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On the American Tontine and Mutual Assessment Schemes

Published online by Cambridge University Press:  18 August 2016

Henry William Manly
Affiliation:
Mutual Life Assurance Society, and Institute of Actuaries

Extract

Mr. T. B. Sprague, in his opening address delivered on the 30th November 1885, when he was President of this Institute, treated, in his usually full and exhaustive' manner, of the various theoretical doctrines current respecting Life Assurance. One of these, he said, “ seems to me to proceed upon the idea that life “ insurance is exclusively a contract of indemnity, the object of “ which is to indemnify the family of the life assured against the “ loss they will suffer if he should die prematurely, and be deprived “ of the opportunity he might otherwise have had of saving money “ and making a provision for those dependent upon him. Looking “ at the matter more practically, it may be held that life insurance “ is also a species of investment; in fact, that an ordinary life “ insurance policy contains elements both of indemnity and of “ investment. … If an indemnity only were desired, life “ insurance should logically cease at the age when the need for the “ indemnity has ceast; that is to say, when a man's working years “ are past, and he is no longer in a position to earn money by “ following his trade or profession. In fact, the logical conclusion is that all insurances should be term insurances expiring at “ about the age of 65.

Type
Research Article
Copyright
Copyright © Institute and Faculty of Actuaries 1887

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References

page 185 note * In order to transact business in this country the companies found it necessary to allow the usual thirty days' grace; but one of them has a provision that if advantage is taken of the days of grace “a fine at the rate of 10 per-cent per annum shall be paid to the company for the time deferred.”