Let us take a young man of thirty, married, with one child, in good health, and in receipt of a fair salary, but with no property to leave his wife and little one in the event of his death.
To secure his dear ones, he decides to insure his life for, let us say, $3,000.
He fills out the blank, in which his age and all the other required information is given; then the insurance company's doctor examines him and he is accepted as what is called "a good risk."
Now, from its actuary tables, the company knows, with reasonable accuracy, the number of years this young man should live, barring accidents.
Already they have their tables of calculations for such cases. They know what expense will be required in the way of rent, clerks, advertising, etc., to care for this case till the prospective, the inevitable end is reached.
On these calculations the immediate and all subsequent premiums or payments are based.
The insurance company invests and reinvests the premiums, and the total of these, it is estimated, will meet the expenses and the amount of the policy at the time of its calculated expiration.
AS AN INVESTMENT
If the young man in question had the money, he would find it to his advantage to buy a paid up policy, that is one on which no further premiums would be required.
But, having the money for a paid up policy, could not the young man, without any expense for clerk hire or rent, invest it, and reinvest it with the interest, as long as he lived, and thus make by insuring himself?