differences deserving attention.

Life-assurance companies may be divided into three classes,--the stock,
the mutual, and the mixed. In the stock company, the management is in
the hands of the stockholders, or their agents, with whom the applicant
for insurance contracts to pay so much while living, in consideration of
a certain sum to be paid to his representatives at his death; and here
his connection with it ceases; the profits of the business being divided
among the stockholders. In the mutual company the assured themselves
receive all the surplus premium or profit. The law of the State of New
York passed in 1849 requires that all life-insurance companies organized
in the State shall have a capital of at least one hundred thousand
dollars. Mutual life-insurance companies organized in that State since
1849 pay only seven per cent on their capital, which their stock by
investment may produce. In the mixed companies there are various
combinations of the principles peculiar to the other two. They differ
from the mutual companies only in the fact that, besides paying the
stockholders legal interest, they receive a portion of the profits of
the business, which in some cases in this country has caused the capital
stock to appreciate in value over three hundred per cent, and in England
over five hundred per cent.

To decide which of these is most advantageous to the assured, we must
consider the subject of premiums, and understand whence companies derive
their surplus, or, as it is sometimes called, the profits. This is
easily explained. As the liability to death increases with age, the
proper annual premium for assurance would increase with each year of
life. But as it is important not to burden age too heavily, and as it is
simpler to pay a uniform sum every year, a mean rate is taken,--one too
little for old age, but greater than is absolutely necessary to cover
the risk in the first years of the assurance. Hence the company receives
at first more than it has to pay, and thus accumulates funds to provide
for the time when its payments will naturally be in excess of its
receipts. Now these funds may be invested so as of themselves to produce
an income, and the increase thence derived may, by the magical power of
compound interest, reaching through a long series of years, become very
large. In forming rates of premium, regard is had to this; but, to gain
security in a contract which may extend far into the future, it is
p