7. Mortality record.—In the first five years of insured lives, there is and may reasonably be expected to be, and ought to be in fact, a much lower mortality record than exists among the pop ulation generally. When an assessment association begins, the assessment may for a while run fairly low but, in due course, there will be an increasing death rate among the members and the assessment must steadily increase if the promised benefits are to be paid. It is impossible to provide life insurance with a definite payment to the beneficiary except in two ways. One, to make the provision on the old line principle, which establishes under actuarial tables the proper charge to be made each year for the policy issued. The other way is to increase the payment as the insured life grows older. Unfortunately, of course, that is precisely the time of life when fewer persons are able to meet the increased obligations.
There has been compiled what is known as the Na tional Fraternal Congress Table, based on the expe rience of the fraternal societies. The difficulty with this table is not a lack of accuracy, but that its intro duction in any existing society means a higher rate of assessment. This results usually in a loss of the mem bership sufficient to cause the society to pass away or to so reduce its membership as to bring it to an end.
8. Fraternal insurance.—Closely allied to the as sessment form is fraternal insurance, tho greater em phasis is placed on other benefits to be derived from the association. Some fraternal orders have a mem bership of over a million and it is estimated that the total membership of the various fraternal societies is not far from eight million persons. Like the busi ness assessment companies, they have had difficulty in placing their affairs on an actuarial basis because they started with the same fallacious ideas concerning the law of mortality. Yet these two forms of insur ance have probably done a very large educational work in regard to the value of insurance. The income of these societies at the present time is approximately one hundred millions of dollars. The reserves car ried are comparatively small because the principle of such organizations is that the money should be col lected when needed and not piled up in the form of vast reserves. This sounds reasonable, but it bears heavily upon the members as they grow older. With increasing assessments the older members are too frequently obliged to drop out and give up their insurance just at the time of life when they most need it.
9. Industrial life insurance.—Insurance for the masses rather than for the classes, or the more care fully selected lives of the old-line companies is the claim of what is known as industrial life insurance. It is conducted on proper actuarial principles, but the very nature of the problem makes it necessary to de vise special means for transacting the business. This form of insurance appears to have originated in Eng land in 1854, when the Prudential Assurance Com pany of London commenced to issue what is called industrial policies, in connection with the ordinary business of life insurance, which it was then trans acting. To this company is due the credit for estab lishing this very important branch of business on the solid foundation which it now enjoys. Its importance
in Great Britain dan be appreciated when we recall that something like twenty million individuals are in sured in the policies issued by this company.
10. Industrial life insurance in the United States.— In this country industrial life insurance is due to the late John F. Dryden of New Jersey. The first in dustrial policies were sold in the year 1875 in Newark, N. J. The company issuing them changed to the present name, The Prudential Insurance Co. of Amer ica in 1877. The principal companies engaged in the business are the Metropolitan, The John Han cock, Columbian, which, with the Prudential, transact probably not far from 90 per cent of this form of busi ness in the United States, altho there are some twen ty-five companies that issue such policies. Approxi mately seventy million lives thruout the world are now protected by policies of this kind, over twenty-four millions of these policies being in the United States.
What are the essential features of this form of in surance? (1) Policies are issued for small amounts, at the utmost not exceeding $500 and ranging down ward, from that sum, to an infant life of not more than $10. (2) Premiums are multiples of five cents. (3) Premiums are payable weekly and are collected by the agent calling at the house. (4) Insurance is pro vided for the whole family.
Some of the methods of this form of insurance may be briefly noted. (1) If death occurs during the first six months of a policy, only one-half of the amount of insurance is usually paid; (2) there is a period of grace, the same as in the case of other policies; (3) the policies are usually incontestable one year after dates; (4) the policies may be converted in due course and at the proper age into ordinary policies; (5) there is the usual clause against naval and military occupa tion; (6) there is a cash surrender value as in the case of the ordinary policies; and (7) endowment policies as well as life policies are provided for.
11. Industrial premiums run from three cents, five, ten, fifteen, twenty, twenty-five, and so on. In one company the highest amount that can be insured for is $996 at the age of twenty-eight, the premium being sixty cents a week. At age ten, a weekly premium of five cents is charged, the amount payable if the policy has been six months, in force, is $150. At age twenty the amount payable is $105. At age thirty it is $79. The companies now provide that if one attains the age of seventy-five the insur ance is continued in force but the payment ceases. Regarding the future of industrial insurance Mr. Frederick L. Hoffman says : Industrial insurance is now a thoroly well established method of family protection, intelligently adjusted to the needs and conditions of wage earners and their dependents. In the natural evolution of the business constant progress is being made and every year improved or new features are introduced into the policy contract, or in the relations of the companies to their policy holders, which shows the people that in years to come industrial insurance will serve a still larger social and economic purpose than at the present day.