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FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD X-7002 October 23, 1931. SUBJECT: Group Life Insurance at Federal Reserve Banks. Dear S i r : Referring to the Board's l e t t e r of September 3 on the above subject, there i s attached hereto f o r your f u r t h e r information, copy of a memorandum prepared by the Division of Bank Operations under date of September 25 on the cost of group l i f e insurance at Federal reserve banks. Very t r u l y yours, E. M. McClelland, Assistant Secretary. Enclosure. TO GOVERNORS AND CHAIRMEN OF ALL F. R. BANKS. COPY TO X-7003-a DATE: September 35, 1931. Federal Reserve Board SUBJECT: FROM Mr. Van Fossen Group Life Insurance Since the preparation of my memorandum of August 12 on the above subject, we have compiled c e r t a i n information, shown below, on the cost per $1000 of group l i f e insurance c a r r i e d by the various Federal reserve banks, which may be of i n t e r e s t to the Board. In t h i s connection i t should be borne i n mind that the cost of group l i f e insurance v a r i e s considerably from year to year at a given Federal reserve bank, and accordingly only very general conclusions can be drawn from the t a b l e below as to the r e l a t i v e cost of such insurance at the respective Federal reserve banks. The cost per $1,000 of insurance shown i n the f i r s t column below i s based on e s s e n t i a l l y the same scale of r a t e s at each reserve bank and the r e l a t i v e l y high average r a t e s at c e r t a i n of the banks axe due to a correspondingly high r a t i o of employees of advanced age. For example, at Minneapolis and Kansas City 15 per cent of the employees are over 50 years of age and the cost of insurance on these l i v e s i s 52 per cent of the t o t a l cost at Minneapolis and 47 per cent at Kansas City. None of the other banks, except Philadelphia perhaps, have more than 10 per cent of t h e i r employees i n t h i s age group and the cost of insurance on such employees i s but 28 per cent of the t o t a l cost at Boston and but l i t t l e over 30 per cent at a number of other banks. Cost per $1,000 of Group L i f e Insurance c a r r i e d by Federal reserve banks. Average Federal Reserve tabular Bank or policy rate* Annual Premium Policies Philadelphia $11.28 12.29(a) Kansas City 9.48 San Francisco 8.91 Cleveland 9.27(b) 8.89 Boston 9.65(a) Dallas Monthly Premium Policies New York Richmond Atlanta Chicago St. Louis Minneapolis 9.95 10.44 10.20 10.10 10.86 12.72 Experience Dividends discount — received — per cent of per cent of tabular r a t e tabular r a t e Actual cost per $1,000 Per cent of Amount tabular r a t e n 44.1 64 73 77 85 81.8 88 55.9 $7.21 8.97 7.30 7.58 7.58 7.82 5.39 37.6 24.4 7.7 8.5 43.8 None 51.7 56.1 90.0 81.8 46.8 84.0 5.14 5.86 9.18 8.26 5.08 10.68 36 27 23 15 18.2 12 None Non-participating n n ii 10.7 19.5 2.3 9.7 9.4 16.0 • S l i g h t l y higher r a t e s are charged on the monthly premium p o l i c i e s due to i n t e r e s t on deferred payments. Allowing f o r t h i s the s c a l e of r a t e s at each age i s i d e n t i c a l f o r a l l banks, except Cleveland. (a) After deduction of e x t r a premium f o r double indemnity f o r accidental death. (b) Calculated on the scale of r a t e s charged the other reserve banks.