You are reading a page from Life Insurance as a Life Work, by Hugh Hart
(1926)
Part of the American Term Life Insurance History Project
Term Life Insurance
CHAPTER VII
THE OPPORTUNITY TO DO GOOD
No man has come to true greatness who has not felt,
in some degree, that his life belongs to his race; and
that what God has given him he has given him for
mankind.—PHILLIPS BROOKS.
Can you serve your fellow men in the
vocation of life underwriting ? If so, how ?
These are quite proper questions to ask.
Two of the worst faults of the American
people are improvidence and extravagance.
We are inclined to think only of to-day, and
to let to-morrow take care of itself. As a
consequence, we spend our substance as we
go along. We fail to lay up a reserve for
the time of adversity that, sooner or later,
comes upon most people. Improvidence
breeds extravagance, and extravagance
breeds improvidence. The two characteris-
tics lead to an immeasurable amount of un-
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THE OPPORTUNITY TO DO GOOD
happiness and disaster. How are we to
combat these evil traits %
Life insurance is the most practical
method that man's ingenuity has devised
with which to cure improvidence and con-
quer extravagance. Thrift is no easily ac-
quired habit. Most of us must be backed
up by a system which braces our will to set
aside a portion of our income for the con-
tingencies of the future. Life insurance
provides that system. The fact that pre-
miums fall due at stated periods, that we
are notified not only once, but many times
by the insurance company, and that every
reasonable credit facility is placed at our
disposal by the company to aid us in paying
these premiums, serves to promote habits of
providence and thrift. There is a form of
compulsion about this system which makes
us carry out the contracts we have under-
taken.
The persistence of life insurance policies
is far greater than that of savings accounts.
It has been stated that only two per cent. of
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LIFE INSURANCE AS A LIFE WORK
the savings accounts once started are intact
after ten years, -whereas some life insurance
companies keep their lapse ratios well be-
low five per cent. after the policies have been
in force for three years. The factor of ab-
solute safety, which distinguishes life insur-
ance among all classes of securities, enables
the policyholder to proceed with absolute
confidence toward the financial goal he has
set out to attain.
Is it not a worthy purpose to wage war
on improvidence and extravagance'?
The Insurance Field quotes the follow-
ing illuminating table from the Statistical
Exhibit of the Northwestern National Life
of Minneapolis, Minn.
The Living American's Dollar Whither it Goes
Food ....................... 32(1
Eent .................................... 15.3
Clothing ................................. 13.3
Savings .................................. 12.
Miscellaneous ...................... 9.
Recreation ............................... 4.6
Fuel and Light .......................... 4.3
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THE OPPORTUNITY TO DO GOOD
Furniture & General Supplies .............. 2.5
Medical ........................1.......... 2.3
Charity ................................. .9
Reading Matter .......................... .8
Life Insurance ........................... 3.
1 00((
The Dead American's Dollar Whence it Comes
All other sources ......................... 13((
Insurance ................................ 87^
1 00^
Only three per cent. of the nation's in-
come is spent for insurance, but from that
three per cent. comes eighty-seven per cent.
of all that remains at death. Since this
eighty-seven per cent. is traceable directly
to the efforts of life insurance salesmen, we
may review the purposes for which it is
used:
(a) Protecting dependents.
(b) Educating children.
(c) Sustaining organizations after
brains, ability, or capital have
been withdrawn through death.
(d) Keeping estates intact.
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LIFE INSURANCE AS A LIFE WORK
The chief function of life insurance has
always been, and probably always will be,
to replace the earning power of the chief
support of the family. That is, it can step
into a man's shoes financially and carry out
the plans which the man would have carried
out if he had lived. For example, every
man plans to meet the current bills, month
by month, from his earnings, but, if his
earning power is cut short through death,
only through life insurance, in many cases,
can these bills be met. Likewise, only
through life insurance can many a man
make sure that his family will not fall heir
to a mortgage rather than a home.
It is not difficult in almost any community
to find cases where even a small amount of
life insurance would have .made the differ-
ence between happy independence and un-
happy dependence; instances where the
mother of the family could have remained
at home with her children instead of having
to help support the children if enough in-
come had been provided through life insur-
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LIFE INSURANCE AS A LIFE WORK
ance to enable her to pay the rent, or if a
life insurance policy had enabled her to pay
off the mortgage, leaving the home free and
clear.
A chart1 contained in a recent study of
the "Aged Clients of Boston Social Agen-
cies," brings out the fact that frequently
only a small additional income will provide
subsistence, and we realize that, in many
cases, the only way in which a man can pro-
vide this income is through life insurance.
The following table shows the figures on
which the chart is based:
Clients receiving specified weekly grants
Total Men Women
Num- Per Num- Per Num- Per
Amount of aid per week ber cent. her cent. her__cent.
Total .......... 592 100.0 188 100.0 401 100.0
Less than $2 ............ 35 5.9 12 6.4 23 5.7
$ 2 and less than $ 4 .141 23.8 33 17.6 108 26.7
$ 4 and less than 6 . 128 21.3 44 23.4 82 20.3
$ 6 and less than 8 . 119 20.1 28 14.9 91 22.5
¥ 8 and less than 10 . 81 13.7 26 13.8 55 13.6
$10 and less than 12 . 49 8.3 26 13.8 23 5.7
$12 and more .......... 41 6.9 19 10.1 22 5.5
From these figures, we see, for example,
that 213 of the 404 women needing chari-
1 Report Number III, Aged Clients of Boston Social
Agencies, by Co-operative Social Research of Boston Council
of Social Agencies, Simmons College School of Social Work
and the Women's Educational and Industrial Union.
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THE OPPORTUNITY TO DO GOOD
ible aid received less than six dollars a
eek. It requires little effort, therefore, to
Isualize the benefits of life insurance policy
hich would provide a life income of only
25 a month.
The preface of this survey, however,
lakes the following significant statement:
The results of this study prove that the
isks of being left without the means of
leeting the economic helplessness or ex-
ensive illness of old age are not confined to
tie workers with low earning capacity, but
re shared by persons in all ranks of so-
iety."
In view of the fact that such a large per-
entage of all that is left at death is received
n the form of life insurance, it is not
ifficult to comprehend the important
art played by life insurance in keeping
amilies together and preserving American
lomes.
When we consider the importance of the
econd function of life insurance, educating
hildren, we must first realize the part
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LIFE INSURANCE AS A LIFE WORK
which education plays under present-day
conditions.
Everett W. Lord, Dean of the College of
Business Administration, Boston Univer-
sity, tells us that the untrained man goes to
work as a boy of fourteen, reaching his
maximum at thirty, his average annual
earnings being less than $1,200. Inasmuch
as his income is largely dependent upon
physical strength, his earnings begin to de-
cline at fifty, or even earlier, to a point be-
low the level of self-support, so that more
than sixty out of every one hundred un-
trained workers are dependent upon others
for support after age sixty.
The total average earnings of the un-
trained man from 14 to 60 are about $45,000.
Not more than $2,000 is earned in the four
years that would have given him a high-
school education. We move a step further
and find through Dean Lord's report that a
high-school graduate goes to work at eight-
een, passes the maximum earnings of the
untrained man within seven years, rises
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THE OPPORTUNITY TO DO GOOD
steadily to his own maximum of $2,400 a
year at age forty, and continues at that level
for the remainder of his active life. His
total earnings from eighteen to sixty
amount to approximately $78,000. The
$33,000 more than the amount earned by the
untrained man represents the cash value of
the four-year high-school course.
Dean Lord then proceeds to show that the
college or technical school graduate begins
to receive a regular income at age twenty-
two, although in many cases a considerable
amount may be earned during the college
course. By the time he is twenty-eight
years old, his income equals that of a high-
school graduate at age forty and continues
steadily to rise, practically without a break.
Since his income is dependent upon his men-
tal ability and training and constantly im-
proves by practice, it increases instead of
decreases with the years. The average is
$6,000 annually at age sixty, but this
amount is often surpassed. The total earn-
ings from twenty-two to sixty, which do not
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LIFE INSURANCE AS A LIFE WORK
include any amounts earned during the col-
lege period, are $150,000 for the average
college graduate. The $72,000 more than
the total earned by the high-school gradu-
ate represents the cash value of the college
or technical training. The four years that
the high-school student spends in college
thus augment his life's earnings $72,000, or
an average of $18,000 per year for the four
years spent in completing his college course.
Dean Lord's figures are based on reports of
the Massachusetts Department of Labor and
Industry and on statistics of earnings of
students and graduates of the School of
Business Administration of Boston Univer-
sity.
The census report of 1920 shows that one
boy in every nine in the United States be-
tween the ages of ten and fifteen years, is
out in the world at work. That ninth boy
ought to be in school. By inducing more
American fathers to carry adequate life in-
surance this appalling condition of the ninth
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THE OPPORTUNITY TO DO GOOD
boy can largely be eliminated, or, at least,
materially improved.
Dr. Willard of the Kansas State Agri-
cultural College has found that out of every
371 successful careers, 370 are enjoyed by
college men, and out of every 288 "who have
amassed wealth, 277 have had college and
university training. The value of an edu-
cation is still further illustrated by the
following statistics which represent the find-
ings of the United States Bureau of Educa-
tion:
Distinguished Men of America
Number on Number Diatin-
Which Statig- Educational At- guished in Buai-
tics Are Based, tainments nesa. Science
and Arts
5,000,000 Uneducated 31
33,000,000 Common School 808
2,000,000 High School 1,245
1,000,000 College 5,768
The problems that confront us to-day are
so complex that the trained mind is much in
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LIFE INSURANCE AS A LIFE WORK
demand and, in the next few decades, this
need for educated men is certain to become
keener than ever before in the history of
the world. Indeed, one profound thinker
has recently expressed the pessimistic opin-
ion that the complexity of modem life is
creating such gigantic problems that, even
with the best trained minds, these problems
are becoming too tremendous to be solved by
the human intellect. Although we do not
concur in his prophecy that civilization will
fall under the weight of problems greater
than human intellect trained to the nth de-
gree can solve, his point of view emphasizes
the fact that the educated mind is needed
more and more every day and that while
college education was important ten, fifteen,
or twenty years ago, it is rapidly becoming
an absolute necessity if a man would take a
creditable place and do a worth-while work
under the changing conditions of a rapidly
advancing age.
By inducing fathers of sons and daugh-
ters to insure their lives, the life under-
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THE OPPORTUNITY TO DO GOOD
writer is guaranteeing an education to the
children of this nation that is not only
enabling them to enhance their earnings, but
also to give more efficient thought to the
solution of the great problems of our mod-
ern life.
The service you can render to the widow
and the orphans by engaging in the profes-
sion of life underwriting is second only in
importance to the contribution you can
make toward the stabilizing of business and
the conservation of wealth. Every great
institution, as someone has said, is the
lengthened, shadow of some great man's life.
Hundreds or even thousands of men may be
dependent upon the continuation of that
business. When the man whose brain has
built that business, piloted it through its
crises, and maintained its credit and stand-
ing, is taken away by death, there is often
grave danger that the financial shock will
be greater than the business can stand.
Life insurance will not protect a business
against the sentimental loss of its chieftain,
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LIFE INSURANCE AS A LIFE WORK
but it will provide the replacement value of
that man's life.
"Within recent years, life insurance has
come to be almost a necessity for the man
who has accumulated a substantial estate
and who wishes to pass on this estate intact.
Inheritance taxes and the expenses of ad-
ministration often cut such a large slice
from the estate that the terms of a will can-
not be carried out. It has been said, in fact,
that under present-day conditions, "the last
act of any man's life is the act of going into
debt."
Life insurance furnishes a practical solu-
tion to this problem for the event which cre-
ates the debt, makes available the funds to
meet the obligation. Moreover, a life insur-
ance policy carried to cover these charges
makes it possible to meet them for and not
from the estate.
There is another way in which the life
underwriter serves. He collects from both
humble and wealthy their deposits or pre-
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THE OPPORTUNITY TO DO GOOD
miums and puts them into the great reser-
voirs of the life insurance company. The
life insurance company, in turn, through its
financial experts, pours these reservoirs of
capital into the places where they can per-
form the twofold purpose of yielding a
proper return on the policyholder's money
and building up our country.
Our life insurance companies render it
possible for our railroads to be constructed,
our farms to be improved, and our cities to
be built. The life underwriter is a gath-
erer of capital. Without him the life in-
surance companies would have little money
to invest and those who would carry out
those great and useful projects that stand
as the landmarks of a developing civiliza-
tion would be deprived of one of their chief
sources of capital. The recent "World War
demonstrated in a peculiarly striking man-
ner the value of the life underwriter's serv-
ice to his country. Great issues of bonds
had to be floated to provide the sinews of
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LIFE INSURANCE AS A LIFE WORK
war. Since enormous amounts of capital
had been amassed through the efforts of the
life underwriters of the "United States,
our life insurance companies were able to
absorb great blocks of these bond issues.
Their prompt and liberal response to the
call of the government in its hour of need is
no less a tribute to the service of the life
insurance companies themselves than to the
life underwriters, who, standing, as it were,
on the first line of defense, secured the
premium deposits that enabled the com-
panies to invest in our national bonds.
If you enter the profession of life under-
writing, you will not only be engaged in the
service of binding up financial wounds, but
better still, you will be instrumental in pre-
venting the wounds. You will be averting
poverty by inducing men to tax themselves
in order that their dependents may not be-
come a tax upon society. You will be pro-
tecting widows against want. You will be
educating children. You will be inculcat-
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THE OPPORTUNITY TO DO GOOD
ing thrift. You will be stabilizing business.
You will be creating capital, and, through
these manifold services, materially aiding in
the building of our civilization.
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