ABSTRACT
THE profits of a life insurance company must arise from one of two sources. The average mortality of the assured must be less than that given in the tables on which the operations of the society are based, or the investments of the company must be more productive than is estimated in the calculation of the premiums. Both of these sources of profit doubtless exist. Even the Carlisle tables, which give the expectation of life much greater than the Northampton, do not make it as large as the experience of the companies would authorize. This may not arise from a smaller rate of mortality in our country, but from the fact that the lives are not taken at random, but carefully selected, free from hereditary diseases, and, at the time of insurance, from any diseases that would tend to shorten life. So also with the other item of profit. In calculating the premiums, 4 per cent is estimated as the rate of interest, while the actual nett interest, after paying the ordinary expenses of the company, will often exceed 5 per cent, especially where the investments are large, and well managed.
