PREFACE

The preliminary term method of valuation is so well known that it is unnecessary to describe it. Among the various modifications of this method, the standard en-acted by the legislature of Illinois is accepted by actuaries and department officials as well adapted to the needs of life insurance companies organized within the past few decades. This standard is as follows:

Ordinary life, and limited payment life policies with premiums payable for twenty years or longer—preliminary term.

Limited payment life policies with premiums payable for a shorter period than twenty years, and all endowment policies—preliminary term for as much of the first year's premium* as is not in excess of the twenty payment life premium for the same age. (It follows that long term endowment policies, such as endowments maturing at the age of 65 or 70, may be written at the younger ages on the full preliminary term basis.)

The following cost-of-insurance tables on the Illinois standard, hitherto not available, meet a growing demand for accurate computations in determining the expected mortality as required in the annual statement blanks, and also in computing annual dividends.

The figures contained herein have been computed care-fully and have been rechecked by a second formula to assure accuracy.

The cost of insurance of the ordinary life monthly in-come policy, as contained herein, is computed for the first twenty years only. The cost for later years can be obtained from j'Principles and Practice of Life Insurance. For example: To obtain the cost of insurance the 25th year of an ordinary life monthly income policy (commuted value $1,754.00) full preliminary term, issued at age 35, multiply the cost of insurance the 24th year of a $1,000 ordinary life policy (net level premium reserve basis) issued at age 36 ($14.83—page 243, Eighth Edition, tPrinciples and Practice of Life Insurance) by the factor 1.754. This gives $26.011 as the cost of insurance the 25th year. This latter method of obtaining the cost may also be used for obtaining the cost during the first twenty years.

To obtain the cost of insurance of a paid-up monthly income policy (commuted value $1,754.00) multiply the cost of insurance of a paid-up policy for $1,000.00 by the factor 1.754.

Madison, Wisconsin.   N. J. FREY. April, 1915.

*Premium as used in this preface refers to net premium. tPublishcd by The Spectator Company, New York.