feature of the policy that he buys.  The various policies issued by a company are approximately equivalent actuarially, on the basis of the assumptions made, but they are of very different degrees of desirability, in view of the circumstances of the insuring individual.  The choice of policies deserves a more careful investigation than it usually received.  Moreover, carelessness and ignorance in the choice of a company is responsible for widespread loss and suffering.

Policies differ in respect to the mode of payment.  The payment usually takes the form of a lump sum payment at death or at the maturity of the endowment.  In recent times there has been a growing use of optional forms of payment which give to the beneficiary annual or monthly installments for a definite number of years or for life.

Sec. 14. #Insurance assets and investments as savings.# The discussion of savings institutions in the last chapter left unmentioned insurance, which probably is destined to be the most important of all.  The assets of life insurance companies in the United States have already attained the enormous sum of $5,000,000,000, a sum equal to the reported savings bank deposits.  In the last twenty years life insurance assets have more than doubled in each decade, and are now increasing by about a quarter of a billion dollars every year.[7] These great funds, which in equity nearly all belong to the policyholders, form already approximately one thirtieth of all the private capital of the country.  They are invested in many ways, in real estate, in loans secured by mortgages on real estate, in bonds—­municipal, railroad, and industrial.  The problem of wise legislation for these organizations, of their competent and honest management, and of their relation to the social, business, and political life of the nation, is certain to be of ever-increasing importance.  We are hardly more than emerging from the experimental stage of life insurance, hardly more than at the beginning of its development.

The premium in personal insurance (life, accident, sickness, invalidity, old age pensions) is in almost all cases paid out of some current income.  The premium paid is just so much subtracted from the amount available for present direct use and applied to the purchase of future incomes for one’s self or family.  The insurance method differs from the method of depositing savings by its contingent nature, the resulting income of any individual being possibly much greater than the amounts actually saved (e.g., when the insured dies or is injured soon after taking insurance), and possibly less or nothing at all.  A very desirable kind of insurance which is yet little developed is that for a term ending with the usual retirement age (say 65 years) combined with an old-age pension for life thereafter.

It is probable that abstinence will more and more express itself not in accumulating large capital sums to provide for one’s old age or for survivors, but in providing insurance for survivors, and invalidity and old-age pensions for the insured and others, payable as terminable annuities.  In any case the results to be expected in the changing forms and magnitude of private fortunes are certain to be great.