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Show MILLARD COUNTY CHRONICLE Dlta. Utah. Thurs. Nov. 28, 1957. GIVING OUR WORLD THE Once Over Are You Premium Poor? Twelve years ago, I took out a life insurance policy, for the benefit of my family. It was a rather good policy, as life insurance policies go, assuring my 'beneficiary some $20,- 000 of protection for a period of years, at an annual premium cost of a little over $300.00. The company com-pany was one of the biggest and most highly respected. But if I had known then, what 1 know now, about Insurance, things would have been very different. dif-ferent. I wouldn't have bought a policy from that company. I'd have put the same amount of money into its stock. And as of today I should have been incomparably richer. Whereas I have been paying that company just about $1000 every three years in premiums, in return for $20,000 of insurance protection which Is due to te terminated at a stated time some years In the future, that same $1000 which I paid as the first three year's premiums, prem-iums, if Invested in the stock of the Company instead, have been worth today in excess of $50,000 stock for that much and kept the cash, and I could have sold my cash forever! And, had I continued to invest the equivalent of each annual premium in the stock, the total value now might have been well over $100,000. And I wouldn't have to die to collect it, either. The thing is hard to believe until you get to inquiring into the economics of the insurance business. And brother, bro-ther, when you do that, you are due to get an eye-opener. I might add that such an inquiry may prove well worth your while If, 1, you don't own any Insurance and intend in-tend to buy some; 2, you already have some and may want to buy more; or, 3, you have been carrying carry-ing a policy on which the premiums are very high and burdensome in proportion to the amount of insurance in-surance protection it gives your family. The salient fact to be learned about insurance is that the companies com-panies are not quite the benevolent outfits they like people to think they are. They aren't in business for the fun of it, nor even as a public service. It is customary for Insurance salesmen to tell of the amounts paid out as claims; but if you ask them to tell you how much the companies took in from the same localities during the same period, or what percent the payments pay-ments were of total receipts, you aren't likely to get an accurate answer. Such an answer would indicate in-dicate overwhelming odds in faver of the companies, in many cases. This Is not to say that the companies com-panies are dishonest. They are not. They will pay claims, in almost all Instances, exactly according to the terms of the policies. But it is to say that very often the salesmen talk people into buying policies the cost of which is out of all proportion propor-tion to the protection given. And that is why a little quiet study of life insurance oan be so very much worth your while. I want to add, too, that even In view of the foregoing, I do not intend to drop the policy mentioned. mention-ed. After all, life insurance Is a necessity for the protection it gives most families, and the policy mentioned, men-tioned, while vastly inferior to the By Dick Morrison actual stock in the Issuing company com-pany as an investment, is still very much superior to a lot of other insurance policies I have heard of. Certain types of policies offering $20,000 protection cost much more than the $300 per year. In that sense, it Is a good policy. But for people carrying policies much more expensive than that one, it could be tn some Instances that it would pay to consider buying buy-ing a cheaper policy first, and then dropping the expensive policy. This is contrary to one of the most sacred precepts of the Insurance business but It can be wise If circumstances warrant. Perhaps the safest rule for anyone any-one wishing to take out a life insurance in-surance policy Is this: first, learn all you can about Insurance, and then go and buy your insurance. Don't simply take whatever policy some salesman tries to sell you. He has a very good reason for wanting to sell you an expensive policy. It means money in his pocket and out of yours. If you feel the urge to buy, too quickly, temper it with the realization that American Insurance companies have accumulated literally more money than they know what to do with some $90 billion in assets simply by keeping a good percentage percent-age of the money their policyholders policyhold-ers have handed to them. And if you want insurance and certainly most families should have insurance it may be wise to buy Just that. Buy insurance, and not a savings or Investment plan. The cost of insurance Itself is quite low. It is when savings plans, endowments, endow-ments, "cash values" and the like are piled on top of the actual Insurance In-surance that costs run up. On average, money entrusted to insurance companies in the form of savings, over and above the cost of actual insurance, brings a very low return. Money invested in government bonds or savings accounts Is very safe, and the returns re-turns are almost always higher than the 2 offered by insurance companies. Furthermore, watch out for that very common booby trap in Insurance, In-surance, the "loan value" of your policy. No Insurance company that I know of will ever lend you any part of the cost of your actual Insurance. In-surance. What it will lend you is money you have entrusted to it over and above the cost of the Insurance your own money, that Is at perhaps 5 Interest! Policies Poli-cies often figure out so that the company will pay you 2M for that money, yet they charge you 5 If you want to borrow some of it back! , And right here the way opens to another, and worse booby trap. Very often, If you'll read your policy closely, you'll find that If you borrow on your policy, and then die before repaying the "loan" (of your own money, remember), the amount of the loan will be deducted from the payment of Insurance In-surance to your 'beneficiary. This provision, a very common one, hardly deserves to be called anything but a racket Under it, you pay for Insurance, and deposit additional funds for safe-keeping with the insurance company. But If you "iborrow" part or all of the additional money back from the company, your wife, child, or other dear one, may have to stand a wholly uncalled-for loss! How do you go about buying straight Insurance? One way to do this Is to ask for what is called "term insurance". Term insurance is the simplest kind, and about the lowest in cost What it gives you is Insurance protection for your dependents, de-pendents, minus all of the costly frills included in fancier policies. Many of the low-cost group insurance insur-ance policies offered to various associated groups of people are nothing more nor less than term insurance. Without going further into discussion of term Insurance, I want only to suggest that anyone considering the purchase of life insurance study thoroughly both the advantages and disadvantages, from his own standpoint, of term Insurance. A took just received goes into this matter, and many other phases of the Insurance business. Purchase of a copy could easily prove a very valuable investment. It is "The Grim Truth About Life Insurance", by Ralph Handershot, published by G. P. Putnam's Sons, New York, at $1.95 per copy. The author's background back-ground Includes 29 years as financial finan-cial editor of the New York World Telegram and Sun; and time on the staff of the Wall Street Journal, and the Journal of Commerce. Right on Schedule Among the most significant developments de-velopments In the news last week, though far from the most spectacular, spectacu-lar, was the reduction by four of the Federal Reserve Banks of the basic Interest rate, the rediscount rate, from 3V4 to 3. This was the first move in two and a half years in the direction of "easier" money. It means that our money masters have decided that the slowdown In business, the decline in the stock market, and growing unemployment, unemploy-ment, have gone far enough. Evidently Evi-dently they feel that the bubble has been blown off the boom, or at least that as much has "been accomplished in that line as can be done by restricting the money supply, without causing additional damage. Fact is, lowering of interest rates does not automatically and sudden ly bring on B resumpt'on of business busi-ness activity. Raising the rate has a much more positive and drastic effect, In the opposite direction. Raising the interest rate discourages discour-ages borrowing almost immediately, immediate-ly, with the result that potential borrowers for capital expansion and the like are quickly dissuaded from making commitments, and a downward spiral is thus started rather quickly. But it does not follow that with a reduction of the basic interest rate, businessmen who have Just felt the squeeze of "tight money" will rush in at once to borrow. The restoration of "confidence" that commitments can be met takes a little more time, and the beneficial effect is slow. It Is, however, pretty sure to be felt after due lapse of time. One thing all this tends to prove is that the up and down swings of our business cycle are rteither natural nor Inevitable. They are man-made, and can toe pretty well directed and controlled, without, It Is essential to note, any such crude and Ineffective methods as the old OPS price controls. To me, the move last week was particularly interesting because it bore out a prediction made in this column last. October 3. To quote myself: "The tight money policy was instigated in-stigated for the avowed purpose of blowing the bubble off the boom. The idea was not to make it drastic dras-tic enough to bring on a depression. It was to bring on a slow-down in expansion with the idea that this would prevent the occurrence of a boom which would lead to a later bust "SO with business and the stock market slowing down now, in the late summer of 1957, It might appear as if the stage were being set for a change, to be put into effect peihaps In mid -winter. The Fed might order reduction of the rediscount rate about that time, and the overall effect would be to start an upward trend of prices, the full effect of which should be felt about mid-summer, 1958 " Well, the Fed has obligingly made good on my prediction, and if this is a bit early to be called mid-winter, the reduction from 3Vi C". was r?ther fvia'l, tio, and it leaves room for further reduction later on. With the stock market having conniptions, this first cut wasn't a bit too soon; maybe just about right if we want things to get going good by next summer, in time to put everybody in a happy mood before election. So now, the prospect is for better business and all-round prosperity the next few months. It may not be too much to say the low point in the stock market decline has been seen already time will tell. At all events, it is rather pleasant plea-sant to have one's predictions on such abstruse matters vindicated by the action of such an august body as the Federal Reserve, Board, and if I may be pardoned for saying say-ing so, I feel a modest glow of pride for having called the turn as closely as I did. Leisure Time Profits Speaking of the stock market, it may be, as the respected analyst, G. M. Loeb said quite recently, "too late to sell, and too soon to buy". Mr." Loeb is pretty shrewd, and in a book he has written, "The Battle For Investment Survival", he makes a number of interesting and unorthodox unor-thodox observations. Among these Is the statement that there is no such thing as a good investment that is not also a good speculation. This flies right in the face of the stodgy idea that there is something not quite respectable about speculation. spec-ulation. Yet It makes sense, that investment and speculation are inextricably in-extricably tied in together. Anyway, what I started out to say is that the increasing emphasis empha-sis by the American people on recreational re-creational activity has opened several avenues of profitable business, busi-ness, and it is in the October issue if. The Exchange magazine that oroof of this is brought to light. The issue gives a list of 10 year records of the stocks of 25 companies com-panies which "might toe expected to benefit from the growing em-"hasis em-"hasis of leisure time recreation". These include makers of billiard tables, powder for firearms, and fishing tackle. But the two that made the greatest gains in ten years surprised me. They were Hammond Orrrnn. maker of electronic elect-ronic o.guns, and Ouiboari ITarine, the builder of Evonrude motors for boats. This makes it look as If people are taking to organ playing play-ing and boating in a big way. The chart shows that anyone who was fortunate enough to buy ?1000 worth of stock in Hammond Organ in 1947 would today have a stock holding worth $12,850, and be receiving dividends at the rate of $920 a year. At the same time, $1000 in Outboard Out-board Marine would have increased in value to $11,924, and be paying dividends of $291 per year. No others on the list even approach these two for capital gains. They are so outstanding that they cannot can-not be considered typical. But there is something about the figures fig-ures that stirs up a lot of thought. As recreational activities, music and boating are a world apart, but the figures show that companies fortunate enough, or well managed enough to gain public acceptance for their products really' made gains. King Backfires I am happy to report that Charlie Chaplin's new anti-American movie, mov-ie, A King In New York, is not going go-ing over at all well.. The adverse reaction of the critics at the open-sc open-sc rn London seems to have .been justified. It serves the ingrate Chaplin darn well right An item by Paul Ghall, of the Chicago Daily News, printed in the Tribune Sunday, states: "His crude attack on America misses its aim .... But it does not backfire against Chaplin alone. It backfires against the thesis , of American intolerance he tries to put across, and the offensive attacks he makes on the American way of life". Good enough. Hope the fizzle costs him a lot of the money, Americans who once loved him, paid him so freely for his earlier efforts. SALE! FINE COTTON QUILT PIECES I U. tH $14t-M 11$ W JO Mak mmHU, attracti. ntm otik- tilH, HK. Him CUltnOW tc Utart tfwniaf Hwy piaft. Cstorfvl MMrtMDt. Wufesbk. It 4ntt -miya FULL Of4 WW. U4 maul-taac maul-taac l Mjv. SatiifectiM w NATIONAL FAIRICS OX HIS RENO, NEVADA Free Sample: ; of Hawk-inspired styling in action, in new '58 Studebaker or Packard. Come in for your teat-drive, now! Studebaker-Packard VAN'S MOTOR SUPPLY DELTA, UTAH y Giving- Old Crow is traditional at Holiday time 4 ....-mum& tev...... OLD CROW ... & y , - . I holiday dress , A gracious l - ft." en. THE OLD CROW DISTILLERY CO.. FRANKFORT. KY. CiSTR. BY HAT, CIST. PROD. CO. KENTUCKY STRAIGHT BOURBON WHISKEY. 85 PROOf "m "'" ' This year Kennecott will pay for educating 27,000 Utah children -13.5 of all students attending elementary, junior high and senior high schools throughout the state. The money for their education comes from Kennecott's state and local taxes which total about $13,780,000 for 1957. Of that amount, $6,800,000 is for school operation and an additional $1,900,000 is for school building. Kennecott pays its taxes, just as it pays other operating costs, from money earned by producing copper and selling it profitably. When production is based on ore averaging only 82 hundredths of one percent copper, success depends to a larg extent on keeping costs down. However, during the war years and the period of high copper demand that followed, the emphasis was on maximum production, because Kennecott wanted to keep its customers supplied with the metal they needed. Cost of production was a secondary factor. Now the situation has changed and it is essential that Kennecott get its costs in line to compete ui today's copper market. And that poses a problem.- Costs have been rising sharply. In just the past five years employment cost have risen 46, supplies and equipment have gone up substantially and state and local taxes have climbed 85. So Kennecott is seeking economies in a wide variety of ways: through work simplification, expanded use of employee suggestions, improved methods, better use of supplies and equipment and the most efficient use of the work force. Switching the emphasis from production to economy will be of tremendous importance to Kennecott and to Utah. It will help Kennecott continue to operate successfully. And successful operations mean continued benefits, including tax payments that do such a big job of helping to educate Utah children. 3 W?M& ' I IBsmemSS Gspper Corporation A Good Neighbor Helping to Build a Better Utah |