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mercial transaction ; a quid pro quo. The company of course looks
to make a profit on it, and you look to the realisation of the pre-
cise sum of five hundred pounds. Suppose you prefer becom'ino-



LIFE-ASSUKANCE.

a member of a mutual society, you will pay, in most of the offices
of that class, a somewhat higher rate — rang-ing* from £2, 8s. to
£2, lis. — or about £12, 10s. in all;* and in that case you will be
entitled to expect that, should your policy run for ten years, it
will bear six instead of five hundred pounds ; or you would be
entitled to have your rate of payment considerably reduced for
the future. In mutual assurance, there is formally the risk of
a falling: short of funds, and in that case you mig-ht be disap-
pointed of the full sum you had insured ; but practically, there
is no such dang-er; for, when well conducted, the business of
mutual assurance invariably flourishes ; and there is hardly an
office of that kind in Britain where you would not be safe from
everything; but a universal ruin of British credit. In fact, not
only are safe views of mortality always assumed in such offices,
but there are so many means of employing' the funds to advan-
tage, that mutual assurance is unlike every other kind of business,
great prosperity being the rule, instead of the exception. There
are some, however, who think the guarantee of a trading* com-
pany so desirable, that they are willing to forego ultimate advan-
tages on that account, or to content themselves at least with
that share of the profits which certain companies agree to give to
the assured.

Thomson. — In what form does a private party receive assurance
of the payment which he bargains for ?

Jones. — He receives it in the shape of a bond, on stamped
paper, usually called a Policy of Assurance, in which the com-
pany, by its directors, binds itself to make good the sum at the
decease of the party, provided that decease be not by suicide or
in a duel, or beyond certain prescribed geographical limits ; pro-
vided also that the stipulated payments called premium have
been duly made, and that no untrue averment was made as to
the state of health and habits of the insured at the date of the
insm'ance. The bond of the society, again, binds the several
members to make good the sum, on the like provisions, but only
as far as the funds of the body may, at the fall of the policy, be
sufficient for that purpose. A policy of assurance is usually ob-
tained on the condition of an annual payment, because this is the
plan which suits the circumstances of most persons ; but it may
also be had on the payment of one sum. For instance, a gentle-
man of 37 years of age will have an assurance for £1000, with
prospect of large additions, on paying* about £450 at a mutual
office. In the latter case, the policy is at all times a bank-note
for at least the sum which was paid for it. But, even when it is
obtained for annual payments, it soon acquires a certain value.

* One or two mutual offices of recent origin have rates somewhat lower,
and more nearly abreast -u-itli those of the companies, yet still sufficiently
safe. It may, however, be held as a ground of presumption against either
the honesty or prudence of a scheme, if it insures life at thirty years much
below £2, 2s. per £100, and other ages in proportion.

7



LIFE-ASSURANCE.



For example, an insurer enters, we shall say, at thirty, and has
paid for ten years. Being- now forty, he has only to pay for the
remainder of lite at the rate proper to thirty, which is much
smaller In the proportion of the one rate to the other is his
'policy of value. And he can according-ly use it as a security for
any debt he may incur, or as a means of raisino- a loan • or he
may sell it for a sum ; which, however, I do not like to see any-
body do as It IS like killing- the g-oose for the eg-g-s, and can only
be justified by the pressure of extreme necessity.

Thomson.— I would like, however, to understand the advantao-es
of life-assurance to an individual a little more clearly. If I am a
healthy person, and live to a g-ood old age, I shall of course pay
a great deal, and get back nothing; and perhaps, after all, what is
got by my heirs may be much less than I have paid, besides per-
haps not being needed by them; for before that time my chil-
dren may be all well provided for otherwise. I think I have hpard
mj neighbour Jackson occasionally indulging in a laugh at life-
assurance : all outlay, he says, and no return.

Jones.— An^ will you allow yourself to be carried away by
a thoughtless laugh? Take life-assurance at its own preten-
sion It is only a kind of lottery, and does not offer prizes
to all. btrictly speaking, the surviving pay for the benefits
given to the dead ; but then who is to say, at the beginnino-
of any year, which are to be the paying, and which the benefit"^
ing parties ? When you conceive of a person paying for forty or
fifty years, till his aggregate outlay greatly exceeds what his
heirs ever can receive, you merely think of the blanks in the
lottery. The fortunate m length of days are the unfortunate in
the distribution of the funds. But then, consider— though you
are a young man, you may die to-morrow. Die when you like
if you have only just paid your first premium, your heirs are
entitled to the sum assured. You may be said in that case to
draw one of the highest prizes. All having here an equal chance,
nothing can be more fair.

Thomson.— '^tiW, it is a lottery, or a species of gamblino- • and
I can imagine a nicely conscientious mind being at first sie-ht a
little startled by it. ^

J'om-.— Such is really the case. There are many excellent
persons who do not think themselves at liberty thus to speculate
upon the events of Providence. But I humbly think they are
wrong. If It is a lottery, it is, I would say, one of a legitimate
and even laudable kind. Taking its rise in one of the most re-
spectable features of human nature— foresight, or a provis^'on
against contingent evils— and having most particularly in view
the succour of the widow and fatherless— it is essentially a moral
and humane institution. And surely, if it be allowable for any
man to seek to gather actual property wherewith to endow those
dependent upon him, it is allowable, where that is impossible or
dilhcult of attainment, to secure the same end, since it can be



LIFE-ASSURANCE.

done, by a combination of means and a brotherly participation of
risks. I contemplate life-assurance, not as an interference in
any deg-ree with the course of Providence, which some raslily
assume it to be, but, on the contrary, the taking- advantage of a
means kindly offered by Providence for our benefit. For, consider
on what it rests. That regularity in the ratio of mortality, with-
out which there could be no life-assurance, is an institution of
divine wisdom, as clearly as any other of the g'reat arrangements
of nature. When we assume this as a guide for certain conduct,
not in itself reprehensible, we do no more than when we regulate
a journey by what we know beforehand of the season and the
length of the day. If we knew from infallible signs that there
was to be a failure of grain crops five years hence, would it not
be quite right to save up corn against that time, and thus equalise
the evil over a wider surface ? Now, if a thousand persons know
that a certain number of them will die next year, are they not to
be at liberty to act upon that knowledge, and insure each other
against the calamities that might flow to their families in the
event of their being left without sufficient property to protect
them from the evils of poverty ? I humbly conceive that we are
called upon, by the most sacred considerations, to adojDt such an
expedient, seeing' that it is attended by no practical evils of any
kind, but, on the contrary, produces an unmixed good.

Thomson. — I admit the force of your arguments there ; but it
just occurs to me that an objection still lies with regard to the
mercantile view of the subject. Say that I am a young hale
man, carrying on a good business which fully employs my capital.
I am likely to live for twenty years at least, and in that time
have every reason to expect I shall provide for my family very
amply. If I take money out of my business to insure upon my
life, I so far diminish my means of carrying on business ; and
my chance of ending- with brilliant success is lessened. This I
feel to be a hardship, and it may even be the worse in the long -
run for my family. You will see, then, that I have a great temp-
tation, circumstanced as I am, to abstain from laying out money
in this way, and rather to keep employing it in business, which
makes me in the meantime such good returns.

Jones.' — You have stated an objection which, I believe, is ex-
tremely apt to arise in the minds of men of business, but which
I equally believe to be ill-founded. The question is simply this
— are you to trust the comfort of your family to a chance, albeit
a promising one, or are you not rather to make quite sure of it
so far ? Why, you speak of life-assurance being a kind of gamble.
In many circumstances, the lieejnng out of it is a greater gamble.
The plan which you propose instead, is like risking" everything
you have in the world upon a sing-le throw of the dice, for the
sake of a possible g-reat gain, in which you may be disappointed.
Resorting to life-assurance, on the other hand, is like simple
trade, where httle is risked, and a moderate but certain profit

9



LIFE-ASSURANCE.

secured. It seems to me the only rational, and, considering- the
interests concerned, conscientious course, while you are trusting"
most of your means to the risks of trade, to set apart a portion,
on which you may rely at all hazards, for the benefit of your
family, should you be unexpectedly taken from them. The stock
in trade of even prosperous men often turns out of little value
when they are removed from the head of their business. This
is what all are exposed to while we continue mortal : not even the
healthiest man can say for certain he is ever to be in his shoj) or
counting-house again. Now, is it not a gratifying reflection to
a person in such circumstances, that, though the stroke come
to-morrow, and make the value of his stock and trade ever so
doubtful, there is at least one clear certain sum to accrue to those
about whose welfare he is most anxious — something which they
cannot be deprived of, so that he only die in solvent circum-
stances. To me, at least, with the element of caution pretty
strong in my constitution — though not stronger, I daresay, than
is necessary in this trying world — it seems so indispensable thus
to have a something certain for my wife and children to look to,
that I feel as if I could not have a minute's comfort at any time,
if I were trusting their future comfort wholly to the chance of
how my business mig-ht turn out after my death.

Thomson. — May I ask if you have known many instances of
life policies proving a stay, where other means that had been
chiefly trusted to failed ?

Jones. — I could relate several cases in point, and I therefore
believe they must be frequent. Speaking genei'ally, my expe-
rience says that, of all the possessions of mercantile men, there
is none more stable, none more to be depended on, than sums
secured upon life.

Thomson. — It will of course sometimes happen that individuals
benefit in a remarkable degree by life-assurance, seeing that
their death may take place at any hour after having effected
their policies.

Jones. — It does ; and I could tell you several remarkable anec-
dotes of that kind. An instance of death during the iceek follow-
ing the payment of the first premium once occurred in Edinburgh.
In the records of one particular office, I have found a consider-
able number of cases in which only one premium was paid. I
find, for instance, £500 realised after the policy had run 262
days; £800 after 330 days; £600 after 206 days; £500 after
only 74 days ; £1000 after four months ; and so forth. A few
years ago, there occurred one particular case of a very striking*
nature. An industrious man, engaged in flax-spinning, and who
had sunk most of what he possessed in a concern of that nature,
insured £500 in the month of February, for which the usual
comparatively small sum was paid by way of premium ; in the
ensuing April, not satisfied with the first sum, he insured £500
more. Next month, after the second policy had run only twenty-



LIFE-ASSURANCE.

tico days, he died in consequence of a severe injury from Ms own
machinery. Thus his family obtained the welcome sum of £1000
to help them on in the world — a sum which they could not have
had, if their parent's death had taken place three months sooner !
Such incidents serve to place the value of life-assurance in a very
striking- lig'ht. We see, indeed, in this institution, one of the
grand differences between a barbarous ag-e and one of hig-h civi-
lisation. Long" ag-o, the condition of the widow and the father-
less, in all departments of society, was g'enerally very deplorable,
for they were in most instances dependent on mere charitv.
Now, by a present expenditure of no great magnitude on the
part of the father of a family, he may secure them against that
wretched state of dependence in the event of his death, happen
when it may. Men who are indisposed to make this little sacri-
fice, talk of leaving their little ones to a kind Providence, in the
certainty that they will not want. This is, in reality, to shift their
own burden upon the shoulders of other people. He, on the other
hand, who sacrifices some of his present comfort to secure the
independency of his little ones, is manifesting, it appears to me,
an equally implicit, and far more rational trust in Providence, in
as far as the arrangements of life-assurance depend thereon, while
he is acting a more heroic and spirited part merely as a man.

Thomson. — ^T^Tiat you say is very convincing", and I no longer
see any occasion to hesitate before effecting a policy for the
benefit of Susan and the young ones. There is only one other
point I wish to have explained. I see that most insurance offices
offer to grant annuities to applicants. Is that on the same prin-
ciple as insurance for sums to be paid at decease ?

Jones. — The granting of annuities is a distinct branch of in-
surance office business, and is conducted on the same principles
as to probability of length of days as the branch we have been
talking of. Insurance for annuities is chiefly adapted to persons
who can sink a certain sum at once in exchange for a certain
sum annually — this last being much more than they could realise
by any process of lending the principal. The amount of the
annual sum or annuity depends of course on the age of the in-
surer. An old person will get a much larger return than a
young one. Men retiring from business with a moderate sum,
and who have no immediate relatives depending on them, find
this species of insurance exceedingly suitable. But the plan
of annuities is very various, and may be applied to many kinds
of cases. A man may buy an annuity for himself, or for him-
self and wife jointly ; or he may sink money for an annuity to
his widow ; or he may begin paying a sum annually, to cease
in a certain number of years, and then his annuity is to com-
mence — such being called deferred annuities ; or he may arrange
that, in the event of his death, his young children shall have an
annuity till they are of age ; and so on.

Thomson — Now that you put me in mind of it, I have heard

11



LIFE-ASSURANCE.



it said jocularly, that people who insure for annuities g-enerally
live longer than those who don't. Surely that must be nonsense.
Jones.— I am not sure that such an idea is altog-ether visionary!
People whose lives are insured for annuities, may be supposed to
feel considerably at their ease. They are not troubled with those
cankering- cares which distract men in busy life. They are left
to enjoy their old age undisturbed. Seeking- the ' chimney-nook
of ease,' they tranquilly spend their declining years ; and, finally,
with life drawn out to its utmost span, they sink quietly to then'
rest.

Thomson.— 'Now that I know something of insurance, and am
determined on effecting a policy, my only concern is to know in
what kind of office I ought to transact the business. Can you
give me any direction on this point ?

Jojies.— It might be invidious to speak of particular offices as
preferable to others. But I can give you some general direc-
tions, which may be of service to you. You must understand
that life-assurance, like every other kind of business, is liable to
have more or less sordid views connected Math it ; and instances
are sometimes known of business being conducted on an unsound
footing, either through erroneous calculations, or with a view to
the immediate benefit of certain adventurers concerned. Gene-
rally, however, the British offices, whether proprietary or mutual,
are conducted in a way that promises perfect security to the
assured. You have heard me describe the opposite advantages
arrogated for the proprietary and mutual systems by their vari-
ous patrons. I am not disposed to go deep into that question ;
but I may state, as my own mature opinion, that mutual assur-
ance gives all desirable security, while it must make, in general,
greater returns to the assured. There is something in the object
of life-assurance so sacred in my estimation, that I dislike seeing
common commercial interests mixing themselves up with it.
Were such aid necessary, it would of course be right to have
recourse to it; but experience, I think, shows that it is not
wanted. Let men unite as brethren of one kind in this holy
duty of insuring each other against one of the greatest of cala-
mities, that of leaving a family in indigence ; and let whatever
surpluses may accrue from a successful management of the busi-
ness be divided among those alone whose benefit was primarily
contemplated. There is, I believe, a growing conviction in
favour of the mutual system, and hence we see offices of that
kind myhiplying faster than the others, while companies are every
day mixing up more and more of the surplus-dividing system
with their own, granting pohcies at certain rates, with what they
call ' participation of jJrofits.' Indeed, so strong is this move-
ment, that pure companies, especially those with high rates,
could not now maintain their ground any longer, if they did
not resort to an expedient which I am sorry to characterise as
immoral. They give commission to any one, whether a man of



LIFE-ASSURANCE.

business or a private person, who brings them customers ; thus
inducing" individuals in trust to recommend their clients to par-
ticular offices, where, perhaps, they will pay more and receive
less than elsewhere. Ignorant as most persons are of life-assur-
ance, and unable to discriminate for themselves between the
claims of contending systems, they are naturally disposed to
listen to the counsels of a friend or legal agent on the subject;
but behold, where they expect true intelligence and sound
advice, they confer with a party who is secretly under the
temptation of a bribe — for such it is — to give them the reverse ;
and it often happens, accordingly, that they are taken unsus-
pectingly to an office which gives their children, some years
after, hardly three-fourths or two-thirds of the sum which they
would realise in other quarters for the same outlay. Seeing
such results, I cannot but condemn the system as one disgrace-
ful to all parties resorting- to or profiting by it. And one strong
reason with me for preferring the mutual offices is, that, with
hardly an exception, they reject this mode of obtaining business.

Thomson. — I really feel surprised that such a practice should
exist in an age like the present. Why, it reduces educated men
to a level with cooks and butlers taking fees from tradesmen for
their masters' custom. I shall of course avoid connecting myself
with any office which acts in a way so directly contrary to good
morals. But, to pass from this subject, I should like to know
if life-assurance is taken advantage of by any large portion of
the community. To speak the truth, although the advertise-
ments of the various offices are seen everywhere, I hear of few
persons who have taken out j^olicies of life-assurance. And, for
my own part, I never till now had any clear idea of what life-
assurance meant, or what it could do.

Jones. — I thoroughly believe you. The subject is extremely
little understood by the public at large, and as yet, accordingly,
its advantages exist in vain for the g'reat mass. So lately as the
year 1839, there were only 80,000 policies of life-assurance in the
United Kingdom, many of which must have been transactions
entered into, not for the benefit of families, but in connexion
with money-raising- and security. We might therefore presume
that hardly one head of a family in a hundred had any money
assured upon his life. This gives a distressing view of the im-
providence of men with respect to their families ; but I am happy
to think that the blessings of life-assurance, as I may well call
them, are rapidly extending. One fact clearly shows this;
namely, that into Scottish offices alone, and they are but a
handful compared with the rest, no less than a million sterling is
poured every year. Such a large subtraction from the current
enjoyments of the population, for the supply of needs yet in the
remote future, speaks strongly, not merely for the increasing
wealth, but the improving civilisation of our country. It is to
be greatly wished that the benefit should spread further down in

13



LIFE-ASSURANCE.



society. As yet, it is almost confined to the upper and middle
ranks ; but there is no reason why a respectable artisan or small
tradesman should not have his family assured ag-ainst the cala-
mity of his early death as well as his richer neighbours.

Thomson. — Certainly not. But do the ordinary insurance offices
accommodate working* men ?

Jones. — They do. I believe most, if not all of them, grant
policies for £50. However, there is a class of insurance asso-
ciations more peculiarly adapted to the wants of artisans and
others with slender means, to which they can very easily resort.

Thomson. — I suppose you allude to what are called benefit
clubs, or friendly societies. From what I have heard of most of
these concerns, I should not willing-ly recommend any man to
trust his money in their hands.

Jones. — That is too sweeping* a condemnation. There are, no
doubt, many g-ot up on erroneous principles, and perhaps some
are conducted by desig-ning* individuals for their own ends ; but
there are likewise several established and managed on principles
as sound as those of respectable insurance companies.

Thomson. — Name one of these if you please, and let me know
something- of its details. I take an interest in everything bearing
on the welfare of the working-classes.

Jones. — The one I happen to be best acquainted with is the
Edinburgh School of Arts' Friendly Society, established about six-
teen years ago. This society, although originating with certain
of the members of and friends to the School of Arts (a species of
mechanics' institution), and taking its name, is not otherwise
connected with that institution, but is open to all persons, male
and female, residing in Edinburgh. It has three separate funds
or schemes — namely, a Sickness Fund, Deferred Annuity Fund,
and a Life-Assurance Fund. One share of the sickness fund
entitles the member during sickness to 10s. a-week for 52 weeks,
7s. 6d. a-week for other 52 weeks, and 5s. a-week for all future
period of sickness until the age of 60 or 65, according to the age
of superannuation fixed at entry; thereafter, his contributions
cease, and he enters to the enjoyment of the Deferred Annuity
Fund, one share of which entitles the member to an annuity of
L.8 a-year, commencing at the age of 60 or 65, as fixed at his
entry. One share of the Life-Assurance Fund is a sum of L.IO
payable at the member's death. In this case, as in others, the
contributions cease at the age of 60 or 65. The rates are calculated
from the Highland Society's sickness table, increased by 50 per
cent., which in this case may be considered as sufficient (seeing
that only sound healthy men are admitted), and a mortality table
compounded of the Northampton, Carlisle, and Swedish, assuming



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