The Bay State Monthly, Volume 3, No. 5 | Page 7

its opponents, anything inherent in the system that fore-dooms it to early and inevitable collapse.
Assessment insurance is natural insurance as against artificial. In the early establishment of life insurance companies, everything was assumption, there was little or no experience to guide in formulating the principles upon which the business should be conducted. There was partial information, it is true, upon certain general facts pertaining to longevity or to mortality laws, under certain conditions, but nothing that could give substantial data upon which to base mathematical calculations for the establishment of a science. Under those conditions, rates of premium were fixed for insurance at the different ages which the experience of many years has shown to be very much higher than is required to meet reasonable expenses, and losses occurring from policies maturing by death.
A rate of mortality was assumed greater than experience has shown to prevail among well selected lives. The important element of lapses was not considered, an element so considerable in its practical bearing upon the requirements of the company to meet its liabilities, that of one million of assumed liabilities upon say one thousand lives, only about $77.000 become actual liabilities by reason of policies maturing by death of the insured.
Assessment insurance instructed by the experience of life companies, adjusts its plans and methods upon the natural basis of fact, and not the artificial one of supposition. It tabulates its rates according to the combined experience of all American companies, requiring the insured to pay a sum proportionate to the amount assured, and to his life expectancy.
It places its risks upon carefully selected lives only, requiring a competent medical examination of the applicant, having regard to his previous health and habits, his occupation or profession, his family history, and such other circumstances as should properly be considered in calculating probable longevity.
We assert without fear, that we shall be successfully controverted, that there is as great care and discrimination exercised in the placing of risks by our representation assessment companies, as in any other form of insurance. Time was when this claim could not have been supported by facts, but that time is not now. Our conservative assessment companies,--and there are many of them that can be fairly so styled, ignore none of the scientific principles upon which life insurance depends for its permanent success. They do believe however that their methods of conducting the business will conserve the interests of a far greater number, and relieve them of a large proportion of the burdens imposed by the older and more cumbersome form.
Assessment companies call upon their policy-holders for such sums as are required to meet actual losses, together with a small amount for expenses and for an emergency fund. Mortuary assessments are called only when there is an amount in hand on that account, insufficient to meet the maximum sum for which a policy is issued. They may be called at stated periods, or as the exigencies of the case shall require. Objection is made to this method that it is unreliable, and cannot be depended upon when the mortality is from any cause unusual or excessive.
It is not claimed by the best informed advocates of assessment insurance, that direct assessments should be the sole reliance of the company. Some other provision should be made which is referred to later in this article, but the main dependence is upon assessments.
If companies are honestly and capably conducted, and risks judiciously selected, there is nothing in the experience of life companies to indicate that mortality assessments on the average will be sufficiently burdensome to seriously threaten the permanence of the institution. Where disaster has been visited upon assessment companies, the cause has been easily traceable to incompetent or dishonest conduct of the business, and utter disregard of the foundation principles of all insurance. It has in no instance been fairly chargeable to defects in the system. With the record before us of our best assessment companies, faithfully and competently administered, paying their losses promptly, at a cost to the insured for a term of years, of one third to one half only, of that in level premium companies, what reason is there for the insuring public withdrawing their patronage.
But we admit that it is not sound policy to depend upon assessments alone, and this view is held by most if not all, who have studied the subject in its various aspects. While for many years, and perhaps indefinitely, a company might be successfully conducted, if under a competent management, depending solely upon assessments, yet contingencies arc liable to arise in which it will be evident that true conservatism and wise forethought would have held in hand some funds for use without imposing, at that particular time, the burden of an assessment upon the policy holders.
The advocates of such conservatism