In dealing with the selection of lives we leave the actuarial idea of selection and come down to the practical consideration of the individual. The actuarial student is accustomed to dealing with select lives and we want to find out how these lives are classified. In this practical sense there are two types of selection, medical and non-medical, the latter referring not to a non-medical scheme of assurance but to the points arising from the papers and circumstances of the case apart from the medical report.

It is proposed to consider both these aspects and to show that the actuary can take his part in the selection just as much as the Principal Medical Officer. Some considerations need the actuary alone, others the P.M.O. alone, and the best results can only be obtained by whole-hearted co-operation between the two. No attempt is made to discuss extra risks, this being outside the scope of the paper, and we shall merely examine the various phases of the selection and outline points which the actuary must be ready to detect so that he can assist the P.M.O. as far as possible.

Any mechanical aid which makes it possible to extract records and then analyse them rapidly and economically must command the serious attention of actuaries and attract increasing interest from those intimately connected with progress and development in Industry or Commerce. Powers machines are one of the most important of these mechanical aids and are readily adaptable to the business of Life Assurance. Invented in America, they have been improved and placed on the market in this country by the Accounting and Tabulating Corporation of Great Britain.

The rationale of the Powers System is that many particulars relative to a given contract, such as a policy, may be placed on permanent record by means of punching holes in a card. Then such punched cards can, by entirely mechanical processes, be sorted and duplicated and the information contained thereon tabulated and cast; as a result of which we may collect our desired information in a very much more speedy, economical and efficient manner than was possible under the old clerical system.

The title to this paper deliberately restricts its field. Emphasis is essentially on “The Valuation” and the limitation to Whole Life Policies restricts these notes to the one class to the exclusion of all others, including special policies, which, in any event, would require in the valuation separate treatment. It is not intended to enter into the realms of Industrial Assurance.

Essentially there is no difference between Whole Life and Endowment Assurance Policies, but by restricting the paper to the former it will simplify discussion. It has the advantage also that we have to consider the basic factors—namely, the rates of mortality and interest—in their extreme form, for whereas the terms of Endowment Assurances are comparatively short, thus minimising the effect of error, when dealing with Whole of Life Policies the Actuary has to consider the general trend of mortality and interest rates over a very much longer period, probably fifty or more years.

The subject of Group Life Insurance schemes has been quite recently discussed by the Society (J.S.S. Vol. III. No. 3) and no useful purpose can be served by a repetition of remarks regarding such schemes.

However, there are two points which deserve further consideration. The first of these relates to what might be termed underwriting rules—or, in other words, regulations to which every contract must conform. Each individual contract should be written, so far as possible, on such a basis as will preclude the writing of unsatisfactory business and in this connection such points as the number of lives to be covered, maximum and minimum amounts of insurance, etc., fall to be considered.

Privately administered pension schemes may be divided into 3 main classes:—

(1) those which provide pensions based on the salary received by the members.

(2) The type known as the “Money-purchase” fund in which each year's contribution is applied as a single premium to purchase an amount of pension at the retiring age.

(3) Funds which provide pensions which are fixed in amount in return for a definite contribution which varies according to the age at entry.

There are, of course, numerous funds which do not fall exactly into one of these categories—in fact, private funds are usually framed so as to suit the individual needs or preferences of the employers and the members.