IV. In virtue of INSURANCE for Lives

IV. In virtue of INSURANCE for Lives, when the person dies, a sum of money becomes payable to the person on whose behalf the policy of insurance was granted. One of the principal insurance-offices of this kind is that of the Amicable Society for a perpetual insurance, kept in Serjeant's-inn, Fleet street, London.

This society at Serjeant's-inn requires an annual payment of 5l. from every member during life, payable quarterly. The whole annual income hence arising is equally divided among the nominees, or heirs, of such members as die every year; and this renders the dividends among the nominees in different years, more or less, according to the number of members who have happened to die in those years. But this

society engages that the dividends shall not be less than 150l. to each claimant, though they may be more. None are admitted whose ages are greater than 45, or less than 12; nor is there any difference of contribution allowed on account of difference of age.—This society has subsisted ever since 1706, and its credit and usefulness are well established. Its plan, however, is liable to several objections. First, it is evident, that regulating the dividends among the nominees, by the number of members who die every year, is not equitable; because it makes the benefit which a member is to receive to depend, not on the value of his contribution, but on a contingency; that is, the number of members that shall happen to die the same year with him. Secondly, its requiring the same payments from all persons under 45, is also not equitable; for the payment of a person admitted at 12 ought not to be more than half the payment of a person admitted at 45. Thirdly, its plan is so narrow, as to confine its usefulness too much. It can be of no service to any person whose age exceeds 45. It is likewise by no means properly adapted to the circumstances of persons who want to make assurances on their lives for only one year, or a short term of years. For example: the true value of the assurance of 150l. for five years, on the life of a person whose age is 39, may be found, by the first rule, to be nearly three guineas per annum, supposing interest at 3 per cent. and the probabilities of the duration of human life, as they are given in Dr Halley's Table of Observations. But such an assurance could not be made in this society without an annual payment of 5l. Neither is the plan of this society at all adapted to the circumstances of persons who want to make assurances on particular survivorships. For example: a person possessed of an estate or salary, which must be lost with his life, has a person dependent upon him, for whom he desires to secure a sum of money payable at his death. But he desires this only as a security against the danger of his dying first, and leaving a wife, or a parent, without support. In these circumstances he enters himself into this society; and, by an annual payment of 5l. entitles his nominee at his death to 150l. In a few years, perhaps, his nominee happens to die; and having then lost the advantages he had in view, he determines to forfeit his former payments, and to withdraw from the society. The right method, in this case, would have been to have taken from such a person the true value of the sum assured, "on the supposition of non-payment, provided he should survive." In this way he would have chosen to contract with the society: and had he done this, he would have paid for the assurance (supposing interest at 3 per cent. his age 30, the age of his nominee 30, and the values of lives as given by M. de Moivre) 3l. 8s. in annual payments, to begin immediately, and to be continued during the joint duration of his own life, and the life of his nominee.

The Equitable Society for Assurances on Lives and Survivorships, which meets at Blackfriars Bridge, is one of the most important of the kind. It was established in the year 1762, in consequence of proposals made, and lectures recommending the design, which had been read by Mr Dodson, author of the Mathematical Repository. It assures any sums, or reversionary annuities, on any life or lives, for any number of years, as well as for the whole continuance of the lives; and

in any manner that may be best adapted to the views of the persons assured. For instance, any persons who depend on incomes which must be lost when they die, or who are only tenants for life in estates, may, if they want to borrow money, be enabled to give sufficient security, by assuring such sums as they want to borrow, and assigning the policy. In the same way clergymen, and others who hold places of profit, having families whose subsistence depends on the continuance of their lives; such as enjoy annuities for the lives of others; any person entitled to an estate, legacy, &c. after another person, provided he survives; husbands may provide annuities for their wives, if they leave them widows; parents may, by assuring the lives of their children, when infants, till they attain a given age, secure for them, should they live till that age, sums necessary for apprenticeships, &c.; persons apprehensive of being left without support in old age, may here purchase annuities, if willing to wait for the commencement of the payment of these till they are 55 or 60 years of age.

In fine, there are no kinds of assurances on lives and survivorships, which this society does not make, following the rules given by the best mathematical writers on life annuities, particularly Mr Simson's. In order to gain such a profit as may render it a permanent benefit to the public, and enable it to bear the expences of management, it takes the advantage of making its calculations at so low an interest as 3 per cent. and from tables of the probabilities and values of lives in London, where, as in all great towns, the rate of human mortality is much greater than it is in common among mankind.

This society, finding in the month of June 1777, that their affairs were in a flourishing condition, came to a resolution to reduce their annual premiums one-tenth; and they adopted new tables in the year 1782, founded on the probabilities of life at Northampton, instead of those which were framed from the London bills of mortality. It was afterwards thought proper to make an addition, for greater security, of 15 per cent. to the true value of the assurances, as calculated from the table of mortality at Northampton. To make a suitable recompense to the assured for the payments they had formerly made, which had been greater than the new rates required, an addition of 11. 10s. was made to their claims for every premium they had paid. The result of this measure was, that in 1785 the business of the society was nearly doubled, the sums assured amounting to 720,000l. In consequence of a minute investigation, the society took off the 15 per cent. charged on premiums in 1782, and added 11. per cent. more to the assured's claims, for every payment made before the 1st of January 1786. Business still increasing, they made another addition of 11. per cent. in 1791; and in the subsequent year a farther addition of 21. per cent. by which the claims of such as assured in 1770 came to be more than doubled, and those of a prior date were still higher. By such integrity and consequent increase of business, the sums assured amounted, on the 31st of December 1792, to the astonishing sum of three millions sterling; and exactly three years after, they amounted to about one million more.

The rates of assurance, as reduced to their real values in 1786, according to which all business is now transacted, are the following.

The other offices in London for the assurances of lives are,

The Royal Exchange Assurance, which was empowered to assure lives by virtue of its second charter, bearing date the 29th of April 1721; the Westminster Society was established in 1792, for assuring lives and annuities; and the Pelican Life Office was instituted in 1797, which makes a new species of assurance, by way of endowment for daughters, when they have attained the age of 21 years.

RE-INSURANCE is a second contract, made by any insurer, to transfer the risk he has engaged for to another. It is in general forbidden by 19 Geo. II. c. 37. but is permitted to the representatives of an insurer in case of his death, or his assignees in case of his bankruptcy; and it must be mentioned in the policy that it is a re-insurance.