T H E K I N G ' S B U S I N E S S
August, 1937
289
Insured Annuities By an arrangement with the most conservative and best-managed life insurance com panies, the Bible Institute of Los Angeles, Incorporated, offers to its friends the most de sirable form of Christian investment— INSURED ANNUITIES Says T. A. Stafford, Treasurer, Board of Pensions of the Methodist Episcopal Church, who arranged the reinsurance of all the outstanding annuity obligations of his board*: “We consider that the following distinct advantages for the board result from this contract: First —All annuity risks on the lives involved rest definitely with the rein surer ; Second —The board has a substantial margin free of liability at its command for immediate use or for accumulation, as it may desire.” *Methods and Plans in Using Annuity Agreements. Says Charles L. White, formerly Executive Secretary of the American Baptist Home Mission Society: “ The life insurance companies offer a service whereby the donor may be guaranteed a life annuity equal to normal income on his investments, and the board has for immediate use the entire residuum........... A promi nent actuary has prepared the following opinion:
"A life insurance company, with its large surplus funds, can afford to make an investment in annuities, expecting that in the long run the fund will grow to such a size that the law of average will take care of the situation. The small an nuity fund of a charitable organization, however, may become a cause of serious embarrassment to that organization. An unfavorable fluctuation in mortality might consume a large portion of the 'residual fund* which that organization expected to have in hand when all of the present an nuitants will have died. In other words the very purpose of the annuity fund may be defeated. “ The situation might further be aggra vated by an increase in the longevity of annuitants, as may very easily happen if such diseases as cancer, pneumonia or other common ills of old age are brought under greater control through advances in medical science. “ While I would not wish to make too sweeping a statement, it does seem wise for charitable organizations with small or moderately small annuity funds, to con sider seriously the risks which they incur in the handling of such funds. Life in surance companies are organized to han dle annuities involving such risks. If the life '■> annuities promised by charitable or ganizations are reinsured in good life in
surance companies, the charitable organ izations have relieved themselves of all risk and care under the annuity and can determine definitely how much of the d o nor’s gift can be freed for immediate use. It seems to me that this whole question is one which could well receive the con sideration of a number of charitable or ganizations granting life annuities.” Mr. White calls attention to the fact that the plan for reinsurance of annuities published in a New Approach to Annuities has certain advantages. The society does not assume the obli gation to pay the annuity, but arranges for the annuitant to have the strongest possible guarantee that the annuity will be regularly and promptly paid. The society has in its hands a balance after it has used a part of the gift to purchase the annuity for the annuitant. The society knows exactly what its gain is on each transaction, and if the donor believes, as many will believe, that the balance in the hands of the society will achieve the largest spiritual result by its immediate use, then the society’s in come will be at once increased. The society is relieved o f the necessity of investing all of its funds received from its annuitants in the securities of a cer tain state and making satisfactory re ports thereon to its officials, as in Texas.
The society will avoid embarrassments which will doubtless multiply if it tries to conduct its own annuity business in the various states. The society voids the dangers in the promise to pay an annuity during a long term of years, when the interest earned on the invested funds may become much smaller than was anticipated. The society does not have to set up a reserve fund to safeguard the payment of the annuity and to keep the same invested in certain types of securities as required by law, as in New York. The society can begin with safety to use for its purposes the residuum when it has secured its first annuity gift, and has no financial embarrassment, if it never secures another. The society is relieved of the expense of operating its own annuity business and of the meticulous care which such an op eration entails. A society does not need to abandon its present annuity plan, but can supplement and strengthen it by the method proposed. The society can assure the donor that in a reasonable number of years and per haps within his lifetime it will have the amount originally given and possibly more, if he prefers that the balance re maining shall be increased by interest accumulation.
The Bible Institute of Los Angeles, Incorporated, plans to use the residuum: First: for the current expenses of its annuity estates department; Second: for strengthening the annuity reserves on its noninsured annuities; and Third: for reinvestment to reach the amount given by the donor prior to application to Institute expenses. Should the annuitant desire, he may direct the application of the residuum to any of the above purposes. Full information will be given upon request and in absolute confidence for single payment life annuities of $100.00 or more. E l m e r J . P e t e r s o n , Manager BUSINESS DEPARTMENT THE BIBLE INSTITUTE OF LOS ANGELES, INCORPORATED 558 South Hope Street Los Angeles, California
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