han enough to pay funeral expenses. The
premiums on such policies are usually collected weekly and by agents
making personal visits. The cost to the insured is, therefore,
necessarily very high in proportion to the amount of insurance.

Sec. 9. #Assessment plan.# Life insurance plans may be distinguished,
with reference to the time and method of collecting the premiums, as
assessment and reserve insurance.

In the simple form of assessment insurance originally the losses were
paid by contributions taken after the losses occurred, each member
paying an equal share without regard to age. In a slightly improved
plan the assessments are made at the beginning of the year, based upon
the expected mortality for the year. The sum just sufficient for this
purpose (omitting expenses) is called the _natural premium_. The
cost of such insurance is closely related to the average age of
the members. The rates are very low in a new organization with a
membership of young men; but each year the average age, and therefore
the mortality of the membership, rises and the annual assessments must
be increased. By constant additions of young members, this rise of
cost may be retarded. But when these members grow older, a still
larger addition of young members is required to keep down the average,
and the mathematically inevitable result is an increasing rate of
assessment. This keeps young men from entering, and finally results in
failure or in some form of "reorganization" that drives out the older
members. The assessment plan carries with it the seeds of its own
decay.

To meet these difficulties in part, various modifications of the
flat-rate assessment plan are employed, such as classification by age
at entry, so that each member pays a flat-rate according to age
at entry; or large initiation fees at entry which form a temporary
"reserve" to offset increasing mortality in late years. Finally,
the policies may be issued on the natural premium plan, by which the
members of each age class pay exactly what the insurance costs for the
year. Under this plan the company will remain solvent, but with this
and all the other expedients the surviving members are forced to drop
the insurance in later years.

Assessment insurance is sold by business companies organized
for profit, by fraternal orders, and by various types of mutual
organizations. The business companies have had a dismal history
of hardship to surviving members and of eventual f