Comparison of Industrial with Other Forms of Life Insurance

Although industrial insurance is a modified form of ordinary level premium insurance, and is in most instances written by companies which also write life insurance on the ordinary plan, there are certain fundamental characteristics which distinguish it from all other forms of life insurance. Briefly . stated these distinctive characteristics are:

1. The premiums are payable weekly whereas in ordinary life insurance they are payable annually, semi-annually or quarterly. This may be regarded as the most important difference since the feasibility of industrial insurance depends upon, and the organization of the company's agency system must be adapted to, this particular method of paying premiums. Experience has demonstrated the necessity of very frequent premium collections if life insurance is to be widely disseminated among the wage-earning class.

2. The premiums, instead of being payable at the office of the company as is usually the case in ordinary life insurance, are collected weekly by the companies3 agents from the homes of the insured.

3. The amount of the insurance is "adjusted to the unit of premium" customarily five cents, or a multiple thereof, up to seventy cents. Thus in industrial insurance we speak of five, ten- or fifteen-cent policies, and the amount of insurance obtainable for that weekly premium will vary according to age of entry and will represent odd figures. In ordinary life insurance, on the contrary, the unit is the amount of insurance. We thus refer to $1,000, $2,000, etc., policies, and the factor that varies with the age of entry is the premium.

4. The insurance is extended to every member of the family, and the companies therefore issue both adult and infantile policies, while in ordinary life insurance the business is confined almost wholly to adult risks. In nearly all the companies industrial insurance is made to comprise all ages between one and seventy. Some of the smaller companies even insure children before they are one year old.

With the exception of the differences just noted and the resulting differences in field and office methods, industrial insurance is essentially the same as ordinary life insurance. Premiums for both children and adults are calculated upon an actuarial basis, although, owing to the heavier mortality experienced among industrial risks, a special mortality table is used for computation purposes. The system is also based upon the legal reserve plan, and as will be noted later the policies issued contain nearly all the essential conditions found in ordinary life contracts.