United States. Temporary National Economic Committ.

Investigation of concentration of economic power; monograph no. 1[-43] (Volume no. 2) online

. (page 5 of 19)
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« Pt. 12. R. 5781.



CONCENTRATION OF ECONOMIC POWER

Summary of 8,022 industrial policies — Plans and years in force



37





Number of policies


Years in force


Whole
life


Limited
payment


Endow-
ment


Total




1,547

767

1.202


947
282
155


1,451
849
822


3,945
1,898
2,179


5 to 10 -


Over 10




Total


3,516


1,384


3,122


8 022








Percentages


Under 5


44.00
21.81
34.19


68.42
20.38
11.20


46.48
27.19
26.33


49 18


6 to 10


23 66


Over 10


27 16






Total


100.00


100.00


100.00


100 00







Families vary with respect to the number of breadwinners. Among
the, 1,251 nonrelief insured families there were 3 families with none
and 12 with 5 or more breadwinners- each. The typical family, how-
ever, is a 1 -breadwinner family. Families with only 1 breadwinner
account for 69 percent of the nonrelief families and 64 percent of the
relief families. As might be expected, there were many more no-
breadwinner families on relief than in the nonrelief group. As many
as 66 of the nonrelief insured families had no breadwinners. (See
tables 14 and 15, pp. 128-129.)

An analysis of family income in relief and nonrelief families accord-
ing to the number of breadwinners in the family shows that the non-
relief families have incomes that reach as high as $6,000, while in
relief families the range is only to $4,000. There are definite positive
relationships between number of breadwinners per family and both
total family income and the average income per family member.

Insurance status of breadwinners and others* 24 In order to ascer-
tain the facts with respect to the proportion of breadwinners and others
that were insured and uninsured, the members of the 1,666 insured
families were classified as shown in table 16. This table shows that
11.58 percent of the chief breadwinners and 20.21 percent of the
"other breadwinners" were not insured. On the other hand there
were 17.93 percent of the dependents that were not insured. One
significant. difference between the relief and nonrelief families appears
in the percentages of chief breadwinners without insurance. In the
nonrelief group only 1 out of 11 chief breadwinners was uninsured,
while in the relief group 2 out of 10 chief breadwinners were not
insured. Breadwinners other than the chief breadwinners were
insured to approximately the same proportion in both groups but
a smaller percentage of dependents were insured in the relief group
than in the nonrelief group.

Total amount of all insurance held by each individual surveyed.
There were 8,794 men, women, and children reported as members of
the 2,132 families enumerated in the survey. Life insurance of all
kinds to the amount of $3,954,319 was found in force on the lives of
5,791 individual family members. There were 3,003 uninsured family

,( Other aspects oi Insurance on breadwinners are presented on pp. 39 and 48.



38



CONCENTRATION OF ECONOMIC POWER



members. Thus 66 percent of all men, women, and children in these
families carried some insurance and the over-all average amount of
insurance was $683 per insured person.

Although this average is highly interesting it must be pointed out
that it has the disadvantage of all summary measures in that it fails
to reveal the wide variations that exist in the amounts of insurance
carried by 5,791 insured individuals. In order to examine the pat-
terns that exist in the distribution of amounts of insurance carried on
various classes of individuals, separate tabulations were made to

Chart 16

ALL INSURANCE HELD BY INDIVIDUALS

5791 INSURED MEMBERS OF ALL INSURED FAMILIES CLASSIFIED

ACCORDING TO AMOUNTS OF ALL INSURANCE IN FORCE

(Percentages of the total number of insured family metnbers)



PERCENT OP TOTAL NUMBER OP
INSURED PERSONS IN EACH CLASS

io —



PERCENT OF TOTAL NUMBER OP
INSURED PERSONS IN EAC H CLASS




AMOUNTS ($) OP ALL KINDS OP INSURANCE IN FORCE ON INDIVIDUAL PERSONS
Source: Table lj-A DS-1519 Prepared by Sec. 1 Ixch. Com*.

show the total amounts of insurance in force on males and females,
on breadwinners and others, according to the economic status of the
family to which each belongs. The details of this analysis are con-
tained in tables 17 and 17-A. There is room here only for a chart
which shows a frequency distribution of the 5,791 insured individuals
classified according to the amounts of insurance on their respective
lives.

Chart 16 should be studied in connection with the table upon which
it is based. Both show concentrations of individual amounts of
insurance at points which are associated with the custom of insurance
companies in issuing policies in units of $250, $500, and $1,000 each.

The chart is not large enough to show the few individuals with the
largest amounts of insurance. The table shows that there was one



CONCENTRATION OF ECONOMIC POWER 39

person who carried as much as $15,619 of insurance, and eight others
who carried amounts of insurance in excess of $8,000 each; neverthe-
less it is clear that the great bulk of the individuals were insured for
relatively small amounts. In fact, the amounts of insurance carried
on half of these persons were less than $476 ; and the amounts carried
on one-fourth of them were less than $256. On the other hand, it
may be said that half of them were insured for amounts greater than
$476 each, and that one-fourth of them (the most heavily insured)
carried amounts in excess of $915 each.

Total amount of industrial insurance held by individual members
of the 701 families in which industrial insurance only was found.
As indicated above, this analysis included the total of all kinds of life
insurance in force. It was thought desirable to examine separately
the industrial insurance in force. Therefore the same type of analysis
was made for the insurance held by the 2,349 insured members of the
701 families in which only industrial policies were found. There were
2,913 members of the 701 families in which only industrial insurance
was found. Of that number there were 2,349, or 81 percent, on
whose lives 3,745 policies were carried. The total amount of insurance
represented by these policies was $899,368. Thus the average insured
person in these 701 families held 1.6 industrial policies and had $383
industrial insurance in force on his life.

Reference to tables 18 and 18-A will enable the reader to see the
range of variation in the amounts of industrial insurance held by
these family members when they were separately classified according
to sex and economic status. The accompanying chart 17 on p. 40 is
based on table 18-A and shows the amounts of insurance on all of the
2,349 insured family members. Amounts between $250 and $300,
and between $500 and $600 occur with sufficient frequency to stand out
on the chart. This is accounted for by reason of the practice of life-
insurance companies in issuing certain industrial policies in units of
$250 and $500. There were 50 percent of these individuals who carried
ess than $324 and 50 percent who carried more than that amount.

It is obvious that the members in this group are much more homo-
geneous with respect to the amounts of insurance carried on their
lives than was the case with all insured individuals. Only 80 indi-
viduals carried industrial insurance for amounts of $1,000 or more.

Industrial insurance on breadwinners and others. The 701 families
with only industrial insurance had 655 insured breadwinners and
1,694 other insured members. These insured individuals are classified
separately in table 18-A according to the amounts of insurance in
force on each. The results show the extent to which the status of
breadwinner affects the amount carried by individuals. Breadwinners
are found distributed throughout the range from under $50 to over
$2,000 but typically breadwinners carry more insurance than others.
This is evident from several points of view. For example, in each of
the insurance classes up to $400, breadwinners are proportionally less
important than nonbreadwinners, while in each of the insurance
classes beyond $400 the breadwinners are proportionally more impor-
tant than the others. Also it may be observed that whereas the
median 26 breadwinner carried $494 insurance, the median for the
nonbreadwinners was only $282. Almost half (49.16 percent) of the

24 The median is a type of average. It is determined in such fashion that half of the items are Jess than,
and the other half of the items greater than, the median. When the items are arranged in order of size the
median is that value which divides the items in the distribution into two equal parts.

250783—40 — No. 2 4



40



CONCENTRATION OF ECONOMIC POWER

Chart 17

INDUSTRIAL. INSURANCE HELD BY INDIVIDUALS

2349 INSURED MEMBERS OF 701 FAMILIES WITH ONLY INDUSTRIAL INSURANCE

CLASSIFIED ACCORDING TO AMOUNTS OF INSURANCE IN FORCE

(Percentages of the total number of insured family members)



ER OP




PERCENTAGE OP TOTAL NUMBER OP



scj:



INSURED PERSONS TNR/tCH CLASS



o



AVERAGE AMOUNT OP INDUSTRIAL INSURANCE
PER INSURED PERSON - $383



SmJSHSSSSSSJS



ooooooo o o o

IOOIOOIOO o o o
rtHOCOO T lO > Sec. t txclt. Con*.

breadwinners were insured for amounts greater than $500, while
only 19.43 percent of the others carried that much insurance.

Industrial insurance on males and females. Among the 2,349
insured individuals in the 701 families with industrial insurance only
there were more females than males. The division was 1,137 insured
males and 1,212 insured females. The distribution according to the
amounts of insurance on each person tends to follow somewhat the
proportional pattern noted above with respect to breadwinners and
others in that, in general, males carried more insurance than females.
In view of the fact that the males account for 479 of the 655 bread-
winners, this similarity in result is not illogical. The median amount
of insurance on males was $336 and the median amount of insurance on
females was $311.



CHAPTER IV

The Annual Cost of Life Insurance to the 1,666 Insured Families

Premiums Paid for Various Classes of Insurance; for
Various Plans of Insurance — Relation of Premiums to
Family Income — Relation of Premium Cost to Size of
Family and Economic Status.

The cost of life insurance to the 1,666 insured families covered in
the survey may be measured by the aggregate of the annual premiums
charged for all the individual policies found in force at the time of
the enumeration. 1 The total of these annual premium charges was
$125,794.26. It should be emphasized that this amount represents
the net cost of insurance as deductions were made in each case (o
allow for dividends declared to policyholders. 2 The total amount of
insurance in force on the day of enumeration was $4,069,385. (See
table 1, p. 106.) This, too, represents not the total of the"face values"
of policies but the aggregate amount of the actual insurance benefits
that would have been paid on all policies had the full benefits become
payable on the day of enumeration.

Of course, no premiums were being paid on paid-up, extended term,
or noncontributory group insurance and in the case of contributory
group insurance only part of the premiums were being paid by the
families. 3 Nevertheless, for the entire amount of insurance in force
the ratio of total premiums to total insurance is 3.09 percent. Remov-
ing the influence of the noncontributory and partially contributory
insurance, this ratio becomes 3.44 percent. For the industrial and
ordinary insurance, including savings-bank life insurance upon which
premium payments are being made, this ratio is 3.55 percent.

Total cost of different classes of insurance. The relative impor-
tance of the component parts of this total cost of insurance is noted
in the table below. This includes all insurance covered by the survey.

1 This aggregate is an understatement rather than an overstatement. It does not include premiums that
may have been paid on policies that had terminated during the year by lapse or otherwise. It is also likely
that there were policies in force which were not produced for inspection by enumerators. In addition it is
certain that no policies were recorded that were not actually in force.

1 This adjustment reduced the total premiums on industrial policies by about 9.2 percent and the total
premiums on ordinary policies by approximately 14.9 percent. It is estimated that if these adjustments
had not been made the total cost of all insurance in force would have been 10 percent greater tban the figures
actually shown in this survey.

» Table 24 indicates that there was $207,068 of life insurance in force on which no premiums are being paid,
and $294,150 of life insurance in force on which partial premiums of $2,816 are being paid.

41



42



CONCENTRATION OF ECONOMIC POWER



Class of insurance



Insurance in force



Amount Percent



Annual premium



Amount Percent



Industrial -'.-.

Ordinary (excluding savings bank)

Savings bank

Group .'

Fraternal

Total



$2, 020,158

1, 319, 438

84,586

, 454, 597

190, 606



49.6

32.4

2.1

11.2

4.7



$80, 549

36, 189

1,705

3,579

3,772



i, 069, 385



100.0



125, 794



64.0

28.8

1.4

2.8

3.0



100.0



Industrial insurance, which accounted for 49.6 percent of the total
insurance in force, accounted for 64 percent of the aggregate premiums
paid. Thus it can be seen that in the area surveyed the population
relied on industrial insurance for half of its insurance needs, for which
it paid almost two-thirds of its total life-insurance bill.

Total cost of insurance written on different plans. Reference is
made on page — in the preceding chapter to the amounts of insurance
in force written on the different plans. The table below presents for
industrial, ordinary, and all classes of insurance combined the pre-
mium costs of the total insurance according to the different plans.



Plan of insurance


Industrial


Ordinary '


All classes a


Premiums


Percent


Premiums


Percent


Premiums


Percent


Whole life


$32, 002

14, 527

34, 020




39.8

18.0

42.2




$16, 463

12, 573

8,366

492


43.4

33.2

22.1

1.3


$52, 237

27, 101

42, 385

4,071


41.5




21.5




33.7


Term


3.3






Total..


80,549


100.0


37, 894


100.0


125, 794


100.0







1 Including savings bank life insurance.

1 Including savings bank, group, and fraternal insurance premiums.

It is apparent from these figures that the largest part of the indus-
trial policyholders' premiums were spent for endowment policies
which it was shown earlier were written to a large extent upon children.
The total premiums on industrial endowments account for 42.2 percent
of the total premiums these families paid for industrial insurance.
Also, marked differences appear in the relative magnitudes of the
premiums, paid on limited-payment policies. Whereas in ordinary
insurance policies on this plan account for 33.2 percent, such policies
account for only 18 percent of industrial-insurance premiums.

Premiums in relation to family income. Any appraisal of the role
of insurance in the families covered in the survey must take into
account the relative cost of insurance premiums to the individual
family. One way of measuring the burden of premium payments is to
relate the annual premiums to the annual incomes of individual fami-
lies. The accompanying table and chart 18 present the results of such
analysis for nonrelief and relief families separately.



CONCENTRATION OF ECONOMIC POWER



43



CHAiiT 18

1666 FAMILIES CLASSIFIED ACCORDING TO THE PERCENTAGE
OF THEIR INCOME PAID AS LIFE INSURANCE PREMIUMS



PERCENTAGES

OP FAMILIES

20



1251 HON RELIEF FAMILIES



PERCENTAGES
OP FAMILIES
20




12 3 4 5 6 7 8 9 10 11 12 13 14 15 16
PREMIUM'S AS A PERCENTAGE OF, FAMILY INCOME



MIS RELIEF FAMILIES



20



15



10



Median 3.97%
Q' 2. 36%

Q 3 6. 15%




TZZZZZZZZZOma-



2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
PREMIUMS AS A PERCENTAGE OF FAMILY INCOME



/ Son-contributory Insurance
Source: Table 19



D3-IU8S rrtpared by Sec. i tick. Com*.



44



CONCENTRATION OF ECONOMIC POWER



1 ,666 insured families classified according to the percentage of their income paid as

life-insurance premiums





Insured families


Percentage of family income paid for
insurance premiums


Number


Percentage




Nonrelief


Relief


Nonrelief


Relief




3

3

3

3

6

17

16

69

47

76

94

96

148

163

167

164

108

45

23


1
1


0.24

.24

.24

.24

.48

1.36

1.28

5.51

3.76

6.08

7.51

7.67

11.83

13.03

13.35

13.11

8.63

3.60

1.84


24


22 to 23.9


.24


20 to 21.9




18 to 19.9


2
2
3
10
17
9
20
20
22
46
52
74
50
41
24
21


.48


16 to 17.9


.48


14 to 15.9 .-


.72


12 to 13.9


2.41


10 to 11.9


4.10


9 to 9.9


2.17


8 to 8.9


4.82


7 to 7. 9


4.82


6 to 6.9


5.30


5 to 5.9


11.08


4 to 4.9


12.53


3 to 3.9


17.83


2 to 2.9


12.05


1 to 1.9:..


9.88


0.1 to 0.9


5.78


None i


5.07






Total. +.


1,251


415


100.00


100.00



i Noncontributory insurance.
Source: Table 19, p. 137.

The burden in both classes of families varies from zero (in cases where
all the insurance in force was either paid-up, extended term, or non-
contributory group insurance) to 24 percent and over. However, as
evident from the distributions, the great bulk of the families fall
within a narrower range. The middle half of the nonrelief families
paid between 2.83 percent and 7.26 percent of their annual incomes
for liO-insurance premiums. The median family in this group paid
4.72 percent. Among the relief families the picture is only slightly
different. The median relief family paid 3.97 percent and the middle
half of the relief families paid between 2.36 percent and 6.15 percent of
their incomes for insurance.

However, it should be indicated that relatively large percentages
were paid by many families in both groups. Among the 1,251 non-
relief families there were 120 which paid premiums in excess of 10
percent of their incomes. There were 36 families of the 415 on relief
which paid 10 percent or more of their respective incomes for pre-
miums.

Attention is directed to the families which are insured but which pay
no premiums. It will be observed that there are proportionally
almost three times as many relief families as nonrelief families paying
nothing for cheir insurance. This and other differences in the general
patterns of the two distributions are traceable in part to the greater
economic pressure upon the relief group and in part to the insurance
advice given it by the social agencies adminis fcering relief.

Number of dependents and percent of family income paid as pre-
miums. The relation between the size of t v e family and its insurance



CONCENTRATION OF ECONOMIC POWER



45



status was discussed on pages 10 and 11 in chapter II. The table and
chart 19 below summarize the results of classifying relief and nonrelief
families according to the number of dependents and the percentage
of family income spent for insurance premiums. It may be concluded
from this analysis that, except in the families with no dependents, the
average relief family spends a smaller percentage of its income on life
insurance than the average nonrelief family. Both classes of families,
however, exhibit the same tendency to spend proportionally more as
the number of dependents increases until the family has seven or more
dependents. At this point smaller proportional amounts are expended
for insurance.

Chart 19



RELATIVE COST OF INSURANCE AS RELATED TO THE NUMBER OF
DEPENDENTS IN RELIEF AND NON-RELIEF FAMILIES



PEr^ENf OP INCOUB
PAID FOB IMSUBAHCM



nm&ass




NO. OF DEPENDENTS I

fNON-REUW 70 270

3 \RSL1E1 62



6 7 8 MORE FAMILIES

' 46 1261



1S-15I4 rrtfarad by Uc. i *


1 2 3 5 7 8 9 10 11 12 13 14 15 16 17 18 19

Online LibraryUnited States. Temporary National Economic CommittInvestigation of concentration of economic power; monograph no. 1[-43] (Volume no. 2) → online text (page 5 of 19)