0344 | 9.8430 | 9.8430 |
------------+----------+-----------+--------+---------+
The present value of the ten yearly expense items given in the "total"
column above is $46.6812, which is equal to a ten-year annuity of
$5.534. The several premiums stand now as follows:
ENDOWMENT: $1,000, AGE 30, PAYABLE AT DEATH OR 40
Net Prem.[2] Margin. Total.
At single premium. $687.228 $71.6394 $758.8674
At five premiums. 150.615 12.9769 163.5939
At annual premiums. 84.172 5.5340 89.7060
[Footnote 2: Thirty American offices. Discount from middle of year,
Vx-1/2 or (M x 1.01961) / Dx.]
By the actuaries' rate we have, with the customary loading for
expense:
Single premium: $721.66 (loaded, $34.36). Five premiums, $188.70
(loaded $37.78). Annual premium, $105.65 (loaded $21.11).
Admitting the correctness of the new method, we must conclude that the
present single premium is not sufficiently loaded to cover its own
expenses, while the annual payment policy pays more than its just
share. A prominent and thoroughly informed life insurance president
says in this connection: "Many of the policies, particularly the short
term endowments, are charged with too high a percentage of expenses to
prove a good investment at maturity or profitable to the insured in
case of surrender.
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