7. Which is the better investment, a mortgage for 3 yr. of $5000, paying 7% interest, and purchased at a discount of 5%, and paid in full, without cost, at maturity, or 50 shares of stock at 95, paying 8% dividends, and sold at the expiration of three years at 98 ? 8. Henry Ivison, through his broker, invested a certain sum of money in New York State 6's at 107, and twice as much in U. S. 5's, at 981, brokerage in each case 1%. The annual income from both investments was $3348. How much did he invest in each kind of stock? 9. A gentleman invested $12480 current funds in U. S. 6 per cent. bonds, at 104. What was his annual income in currency when gold was 110? INSURANCE. 655. Insurance is a contract of indemnity against loss or damage. It is of two kinds: insurance on property, and insurance on life. 656. The Insurer or Underwriter is the party who takes the risk or makes the contract. 657. The Policy is the written contract between the parties. 658. The Premium is the sum paid for insurance, and is a certain per cent. of the sum insured. 659. Insurance business is generally conducted by Companies, which are either Joint-stock Companies, or Mutual Companies. A Stock Insurance Company is one in which the capita is owned by individuals called stockholders. They alone share the profits, and are liable for the losses. ▲ Mutual Insurance Company is one in which the profits and losses are divided among those who are insured. Some companies are conducted upon the Stock and Mutual plans combined, and are called Mixed Companies, Insurance on property is principally of two kinds: Fire Insurance, and Marine and Inland Insurance. 660. Fire Insurance is indemnity for loss of property by fire. 661. Marine and Inland Insurance is indemnity for loss of vessel or cargo, by casualties of navıgation on the ocean, or on inland waters. Transit Insurance refers to risks of transportation by land only, or partly by land and partly by water. The same policy may cover both Marine and Transit Insurance. Stock Insurance is indemnity for the loss of cattle, horses, etc. Most insurance companies will not take risks to exceed two-thirds or three-fourths the appraised value of the property insured. When only a part of the property insured is destroyed or damaged, the insurers are required to pay only the estimated loss; and sometimes the claim is adjusted by repairing or replacing the property, instead of paying the amount claimed. 662. The operations are based on the principles of Percentage, the corresponding terms being as follows: 1. The Base is the amount of insurance. 2. The Rate is the per cent. of premium. 3. The Percentage is the premium. 663. 1. How much must be paid for insuring a house and furniture for $4000, at 11% premium ? ANALYSIS.—Since the premium is 14%, or 8, equal to of the sum insured, the premium on $4000 will be of $4000, or $50. Hence, etc. (510.) 2. What will be the annual premium of insurance, at %, on a building valued at $8000 ? 3. What will be the cost of insuring a quantity of flour, valued at $1500, at %? 4. What must be paid for insuring a case of merchan dise, worth $640, at 21% ? 5. A man owns of a boat-load of $1800, and insures his interest at 13%. does he pay? corn valued at What premium 6. Paid $6 for insuring $300; what was the rate? ANALYSIS. Since the premium on $300 is $6, the premium on $1 is of $6, or $.02, equal to 2%. Hence, etc. (513.) 7. Paid $12 for an insurance of $800; find the rate. 8. Paid $24 for an insurance of $1000; find the rate. 9. At 2%, what amount of insurance can be obtained for $30 premium? ANALYSIS. Since 2% is 18 or of the amount insured, $30, the given premium, is of the amount insured; and $30 is of 50 times $30, or $1500. Hence, etc. (516.) What amount of insurance can be obtained, WRITTEN 664. Find the Premium EXERCISES. 1. For insuring a building for $14500, at 11%. OPERATION.-$14500 x .015 = $217.50. (512.) FORMULA.-Premium Amount Insured × Rate Find the premium for insuring 2. A house valued at $5700, at 1%. 13. Merchandise for $2750, at 7%. 4. A fishing craft, for $15000, at 11%. 5. If I take a risk of $25000, at 12%, and re-insure of it at 21%, what is my balance of the premium? 665. Find the Rate of Insurance, 1. If $36 is paid for an insurance of $2400. OPERATION.-$36 ÷ $2400.015, or 11%. (515.) Insured. What is the rate of insurance, Premium ÷ Sum 2. If $280 is paid for an insurance of $16000 ? 3. If $4.30 is paid for an insurance of $860? 4. A tea merchant gets his vessel insured for $20000 in the Royal Company, at %, and for $30000 in the Globe Company, at 1%. What rate of premium does he pay on the whole insurance? 666. To find the Amount of Insurance. 1. A speculator paid $262.50 for the insurance of a cargo of corn, at 11%. For what amount was the corn insured? OPERATION.-$262.50÷.015=$17500, the sum insured. (518.) FORMULA.-Sum Insured — Premium ÷ Rate. 2. If it cost $93.50 to insure a store for one-half of its value, at 14%, what is the store worth? 3. Paid $245 insurance at 43% on a shipment of pork, to cover of its value. What was its total value ? 4. A merchant shipped a cargo of flour worth $3597, from New York to Liverpool. For what must he insure it at 31%, to cover the value of the flour and premium? OPERATION.—$3597 ÷ (1 − .03†) or .9675 = $3717.829. (520.) 5. An underwriter agrees to insure some property for enough more than its value to cover the premium, at the rate of 26 cents per $100. If the property is worth $22163, what should be the amount of the policy? 6. For what sum must a policy be issued to insure a dwelling-house, valued at $35000, at 4%, a carriage-house worth $9500, at %, and furniture worth $4500, at 3%, 10% being deducted from the premium, which is to be covered by the policy? 7. A person insured his house for of its value at 40 cents per $100, paying a premium of $73.50. What was the value of the house? 8. A dealer shipped a cargo of lumber from Portland to New York; the amount of insurance, including the value of the lumber and the premium paid, at 14%, was $25200. What was the value of the lumber? 9. A merchant had 500 bbl. of flour insured for 80% of their cost, at 31%, paying $107.25 premium. At what price per barrel must he sell the flour to gain 20%. LIFE INSURANCE.* 667. Life Insurance is a contract by which a company agrees to pay a certain sum, in case of the death of the insured during the continuance of the policy. 668. A Term Life Policy is an assurance for one or more years specified. 669. A Whole Life Policy continues during the life of the insured. * See note at bottom of page 346. |