIFE INSURANCE A MEANS OF AVOIDING 
 
 WORRY 
 
 Life insurance confers another great boon upon men of 
 small or no means, but of good earning capacity. It serves to 
 save and husband their nervous vitality. One of the greatest 
 causes for waste in the exercise of human energy is nervous 
 worry. Where worry only stimulates to a greater effort and 
 more thorough preparation, it is useful, but where it goes far 
 beyond this and burns up nervous vitality unnecessarily it is 
 waste without return. There is no cause that I know of that 
 works on a conscientious man who loves his wife and his 
 children so much as the prospect of leaving them helpless in 
 the world and dependent on others ; and there is nothing 
 comparable to the relief from this worry that the instru- 
 mentality of life insurance offers to a man who has a family 
 and who has only his brain and his hands to support them 
 from year to year, and who must regard his possible death as 
 the launching of those near and dear to him upon a helpless 
 sea of trouble and want. If, by provident contribution from 
 his annual income, he can secure, upon his possible death, the 
 immediate payment of money enough to enable his family to 
 live and to keep the wolf from the door and to educate the 
 children until they are self-supporting, then the burden of 
 worry and of interference with his peace of mind and with 
 his working capacity is lifted from him; he is in the happy 
 frame of mind and can say that, measured by dollars, he is 
 more valuable to his family dead than alive. The perception 
 of these truths by a great number of people in every com- 
 munity is what explains the enormous amounts now invested 
 in life insurance in this country. 
 
 RIGHT AND DUTY OF THE STATE TO SUPERVISE INSURANCE 
 
 BUSINESS 
 
 Life insurance is so large a business and enters so minutely 
 into the happiness of hundreds of thousands of individuals 
 
 10 
 
that the State may properly claim the right to supervise it, to 
 impose upon it restrictions for the security of those who ought 
 to be its beneficiaries and may be its victims, and by constant 
 examination to see to it that the millions and billions of money 
 entrusted to the companies engaged in this work are properly 
 invested for the benefit of those whose faith in the honesty of 
 the company managers has led to their straining every nerve 
 to meet the annual premiums on the policies which they have 
 taken out. * * * 
 
 PUBLIC REALIZES NECESSITY OF LIFE INSURANCE. 
 
 It is to the lasting credit of the American people that they 
 are coming more and more to realize the necessity for life in- 
 surance and are in constantly increasing numbers availing 
 themselves of its benefits. This fact is significant of the love 
 of home and family that characterizes the average American, 
 and of the sense of responsibility that is his highest domestic 
 virtue. 
 
 In the last five years the growth of the total life insurance 
 business of the country has been phenomenal. The new busi- 
 ness written and paid for in 1907 amounted to $1,939,000,000, 
 as against $2,887,000,000 in 1911, while the business paid for 
 in 1912 was $3,232,871,138. At the close of 1907 there was in 
 force $14,080,000,000 of ordinary and industrial life insurance 
 in the United States. Four years later this had grown to the 
 enormous sum of $18,002,000,000, and the total amount of in- 
 surance in force at the end of the year 1912 was $19,218,263,- 
 143. Vast as these sums are, they represent but a portion of 
 the insurable value of the lives of our citizens, and there is a 
 rich field for the further cultivation of savings by these means. 
 
 THE PART OF THE LIFE INSURANCE COMPANIES DONE WELL 
 
 On the whole, the life insurance companies are doing their 
 part in the evolution of this great business with conspicuous 
 
 11 
 
ability and with admirable fidelity to the trust imposed in them. 
 They can hardly have a greater responsibility. Their difficult 
 task is to guard the accumulated trust funds, now nearly four 
 and a half billion of dollars, with the most scrupulous watch- 
 fulness, to keep them invested with due regard to productive- 
 ness and absolute security, and, finally, to carry out with exact 
 justice the provisions of contracts as they mature from day 
 to day on into the distant future. This is a labor of the 
 highest importance to the community at large. They must be 
 alert to detect treachery and dishonesty, within the company, 
 and fraud and conspiracies without. With many conflicting 
 laws in the several States, they must carry on their business in 
 conformity with such laws as best they may. They must de- 
 cide the border line between liberality to their policyholders, 
 in the matter of policy provisions, and what might be unsafe at 
 times of excessive mortality or financial stress. 
 
 PLANS OF SOME COMPANIES TO PROMOTE GENERAL HYGIENE 
 
 It appears that some of the life insurance companies are 
 carrying on educational plans looking to the conservation of 
 life and health which cannot fail to be of great practical value 
 to the whole country. Trained statisticians study and classify 
 the conditions bearing upon mortality and disease in different 
 sections of the country and under various industrial condi- 
 tions, and, as a result of their investigations, steps are taken 
 to improve hygienic regulations in communities and to abate 
 the dangers incident to unhealthy occupations. 
 
 UNFOUNDED PREJUDICES AGAINST INSURANCE COMPANIES 
 AND OTHER CORPORATIONS 
 
 There is a very strong prejudice against all corporations, and 
 this includes insurance companies and railroad companies. In 
 so far as the methods of these corporations have been properly 
 subject to criticism a feeling of antagonism by the public is 
 justified; but in many instances and generally it goes beyond 
 
 12 
 
this, and it ought to moderate the feeling much and restore 
 a desire to do justice to such corporations to have it under- 
 stood what a large part of the money of insurance companies 
 represents the savings of the many. Thus, there are 20,000,- 
 ooo policyholders in American life insurance companies to- 
 day, which itself speaks for the number of poor and com- 
 paratively poor persons who are interested in the capital and 
 prosperity of insurance companies. Then the insurance com- 
 panies have invested a large part of this capital in corporate 
 investments. Thus the insurance companies doing business in 
 New York own one-eighth of all the bonds issued by the rail- 
 road companies of this country, and their ownership of other 
 securities of corporations is equally important. The signifi- 
 cance of this should be brought home to the public at large 
 in order to mitigate strong anti-capitalistic feeling, which 
 really brings about injustice and tends to halt prosperity. 
 
 THE PEOPLE OWN THIS COUNTRY NOT THE MILLIONAIRES 
 
 The people ought to know that it is the people, after all, that 
 own this country, and it is their savings and their capital that 
 run the great enterprises of this country, and not that of a 
 few individuals, and that legislation intended to strike at capi- 
 tal to restrict its beneficial use by the people is a blow at them- 
 selves. 
 
 TOTAL ASSETS OF LEGAL RESERVE LIFE INSURANCE 
 COMPANIES A BULWARK 
 
 At the end of the year 1911 the total admitted assets of the 
 legal reserve life insurance companies doing business in the 
 United States amounted to $4,165,148,290, and by the first of 
 January, 1913, these assets had grown to be $4,404,744,039. 
 This enormous sum, accumulated from every part of the coun- 
 try, and from all classes of citizens, is not only a bulwark 
 against future want and poverty, but it is an ever-increasing 
 
 13 
 
source of prosperity in the present. As it must be invested 
 in order to carry out its purpose, it builds our railroads and 
 our factories, finances our industrial and commercial enter- 
 prises, and distributes its potent streams in every direction, 
 as irrigation spreads fertility in an arid land. It is one of the 
 greatest modern instances of the power of a great people act- 
 ing together for good. 
 
 14 
 
EX-PRESIDENT WILLIAM H. TAFT AT YALE UNIVERSITY 
 
 15 
 
LOAN DEPT. 
 
 T Tk 91 A-50w-8,'57 
 ^8481^0)4768 
 
UNIVERSITY OF CALIFORNIA. JJBRAR