On applying the foregoing ratios to the business of the existing companies we find that, calling the theoretical expenses $100, the actual expenditures for 1889 were as follows:  $112.67, $118.34, $150.40, $194.48, $208.16, $208.53, $228.66, $235.89, $248.44, $250.79, $258.33, $258.57, $265.14, $267.19, $267.92, $274.47, $294.17, $314.96, $335.70, $377.94, $616.70.

In this discouraging exhibit there is one ray of comfort.  The combined assets of the two companies heading the list amount to over $100,000,000.  There is no question as to their financial standing, and both show a large increase in membership over the previous year.  I may also say here that it is a difficult matter to get at the actual “cost of insurance” in the various companies.  Many of them, on their own acknowledgment, do not compute the advance cost of carrying their “amount at risk,” and others, for reasons of their own, do not care to state the figures.  In cases where the correct figures were not obtainable, I have assumed the cost to have been 1-1/3 per cent. of the mean amount at risk.

If we should, in our comparison, omit the actual agency expenses and commissions, the ratios would stand as follows: 

Where I would allow $100 the companies actually used:  $43.17, $55.90, $65.21, $77.21, $82.39, $88.34, $91.99. $91.98. $92.19, $94.65, $97.15. $99.55. $99.11. $102.86, $109.35, $125.05, $133.03, $141.92, $195.90, $207.06, $287.72.

As might be supposed, the first two ratios are those companies before alluded to.  These companies might have doubled their advertising account and expended $300,000 between them on agents’ salaries, and still have kept within my allowance.

Admitting, for the present at least, the reasonableness of the proposed allowance for the expenses of the banking and insurance departments of the business, we have before us the problem how to equitably adjust the burden among the great variety of policies.

In the first place, there should be no policy in the company that does not contribute its proportionate share of the expense allowance during every year of its life.  I make a special point of this, for at present the policies which have become paid up, either by the payment of a single premium at the outset or by the completion of a stipulated number of payments, contribute practically nothing to the expense account after the premium payments cease.

The following plan, I think, complies with all the requirements of the problem.  By the proposed method every policy, at all stages of its existence, contributes its exact share to the expense fund, whatever its plan of payment may be.

Let us, as an illustration, examine the case of a ten year endowment policy, taken out at age 30, and consider it under three aspects, first, as paid for in advance by a single payment, second, as paid by five annual payments, and third, as paid for annually throughout the term.  I have used this short term endowment policy simply for convenience, the rule applying equally to policies of longer term or to the ordinary life policy, which is, in fact, an endowment policy payable at death or age 100.[1]