rudent to base the calculations on so low a rate of interest that there
can be a certainty of obtaining it. The rate adopted is usually three
per cent in England, and four or five per cent in this country. But, in
point of fact, the American companies now obtain on secure investments
six or seven per cent.

Again, in order to cover expenses and provide against possible
contingencies, it is common to add to the rates obtained by calculation
from correct tables of mortality a certain percentage, called _loading_,
which is usually found more than is necessary, and forms a second source
of profit.

Again, most tables of mortality are derived from the experience of whole
communities, while all companies now subject applicants to a medical
examination, and reject those found diseased; it being possible to
discover, through the progress of medical science, even incipient signs
of disease. Hence one would expect that among these selected lives the
rates of mortality would be less than by ordinary statistics; and this
is confirmed by the published experience of many companies. Here we find
a third source of profit.

In these three ways, and others incidental to the business, it happens
that all corporations managed with ordinary prudence accumulate a much
larger capital than is needed for future losses. The advocates of the
stock plan contend that, by a low rate of premium, they furnish their
assured with a full equivalent for that division of profits which is the
special boast of other companies. In a corporation purely mutual, the
whole surplus is periodically applied to the benefit of the assured,
either by a dividend in cash, or by equitable additions to the amount
assured without increase of premium, or by deducting from future
premiums, while the amount assured remains the same. The advantages of
the latter system must be evident to every one.

It is of course important in all companies, whether mutual or not, that
the officers should be men of integrity, sagacity, and financial
experience, as well as that due precautions should be taken in the care
and investment of the company's fund; and it is now proved by experience
in this country, that, when a company is thus managed, so regular are
the rates of mortality, so efficient the safeguards derived from the
selection of lives, the assumption of low rates of interest, and the
loading of premiums, that no company, when once well established, has
ever met with disaster. O