Participation in Profits and Non-Participation.

Another theoretical view, which is, perhaps, only a development of the one last mentioned, finds expression in the opinion I have sometimes heard put forward—that it is an anomaly, if not an absurdity, for any person to effect a life policy with participation in profits, and that the more reasonable and in every way preferable course is in all cases to effect a non-participating policy. However logically this conclusion may follow from the premises adopted by the persons who hold it, as to which I am scarcely in a page 6 position to speak, it must be admitted that it takes no regard of the fact that the share of the surplus allotted to participating policies is, in almost all cases, of greater value and of greater advantage to the policyholders than the difference between the participating and non-participating rates of the premium. Whatever weight the above-mentioned doctrine may be entitled to carry with persons intending to insure, the manager of a life office should not allow himself to be influenced by it; and if he does adopt and act upon it, the interests of his office will be likely to suffer. It is his business to accommodate the regulations of his office to the wishes of his customers; and as there can be no doubt that the majority of these prefer to insure with profits, he will be quite right to give the greatest prominence to the regulations as to this class of insurances. As far as I understand the doctrine I have just referred to, it 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. The element of indemnity is required, as just mentioned, to insure against the risks of premature death. If a man were sure that he would live to, say, sixty-five, there would be little, if any inducement for him to insure at all, for it would be a simple matter to calculate how much he must save and invest each year in order to make what he considers a suitable provision for his own old age and for the wants of those dependent upon him; but observation and experience render it certain that all men will not live to be sixty-five, and it is impossible to say who will live and who will die prematurely.