Below is a table showing fire and theft insurance rates on cars of different prices when they are new and also after they have been run one or two years. These are limits that agents may work with, but we should understand that there are always exceptions, depending upon the condition of a used car.

Practice in Buying Automobile Insurance

1. In New York City the cost of fire insurance on a used automobile was $1.17 per $100 per year. What would it cost to insure an automobile against fire for $300?

2. In the same city the rate is 40¢ a $100 to insure a new car against fire. How much will it cost to insure a new automobile for $1500 against fire?

3. The rate of insurance against theft in that city for the car mentioned in example 2 is $1.30 per $100. How much will it cost to insure the machine for $1500 against theft?

4. The liability cost in that city to cover injuries or death to one person to the limit of $10,000 and injuries or death to more than one person to the limit of $20,000 is $128.40. How much is that per $1000 in case of death or injury to one person for the full limit?

5. How much would it cost to insure a car against fire for $1500, against theft for $1500, and against property damage for $2000, at the rates quoted in table I for city 3?

6. Find the total cost of the insurance required in example 5 for city 2.

7. How much would it cost to insure a new $1200 car for all of the items mentioned in table I, city 2? Use table II to find the per cent of value for which it could be insured.

8. Suppose that you insured a new $2000 car for each of the items in table I, city 1, and also had to pay $15 a month garage hire. How much a month would all of these items cost you?

Life Insurance.

There are various forms of personal

insurance such as health insurance and accident in

surance, but the commonest kind is life insurance.

The chief life insurance policies are of three kinds: ordinary life policies, limited payment life policies, and endowment policies. The person to whom the amount of the insurance is payable is called the beneficiary. The beneficiary may be the estate of the insured, in which case the insurance is subject to his will, like other property.

In ordinary life insurance the face of the policy is paid to the

beneficiary at the death of the insured. Premium payments in this kind of insurance must be paid as . long as the insured lives.

In limited payment life insurance the face of the policy is paid to the beneficiary at the death of the

insured, but premium payments are made only through a stated number of years (usually 20 or 30 years, and sometimes 10 years). The policy is then said to be paid up."

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In an endowment policy the face of the policy is paid to the insured at the end of a specified number of years if he is living. In the event of his death prior to the date of expiration it is paid to the beneficiary on this prior date.

Of these three forms of insurance the first is cheapest and the last is the most expensive. Why? Premium rates are determined by a careful mathematical study of the probabilities of the life of the insured. This study is carried on by men called actuaries. The annual rate varies with the age of the insured. Why? It pays to buy life insurance while you are young.

The rate is usually reckoned on the basis of $1000 worth of insurance as, for example, " $48.75 per $1000." If premium payments are made semi-annually or quarterly, a small excess premium is charged.

The table on the next page shows the annual premium rates of one of the large insurance companies.

Many insurance companies are "mutual " companies. This means that when a person takes out insurance he becomes a shareholder to that extent in the company. The profits of a mutual company are distributed among the policy holders in the form of dividends.

These dividends may be left with the company to increase the amount of the insurance; they may be accepted as cash; or they may be used to reduce the amount of the premium.

In connection with insurance, it is well to think of two things which will mean much to you. First, life insurance is cheaper when taken out early in life.

Annual Premium on Different Kinds of Insurance per $1000

Second, savings accounts and endowment policies are both good ways of getting ahead. You can save in a savings account. You must save in life insurance or your policy will "lapse" (be canceled). Besides, you are protecting your family so that in case of your death, they will have some additional income to help them out. This is particularly true if you are old enough to work and are helping with the family expenses. You are likely to spend money which should be put into savings. You cannot spend money which must be paid on insurance premiums without letting your policy lapse. Which do you think is the surer way of getting ahead?

Suggestions to the Executive Committee: If you wish, have the class discuss the above and any other points on life insurance which the problems suggest. Use concrete cases to illustrate your points for or against life insurance.

Practice in Buying Life Insurance

Whenever you can, in this exercise, use the premium table on the preceding page.

Example: Find the premium on a $4000 twenty-payment policy at age 20?

Solution: $4000 = 4 (thousands of dollars)

4 X $27.78 = $111.12.

1. Mr. Gardner at the age of 28 took out a 20-year endowment policy for $5000. Find the amount of his annual premium. What will be the total amount of his premiums at the end of 20 years?

2. Mr. Holcomb at the age of 35 took out a straight ordinary life policy for $8000. What was his annual premium? If he lived 30 years after taking out the insurance, how much more did the beneficiary receive than Mr. Holcomb had paid the company in premiums?

3. When John Landis was 15 years old his father took out an endowment policy for $4000 on his life. It matured (ended) in 20 years. Find the amount paid in premiums during that time. Dividends averaged $10.40 per thousand dollars each year and they were allowed to remain to increase the face (the principal) of the policy. If compound interest on these dividends is not considered, how much would John receive when he was 35 years old?

4. How much less would a boy 15 years of age pay into the company on a $2000 twenty-payment life policy for the twenty years than he would if he waited and bought the same policy at age 20?

5. If you buy a twenty-year endowment policy of $3000 at age 16, how much will you pay the company in the 20 years? How much would you receive back at the end of the 20 years? Would you pay in more or less than you received back at the end of the 20 years? How much? Would you