King's Business - 1937-04

Insured Annu ities 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:

The society will avoid em barrassm ents which will doubtless m ultiply if it tries to conduct its own annuity business in the various states. The society voids the dangers in the prom ise to p ay an annuity^ during a long term of years, when the in terest earned on th e invested funds m ay become much sm aller th an was anticipated. The society does n o t have to set up a reserve fund to safeguard th e paym ent of th e annuity and to keep the sam e invested in certain types of securities as required by law, as in New Y ork. The society can begin w ith safety to use for its purposes the residuum when it h as secured its first annuity gift, and h as no financial em barrassm ent, if it never secures another. The society is relieved of the expense of operating its own annuity business and of th e m eticulous care which such an op­ eration entails. A society does n o t need to abandon its present annuity plan, b u t can supplem ent and strengthen it by the m ethod proposed. The society can assure th e donor th at in a reasonable num ber of years and per­ h aps w ithin his lifetim e it will have the am ount originally given and possibly more, if he prefers th a t the balance re­ m aining shall be increased by interest accum ulation.

surance companies, th e charitable org an ­ izations have relieved them selves of all risk and care under the an n u ity an d can determ ine definitely how m uch of th e do­ nor’s gift can be freed for imm ediate use. It seem s to m e th a t th is whole question is one which could well receive \ the con­ sideration of a num ber of charitable o r­ ganizations granting life annuities.** Mr. W hite calls atten tio n to the fact th a t th e p lan for reinsurance of annuities published in a New A pproach to Annuities has certain advantages. The society does n o t assum e th e obli­ gation to pay th e annuity, b u t arranges for the an n u itan t to have the strongest possible guarantee th a t th e annuity will be regularly and prom ptly paid. The society has in its hands a balance after it has used | a p a rt of th e gift to purchase the annuity for the annuitant^ The society knows exactly w hat its gain is on each tran sactio n , and if the donor believes, as m any will believe, th a t th e balance in th e hands of the society will achieve th e larg est sp iritu al result by its imm ediate use, then th e society’s in­ come will be a t once increased. The society is relieved of the necessity of investing all of its funds^ received from its an nuitants in th e securities of a cer­ tain sta te and m aking satisfacto ry re­ ports thereon to its officials, as in Texas.

“A life insurance company, w ith its large surplus funds, can afford to make an investm ent in annuities, expecting th a t in the long run the fund will grow to such a size th at th e law of average will tak e care of the situation. The small a n ­ nuity fund of a charitable organization, however, m ay become a cause of serious em barrassm ent to th a t organization. An unfavorable fluctuation in m ortality m ight consume a large portion of th e ‘residual fund’ which th a t organization expected to have in hand when all of the present an ­ n uitants will have died. In other words the very purpose of th e annuity fund may be defeated. “The situation m ight further be ag g ra­ 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 m ake too sweeping a statem ent, it does seem wise for charitable organizations w ith small or m oderately sm all annuity funds, to con­ sider seriously the risks which they incur in the handling of such funds. Life in ­ surance companies are organized to h an ­ dle annuities involving such risks. If the life annuities prom ised by charitable o r­ ganizations are reinsured in good life in ­

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 lm e r J . P eter son , Manager BUSINESS DEPARTMENT THE BIBLE INSTITUTE OF LOS 558 South Hope Street ANGELES, INCORPORATED Los Angeles, California

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