The Economy of Insurance I Tis g enerally known that most contin g encies,

the happening of which would involve a pecuniary loss, can be partly or wholly provided against by an insurance policy. It is very remarkable on looking through the list of risks covered by an Inturance Company, in all its various Departments to note the extent to which the principles of insurance have of recent years been developed. In many cases, unfortunately, this is only realized when an actual loss has arisen, and whether such loss is the death of a person on whom someone is dependent, - a fire, the loss of documcnts,an accident, or other mishap,. an appeal for sympathy is met invariably by the question, - " Why were you not insured ? " There seems to be a mistaken notion that insurance is only applicable to large property owners and to moneyed people, or possibly the admitted under-insurance in this country is due to the post-war inclination to spend all ready money, risk losses, and leave the future to take care of itself. " To-morrow will always • be as this day and much more abundant " is the vain assurance of many. Even in regard to Fire Insurance, few people could sleep comfortably if they thought their property was riot • insured, but few trouble as to whether it is fully insured in the light of-present day values and cost of replacement. • Incidentally, it may be mentioned that it is quite a good - plan in the' case of Fire Insurance on private dwelling houses or their contents, not to run the risk of overlooking the renewal of any particular policy, but to pay a single premium in advance for six or seven years at a time, as most offices will allow a substantial rebate. For example,- six premiums down will be accepted for seven years' cover, a rebate which can be shown to be equal to 51 per cent. compound interest, the present value of a level sum per annum for seven years at 51 per cent. compound interest being just six times that sum. In the matter of Accident Insurance the public arc pretty well versed, although there is unfortunately a definite tendency to rely solely on the cover provided by certain daily and weekly- periodicals, diary coupons, and the like. A comparison of the cover offered by this type of insurance as compared with the wide benefits provided by an up-to-date ." All Sickness and Diseases Policy ", should at least remove the impression that the benefits offered by such accident coupons provide all that is necessary in securing oneself against loss of income in the case of accident, disease or illness. It - is, however, more in regard to Life Assurance that people in this country are under-insured, especially the so-called middle classes: It -is surprising to note that less than 5 per cent. of the Estates, the returns of which go through the -Death Duties Department,. are represented by Life Policies, yet this is the most simple and effective way of providing an estate, or of converting income into capital, or indeed of investing small savings. Experience has proved to executors and others that an unencumbered Life Policy is more quickly realized after Probate is granted than any other form of security. It is interesting to note from a paper recently read by Mr. D. Caradog Jones, before the Royal Statistical Society, that he estimates the expenditure on Insurance of a particular sample of middle class family at 5i per cent. of the total annual expenditure, as against 11 per cent. spent on clothing and 9.5 per cent. spent on holidays, clubs and recreation.

The percentage of income up to which the Government will allow an income tax rebate in respect of Life Assur- ance premiums is fixed by them at one-sixth, or over 16 per cent., a percentage which was no doubt determined with due regard to the financial protection against death only provided by Life Assurance, which the average- man should carry. This percentage was fixed many years ago when salaries and wages were probably not so large as they are to-day. The position with most people is that the question of Life Assurance is put off too late either until something has happened to prevent them being insurable, or because they imagine the cost compared to income to be too heavy.

The following table gives the amount of Life Assurance which a premium of £10 per annum will secure at various ages under a Whole Life Policy, and it shows clearly the loss in amount resulting from delay.

A premium of £10 per annum will secure a whole Life Assurance Policy if effected at :- Age 1 of £1,427* 3 of 1,315* *Num. —In the case of ages under 21 the

7 of 1,116* assurance commences from age 21, what- 11 of 940* ever the state of health or occupation of 20 of 690 the child may then be. In the event of 25 of 606 earlier death all premiums are returned, 30 of 530 and at 21 the policy can be continued 40 of 385 at the same amount or changed to an En- _ 50 of 263 dowment Assurance.

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This table is remarkable in that it brings out the fact that if (when his child is an infant) a parent would only set aside a small premium such that he can reasonably expect his child to continue after the age of 21, he will thereby reduce the cost of insurance to that child by over 50 per cent., and at the same time he is really insuring him against becoming uninsurable from any reason whatever.

The objection to life insurance, that it is costly, is not a fair one. Although the price of most other commodities has risen in value since the war the cost of Life Assurance has dropped by about 5 per cent. to 71 per cent. Again the difficulty to many persons of a yearly premium is now met by a system of easy payments on a Monthly Premium basis.

Ten to fifteen years ago in order to spread premiums over a year one had to effect twelve policies at intervals of a month, or alternatively pay an extra of 10 per -cent. To-day, however, almost every Life office brings Life Assurance within the pockets of • all by agreeing to accept annual premiums by monthly. or quarterly instalments, which can be paid conveniently by- means of a banker's order. No extra is charged for this facility, which has the effect of synchronizing life premiums with salaries..

Another factor which may contribute to less Life Assurance being effected than one should carry, is the preference given by small investors to Stock Exchange investments, on the off-chance that a rise in price will enable a profit to be secured, and one which will not be subject to income tax, but surely speculation in this direction should be postponed until the fullest • possible provision has been made for the continuance of income in the event of death. - Incidentally it must not be overlooked that quite satisfactory yields can be obtained from a Life Policy, if due allowance is made for income tax rebate of 10 per cent. to which Life Assurance Pre- miums are subject. Although the appreciation in the value of a Life Policy may not be so great as some industrial speculative securities sometimes yield, the risk of depreciation in the face value of a Life Policy is almost negative, and indeed, Participating Life Policies have shown " appreciations " far in excess of any results that could have been realized over a length of time by pure investment. To those with " locked up " investments which they do not wish to, or cannot, deal with, Life Assurance affords quite a useful method of utilizing the income, in order to increase capital without in any way changing the investment. The income therefrom should be invested in a fairly lengthy term Life Policy. Assuming, for example, one has £1,000 invested, yielding 5 per cent. (or £40 per annum net of tax), this will secure at most ages £1,000 payable at the end of 18 years, or £500 in the event of earlier death. The net result is that the income from the original investment doubles the original capital if the investor lives 18 years, and in the event of earlier death will have improved his estate by £500. This is an example of a Double Endowment Policy, the premium for which, less rebate of tax, is covered by the net yield of the original investment. This form of policy is one of the best for the reinvestment of com- paratively small amounts such as dividends, which in all probability otherwise would be frittered away.- It is the wastage of small sums which is at -the bottom of post-war extravagance of to-day ; sums which although small and considered trifling can be converted by means of a Life Assurance Policy into a valuable estate. The large individual capitalist is going, if not already gone—the future of the Empire is dependent upon the small man's savings, and the greater the stake each individual has in the country the greater the chance of peace prevailing, as his vote will naturally -be against war or any form of evolution which may endanger or depreciate his savings.

• The following example shows -the capital created by the Mere saving of is. a day, and should suffice to establish the fact that Life Assurance is a valuable and systematic form of thrift.

One Shilling a day (say £18 per annum) will provide

000 or more (according to age-) at death, sufficient to- meet the Death Duties on an estate of £12,M00. or £500 at the end of 25 years or on death if within that period. or £50 per annum for 5 'years for educational' puipottes, corn- ' mencing in any event in 12 years time—no premiums being

required if the parent should die in the, meantime.

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One of the most valuable personal services whieb can be rendered to another, and one which often brings its own reward, is to press home the advantages of Life Assurance. No other method is available to the small man by which he can gradually increase his_independence and credit and yet give his family a " first line of defence " against early death and himself an ever • increasing savings fund. The big man, by Life Assurance, can and does anticipate Death Duties, spreading this tax over life and at the same time saving income tax. In. connexion with business transactions a Life Policy. is. a, collateral security second to none,. which a,ny, banker will accept. By Life Assurance one's future, obligations and responsi- bilities, whether likely to arise at death or during,old age, or even in connexion with education of 'children, can be met, as it were, " on the instalment principlet. but unfortunately with many, "where there is greatest need there is often the least provision." ,

HAROLD DOUGHARTY.