Part 4

The Salary Savings Insurance idea is being widely offered by insurance companies; and in fact some insurance companies have adopted it for their own employes. For instance the United States Federal and Guarantee Company has taken out a policy for its employes who have been in the company’s service continuously for two years and receive an annual salary of $780 or more. The cost to each eligible employe is 5 cents per month per $100 of insurance. The remainder of the premium is paid by the company and the amounts obtainable by employes range from $500 to $5000. No medical examination is required.

Many of these policies also carry with them certain specific clauses which, in the event of illness on the part of an employe makes it possible for the premiums to be waived by the company and a certain percentage of the face of the policy paid to the employe during the term of illness.

Also in the event of partial or total disability, a great many of the newer group insurance policies carry benefits of one kind or another, and pay to the employe, if totally disabled, a certain income for the balance of his or her life. Or, if temporarily disabled, a percentage of the policy is paid to the employe during the period of disability.

There are, too, certain policies, in group insurance, which carry specific provisions for the benefit of a workman’s family in the event of his death by accident. That is, a double indemnity is paid to the dependents of the employe when his death occurs by accident.

All these methods of group insurance available to employes, serve several important purposes in savings. Not only is the savings idea kept consistently going, on a systematic and proportionate scale, but, in addition, many other benefits are available, not possible in merely saving in a savings bank. For instance, when the employe begins to save by the method of insurance, he immediately creates an estate of the face amount of the policy. He also, by making his first payment himself or through his employer, provides immediately for his dependents in the event his salary or wages should be discontinued through his own disability to earn a salary.

THE INDIVIDUAL WORKER’S CAPITAL VALUE

It is a perfectly logical calculation to analyze an individual’s capital value to himself, for an individual worker, with only his services to sell, _is his own invested capital_.

A man earning $6,000 a year is getting an income which amounts to 6% interest on $100,000. Therefore it is entirely fair to say that such a man’s capital value to himself and his family is $100,000. If such a man realized this, he would undoubtedly take himself more seriously; and give his own finances the same careful analysis and attention that a business man does who has $100,000 invested in a business.

The savings a man makes out of his salary--which should be 10% at least--equals precisely what is the average business man’s hope for the rate of profit which his business will show. A corporation capitalized at $100,000 hopes and expects its statement at the end of a year to show 10% net profit, after taxes, interest, depreciation, etc.

The _individual_ should have the same expectation for himself. He should not only regard himself as having _failed_ in his business (as the corporation does, if it shows no profit at the end of a year), but he should also regard himself as having stood still if he has not advanced his capital value, which is another way of having raised his salary or income. It is a splendid stimulation to the saving idea to thus visualize oneself personally, as though he were a corporation, for incidentally such a procedure results in giving a man a certain pride in his own financial analysis, about which by traditional negligence we have been rather careless. From 30 to 65 years, at a salary average of $250 a month, a man earns a grand total of $105,000. If one-tenth of this, as per the standard calculation, is saved, the total is $10,500, not counting interest. If put into a savings bank at only 4%, compounded, this saving would amount to over twice this sum or about $23,000. This total saving in 35 years, until the average age of slackening off in earning power, would produce an annual income at that time, at 6%, of $1,380. This sum, as can be seen, is quite enough to insure immunity from real hardships in old age.

Economists tell us that the value of the average life is $5,000. The value of the very young baby is $180 and a man at the age of 80 actually represents a _liability_ of $1,400. At 20 the average value is $8,000, but by 50, this value has decreased to $5,800. This is on the authority of the Life Extension Institute and illustrates the inexorable and illuminating possibilities of measuring human life on a capital value scale.

The United States, at the present time, averages in wealth $3,000 per person, which is actually less than the average value of life. The annual income of the people of the country is about $545 per person, or $2,180 per family of four. Nevertheless in 1924 the average income of 86% of all workers was less than $2,000 per annum, and only 1% of the population earns as much as $8,000 per year. If you want to figure your own capital value, simply figure out how much what you earn represents as 6% interest in capital value.

You can attain a larger capital value in three ways: (1) by increasing your income, (2) by saving and investing, (3) by an insurance plan.

If a man 20 years of age desires to be worth in capital $30,000 at age 65, he can take a $3,000 policy at a cost of $6.00 per month. At 22 years of age, he takes $3,000 more. At 24, $5,000 more; at 26 $5,000 more, and at 28, $5,000 more. This is a total insurance in force of $21,000. At 65 years of age he then has the face value of his policies, $21,000, plus dividends of $9,000 or a net total of $30,000. The total cost of all this, if this plan is followed at the right ages, is less than $50 a month.

Think of yourself in terms of capital value; capitalize your savings and save systematically. Trust the rest to the law of compound interest and the earning power of money judiciously invested, and your financial future is systematically taken care of.