REPORT TO THE CIA CAREER SERVICE BOARD FROM THE INSURANCE TASK FORCE IN RESPECT TO INDEMNITIES AND BENEFITS FOLLOWING DEATH AND DISABILITY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-01826R000600070005-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 9, 2016
• Document Release Date: August 22, 2000
• Sequence Number: 5
• Publication Date: April 5, 1954
• Content Type: REPORT

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ASPT
TO THS
CIA CAMW SMVICS SOMD
IBM
THS INSURM TASK VORCB
IBD RBA' TO
MOMMICS ABA? ENWITS
F?L?.OWI i
DSATS ABC DISABILITY
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ZHE I T 5T ANCE TASK FCR.CE MEMBERSHIP
42mirmant
Mather and Sec ftys
Ambers
Members
SA - DD/P
PROS - Parsol 25X1A9a
ES:C p Personnel
Deputy Gen. Counsel
Security Advisar*rs Office c.f Socurity
Security Advisor: Staff C
Sacurity Advisors Qtief, Fl ? PI
Consultants
Coneaaltants
Congultants
(All Consultants cleared 11bpe' Secret)
25X1A5a1
25X1A5a1
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Foreword
1o Statenent of the problem.
20 Assumptions*
PART I as to death.
Facts
ao Statistics . . .. . . .,. excerpted from TAB A
b. Existing available protective measures . . . a % TAB B
14, Discussion
5. Conclusions
6* flecomtaarndations
PART IX as to disability..
an Statistics ? . . . . .. . ? . excerpted from TAB C
ba Existing available protective Masures, . . ?' " TAB D
fit. Discussion
5. Conclusions
6o Recommendations
TAB A Statistics . . . ? ? e o ? ? o a ? ? ? ? o o a s o a a as to death
TAB B Existing Available Protective LIeaeures -. : . a . . ? 0 " rt n
TAB C S-tatiatics . . o . o ? ? . . a, ? . . . . a . a . as to disability
TAB D Existing Available Protective Measxres . ? . a a ? "' - "
TY 3E Appendices. .
1, WAEPA letter re broadened air-flight acceptance
I1. WAEPA letter re broadened membership eligibility
III. WAEPA letter re broadened employee coverage
IV. The attribution factor
V. Definition of "?empl.oyee groups ay regulation
VI. Hazardous duty in O11
VII. Hazardous duty in T.SS
VIII. Hazardous duty in operations, - per FE
I%. th ecellaneous expression of insurance interests by random
selection of DDof'ficers.
X. Procedure and sources in obtaining CIA and other death and
disability figures,
XI. Premium change i.- Onaha matches GHI surgical.
XII. Full text of Dr. George Baehr's Congressional testimony.
YIII. Excerpt on health insurance from TODAY'S WOMAN, 1953 (Fawcett
Publications., Inc.), written by Jack Harrison Pollack.
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Because of the complexity of this. subject, it is deemed best to make
the presentation in two parts A first, as to death, and then disability.
Clearly, what the Agency should do, if anything, in these #ield:s$ is
properly considered only after review of existing available prctective
measures. Accordingly, this presentation is so organized,
Warning is given that the statistics .following in respect to death
are somewhat untrustworthy in the earlier years especially aixi, overall,,
may be too meagre. to be fully significant. They are, however, indicative
arad useful,
Agency procedures-and systems in respect to records of depth and
disability should be tightened and so organized that continuingly in the
future, this type of Agency vital statistics is immediately ready for any
desired analysis by appropriate officers, '?hie is especially important
in the field of.disability (hospitalization) because of the -rcwing
comtry-wide interest, information and charge in such group plans.,
Further, interpretation and application of P.L, 1.110 in respect to
overseas illnesses must always be carefully weighed together with the
employee ! a membership in a g ip hospitalization plan, Full justice to
the employee includes concern not only for costs to the Government but
also conodrn for the degree of employee participation, and his premium
costs, in ar group plan offered.
The Task Force finds grievous lack of knowledge in the employee
group as to the individual's beneficial rights, especially urder that
important and excellent piece of legislation known as the Federal
Employees Compensation Act. This is also true, but now less so, as
to the war Agencies Employees Protective Association life insurance.
It is suggested that if. future disseminations of such nature are
dressed up modestly, they are loss likely to hit the waste basket with-
out reading. More importantly in this connection, the Usk Force
directs explicit criticism to the culpable failure of the Agency and
its executive or administrative officers to assure that needful informs=
tion reaches all persons concerned,
All of this material should be made available to the Chief, Medical
office., for his appropriate and proper technical contribution to personnel
administration,
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TO : CIA Career Service Board
FROM : Insurance Task Force
SUBJECT: Employee and Family Beneficial Coverage in Respect to Death and
Disability
1. PROBLEM: What employee and family indemnity and beneficial insurance
coverage should the Agency arrange to have offered in order to remedy
or alleviate any possible existing inJuntioe, to alleviate personal
and family concerns which dilute or distract from attention to
mission, to demonstrate community of interest, and to promote the
concept of career.
2. ASSUMPTIONS: The Task Force believes:
a. That from the point of view of constructive personnel administra-
tion the Agency -han a deep interest, if `not obligation, to assist
its employees to meet life's more serious exigencies, whether
imposed by mission or not.
b. That there do exist particular security problems for the Agency
in the field of life and disability insurance.
o. That nature of C.I.A.'s mission requires a quality of personal
action which is founded in a ve1l-rounded and developed nastier
concept.
d. That the agency, as do others, desires to take advantage for its
employees of existing benefits commonly extended only to groups
as such - or to create appropriate new benefits.
e. That the Agency adopts the principle that over and above the pres-
ent available benefits the employee is responsible for securing
for himself, with his own means, the needful life (and disability)
'protection available.
PART I
FACTS, in respect to death. (staff employees and. staff agents)
a. While these statistics are legitimate in perhaps all of the sewn
last years, there is no surety that every death shows in our
records and in any sent the meagreness of the death atm-eratar
strongly cautions as to attributing complete significance.
SEMW
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(1) DEATH INCIDENCE, all causes, all ages -- CIA, Dept. of State,
and U. S. population as a whole.
FOREIGN
SERVICE
STATE
D PPARTM ENTAL
U.S.
POPUTA TI ON
2/
(Physical am=),
(Physical Mimal
(No Physical
Total
Deaths
Total
Deaths
Total
Deaths
Deaths 79
191x7
1
.37
Not A
vail
able
1948
5
1.63
9.88
1949
8
2.04
10
1.86
7
~66
1950
6
1.15
15
1.90
18
2.29
1951
12
1.60
8
.92
17
1.82 9.7
1.29
1952
19
1.75
.56
19
1.82
9.6
1953
18
1.49
1.06
12
1.47
Average
51,'52,'53
16.3
1.61
.83
16 a
1.75 a/
1.54
PLY includes 5 deaths from single air crash.
If 5 deaths from single air crash are eliminated the ratio
would be as shown.
Data furnished by U. S. Public Health Service.
(2) DEATHS BY MAJOR COMPONENT - 1952 and 1953 (CIA)
DD/P DD/I DD/A CONMO OTH
Total Deaths 16 9 7 2 3
Deaths per
14000 1.73 1.48 1.56 1.02 3.42
(3) PIACE OF DEATH - 1947 through 1953 (CIA)
72% in U.S.; 15% in Far East; 13% in Europe and Near East
(4)
CAUSE OF DEATH
1947 through 1953 (CIA)
Cause
Summary
Item
Heart
Cancer
Illness,
Other
Accident
Duty Conn.
cide Accident
Not Duty
Enemy Total Perf.of
Action Duty
Number of
Deaths
25
11
12
8
6
5
2 69 10
Percentage
of Total
35%
16%
17%
12%
9%
7%
3% - 15%
U. S.
Population
32.5%
13.7%
1.:L%
SEC tiLT
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(5) Ages at death, 1947 to 1953 inclusive, in 3 selected cate-
gories (CIA)
(a) Heart: General progressive distribution from age 36
(b) Cancers Middle ages.
(c) Suicide: Younger ages.
b. Existing available protective measures in beneficiary coverage
have the following aspects of most importance:
(1) Commercial Ordinary Life policies
(a) The basic Policy (Face Amount) excludes coverage if
death is occasioned by an Act of War declared or
undeclared) while the insured is in either the military
or the civilian service, by air flight in either military
or non-scheduled planes for purposes of training, testing,
military mission or while acting as a crew member.
(b) The Double Indemnity feature excludes (a) above, plus
others.
(a)
Policies are not obtainable under certain circumstances if
the applicant is scheduled for hazardous duty, and, once
granted may be voided if the exclusions are offended.
(2) National Service Life Insurance (or U. S. Government Life
Insurance)
(a) Both these policies are limited to veterans and are
incontestible from date of issue for any cause except
fraud - i.e., no risk exclusion.
(3)
Federal Employees Compensation Act
(a)
This Act is an exclusive compensatory remedy for death
(and disability) resulting from injuries suffered
in performance of duty or from diseases rox#ma
caused by employment. (See Tab A for example o
application
(4)
Civil Service Retirement Act
(a) This is primarily a retirement act, annuity in nature,
but it does provide =vLU death ( and disability) bene-
fits without regard to performance of duty. The principal
qualification is 5 years of civilian service - then
military service may be added. (See Tab A. for example
of application,)
-
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FAST I
(5)
Public Law 110
(a) Maximum death benefits are preparation and transporta-
tion of the remains of the employee or member of his
family who may die in travel status or abroad to appro-
priate place of interment.
(6) War Agencies Employees Protective Association (WAEPA)
(a) This is excellent term life and accidental death coverage
totaling now $27,000 available without medical examination
or delay, for a premium coat (up to age 41) of $100.00
per year.
(b) There are no exclusions in the term feature and five (5)
in the accidental death category. Most importantly, in
respect to air flight, any flight is fully covered if
the insured proceeds under orders, directly or indirectly,
of the U. S. Government, as a passenger.
DISCUSSION, as to death
a. The potential of risk on the DD/P side shows up both in the .ratio
for 1952 and 1953 and also in the fact of 8 DD/P deaths out of 10
(for all years) in the performance of duty category. These figures
are without reference to deaths arising from illness proximat
caused by employment. Six of the seven suicides are on the DD//P
side (one was in TES) and in two cases of the total, it is knoimn
that Agency activities were pressing factors.
(1)
The incidence of death in performance of duty is
significant at 15%. However, the Task Force believes
than this ratio can quickly show sharp increase due to
our widespread traveling and OTR, TSS and operational
activities. The potential in respect to non-scheduled
aircraft will be treated verbally as appropriateo
b. From an analysis of existing available protective features, the
following observations are of most importance.
(1)
As to commereW Ordinary Life policies, unquestionably
mazy of the hasards to which substantial numbers of our
people are exposed (Opa, OTR, TSS)will void the
individual's previously obtained policy and sake it
impossible for an applicant to obtain such coverage.
This is true in respect to the Pace Asout, but most
especially and more broadly true of the double indemnity
and disability features of these policies.
-4-
Sz=
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 i e
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This fact is subject,, in part, to cxrwer-story modification,
as dictated by security. .
(2) As to National Service of U S 0overnment Life. Insurance.
This in hen owe coverage In moderate ace amount or the
veteran who kept it, This insurance is really cheap with
no hazard exclusions, in either death or disability
features.
As to FECA. This is excellent coverage for the individual
(in disc ability) and for the family in death, arising from
injuries suffered in performance of duty or from diseases
proximately caused by employment. All hazardous or semi-
hazardous duty is covered.
As to Civil Service Retirement Act, This is a retirement
Act, but t s proviM ate benei a an too
limited a basis, for death arising under circumstances not
covered by FECA
(3)
(4)
(5) P. L. no. This Act provides a very small
G r a only.
assist ($h00.00)
(6) WAEPA. This is valuable moderate face amount coverage
for non-accidental death = excellent coverage for accidental
death. The policy is valuable because of (a) absence of
exclusions in the term feature and but small limitation
in the accidental death clause; (b) ease of procurement -
no physical examination and immediate availability.
CCNCLUSICNS, as to death
There is need to seek rep" ent provision for potential voiding
of an individual's ordinary life policy and to counter-denial of
ouch-coverage from the ccemercial market.,
b. There is no need to seek supplemental beneficial coverage in the
field of performance-of-duty.
(1)
The FECA is excellent coverage; when supplemented by the
optional coverage of WAEPA, and probable ordinary life (and
for a veteran, NSLI) all reasonable Agency obligation and
concern is satisfied,
c. It is desirable to seek, as have others, additional, better or
cheaper life coverage outside the field of performance-of duty?
Our people are young with existing and/or potential family
responsibilities.
(1) The group factor here (term life coverage) provides the
potential of about 70% saving in pre93mo cost vs. ordinary
life. (this is the commercial aspect)
SEGRLT
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SECRET
de There is need to subject our WAEPA experience to actuarial scrutiny.
?. The liberal clauses in WAEPA make it an extremely desirable offer.
ing and one not to be jeopardised.
f. There is need to facilitate the individual's procurement of single
trip cmerage on scheduled airlines, with arrangement for such
offering through out processing. (This facility has been agreed
to by Omaha - as a convenience for us - it we desire to so place
it.)
g. There is need to arrange (probably as above) for trip coverage on
non.-scheduled and military aircraft. (It is possible to do tbis
secu"]Sr by special arrangement)
h. The "exclusive remosty" aspect of FECA precludes the expenditure
of appropriate dollars for the individual's benefit, in either
preniun cost or other substantive benefit in the life field.
(excepting the small benefit in PL 110)0
However, because of the nature of Agency mission - its high
demand for devotion, its general and overriding security demands,
the Agency must be prepared to spend appropriate needful adminis-
trative dollars to backstop all proper beneficial coverage measures.
i.. WAEPA shall not be denied a staff employee or staff agent at any
time. The attribution factor contained in FECA is overriding.
Choice must be confined to the
person for the mission.
J. At the present time the Task Force is not looking to legislation
for resolution of our insurance problems.
k. As fully illustrated frcm lack of knowledge among our employees
of FECA - almost entirely, and of WAEPA - less so now, we asst
consider new %a and means to get information over to our employees.
This is vitally important first in respect to mission, then in
justice to the employee and last in respect to the importance of
long-time solid career development program.
Many aspects of the foregoing ask for technical insurance consulta-
tion with actuarial study, to conclude in respect to appropriate
existing supplemental measures or self-insurance.
SECRET
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1. Recapitulation as to continuing benefits after death.
a. In order to assess practically the asset values to the beneficiary
in existing available protective measures, certain assumptions as to
asset (or proceeds) disposition-methods are utilized as follows:
(1)
The widow's age is assumed at 30 years (because of the general
youth of the Agency employees) in both examples to follow, i.e.,
widow is the only beneficiary in the first case, and widow and
2 children in the second - ages 5 and 6 years.
(2) As to Orftnary Life Insurance. There is assumed a policy of
10;66D face with double ty for accidental death.
(3)
(4)
(5)
(6)
The widow chooses to receive the proceeds imaediately in the
farm of a monthly life laco?e (20 years certain) in both alas.
Disposal of these proceeds is illustrated by utilizing option 4,
under an Ordinary Life policy written by United Benefit Life In-
surance Co. of Omaha, Nebraska. The benefit is $30.50 per month
for the face of policy, or $61.00 per month with the Double In-
demoity feature.
(a) The proceeds of this policy are not taxable as income unless
left with the Company at interest. Such interest is taxable.
As to PRCA, in the sugary following bare, the exasp1e8 shown
in the analysis heretofore are used.
(a) The benefits here are not {:exab1e as inco e.
As to CSRA, it is seen that its value is small - is of no con-
sideration in the case of death in performance of duty, and is
applicable uaoder line-of-duty or not, to a widow Alone only
when she reaches 50 years. To a widow with children benefits
are applicable iaa?ediately but are small.
(a) The benefits bw* am taxable " Income unkm the ty
rule. 3$ of total salary deduction until tax equals
deductions, than all taxable.)
As to WAWA in the term feature, it is assumed that the employee
chose proceeds disposal on the basis of monthly installments
parable i?sdiately on his death for the 15-year period. This
pays $6.53 per month per $1,000 of policy face ($12,000 now),
i.e., a total of $78.36.
(a) The proceeds here are not taxable as income, in the same
way as ordinary life-.
As to WAWA, in the accidental death feature, which must be
paid in a lump sum MW now), it is Assumed that the single
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 ? CON F ~~,,QQ
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TAB A
benefiMary (wife only, age 30) is better served by her purchase
of a single premium Deferred, Refundlog Life Annuity payable in
20 years at her then age of 50 y'ear's (or earlier for less amount
if she chooses or needs). On this basis, GuarGlen Life of N.Y.C.
will, in 20 years accumulate a cash value for her of $24,135
and then pay her .13 monthly for life and also refund the un-
used balance to hgr specified beneficiaries.
Bc er, under this feature, in respect to the second example
(the employee's beneficiaries are wife and 2 children, ages 5
and 6), it is deemed the pert of wisdom for her to use the prin-
cipal as she chooses under a Trust Fund serrangaMent, for a minions
of 12 years (until the children we 18 years old) . The trusts now
pay about 4% aven4p on the investment and charge 5$ on the fund
. earnings. This viii net the beneficiary aftitioi al earnings over
12 yews of about $3,000 total or an s-v-erag~e earning of about
$250 per' year. She takes out $1225.00 per mouth average for 1.2
years and uses up the principal.
(a) The proceeds under WAEPA accidental death feature are not
table as Imam,* except as to Interest or earnings.
(7) As to CSEA (Civil Service Retirement Act) benefits, even thou
the beneficiary can choose as between CSRA and PBCA, there is
really no competition between the two. Each was designed for a
different purpose. However, outside of c~'oruance of duty death,
the. sole beneficiary (widow only) waits until she is 50 years of
age to benefit in a 8maL1, way under CSRA. The widow with 2
children secures eomrAwt larger, though relatively s=3 3,0 bene-
fits immediately following death, under CSRA. Here again there's
no competition with FECA, hence the great importance of inter-
pretation as to "performance of duty." The two come used in the
analysis proper are again utilized in the following summary.
(a) The proceeds are ta=ble as income under the annuity rule.
(8) In respect to Natio i Service Life Insurance (veteran), the 15-Wil
yew mathod
of polite paying face. This In $6i. 1chosen 0 monthly.
(a) These proceeds are not table as income.
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CONFIDENTIAL
SUMA1AR1 OF EXISTING AYAILABL.E PROTECIIYE ASSETS IN TERMS OF THE PROCEEDS - DISPOSAL P:..ANS CHOSEN
(MONTHLY PAYMENTS)
ASSUMPTIONS.
1. DEATH OF A GS-11 Wtf~
9 VEARS SERVICE
2. BEFEFIC$ARY - AOE 30
OROIMARY LIFE INSURANCE ;FA;.E)
n n n 10.I,)
FEC 25X1A6a
WAEPA !TERM)
n {ACCIDENTAL DEATH)
?DTAL25X1A6a
PERFORMANCE OF DUTY
WITH ORDINARY LIFE WITHOUT OROINART LIFE
30.50
30.50
,!NF OF DUTY OR NO
WITH ORD. !fE WITHOUT ORO.
11FE
30.50
30.50
NS1
61.10
61.10
61.10
61.10
TOTA125X1A6a
423.21
362.21
200.46
139.46
1. 34.00)
ORDINARY LIFE INSURANCE ;FACE)
30.50
30.50
0 n n (0
1
)
30
50
,
,
FECA 25X1A6a
.
30.50
66
84
.
78.36
78.36
78.36
78.36
IACCIDEVTAL DEATH)
125.00
125.00
125.00
125.00
TOTAL 25X1A6a
592.52
331.20
71
00)
.
M I- I
61.QO
61.10
61.10
4~TA 25X1A6a
(153.62
592.62
392.30
,AA"lY DEATH OUTSIDE OF .tsERFORMAM:~E OF DUTY
Approved For Relea
~e 2000/0*1 'A-RD
X40
1. 34.00)
MA
5-8