ailure. They are
disappearing under the influence of hostile legislation resulting
from a better popular knowledge of insurance principles. The fraternal
orders combine insurance with other objects of a benevolent and social
character. With good management, a favorable death rate, and very low
expenses, some of them have provided protection at very low rates for
many years. Others have failed with disappointment and disaster to
the older members. Still others are struggling with difficulties that
presage dissolution. Many now have some form of reserve accumulations,
and some have so improved their methods that they closely resemble
reserve companies. The assets of all the assessment companies are
now $1.37 per $100 of insurance in force, while the legal reserve
companies have $22.66. The assessment companies now get 10 per cent of
their total incomes from their funded investments, as against 24 per
cent for the old-line companies. Even with the favorable conditions
under which the fraternal orders conduct their insurance business they
are doomed to failure unless they adopt rates and policies based upon
adequate reserve accumulations. Many thousands of present members
are paying for insurance at rates which will not suffice to meet the
future losses. The assessment plan fails to eliminate the one great
risk, that of leaving the survivors without insurance in advancing
years.

Sec. 10. # The reserve plan.# The reserve plan, if honestly administered,
gives complete protection against the difficulties just indicated. The
essential purpose of the reserve plan is to collect during the earlier
years of the insurance policy when the mortality is less, a sum larger
than is needed to meet the current losses. This sum, the reserve, is
kept invested and accumulating an income, sufficient to offset the
increase in losses as years advance. In reserve insurance, therefore,
the premium never increases from year to year, altho it may be so
arranged as to diminish or to cease entirely sometime within the term
for which the insurance continues.

The premium must always be fixed in advance. The calculations for
determining the premiums on different kinds of insurance policies are
many and complex, but all conform to a few general principles. The
three factors assumed are an average mortality table, a rate of
interest (or yield on investments), and an expense rate in proportion
to the premiums or outstanding insurance. Insurance on the