One of the most difficult subjects for the layman to understand in connection
with the administration of a life-insurance company is the existence of
the enormous assets possessed by the different companies and the reasons
why these funds must be held. That a single company should hold over half
a billion dollars strikes many persons as unnecessary and as an opening
to the possible misuse of such funds. The fact is not generally known, or
clearly understood, that a major portion of these assets represents liabilities
held by the company for its policyholders and subject to call by them at
any time upon the surrender of their policies. This portion of the funds
is held in trust by the company and is known as the reserve.
Sections in Chapter 16.