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of the companies have 100 percent of premiums paid returned as a minimum in case of death. Where the latter is done, the annuity retirement is lower than would otherwise be, of course, unless the total premium is raised.

Insurance companies at the present time do not sell any annuities on the basis of disability. That is, if a person who is permanently and totally disabled buys an annuity, he pays the same price for it as he would if he were in perfect health. This means that, by and large, no disabled people buy annuities. And I am not at all sure that what an insurance company would have to say, in answering Mr. Brady's question, would be of any significance in connection with the kind of plan that the pilots want.

2. If an annuity system offers its members, at the time of retiring, the choice between an annuity and the cash value, the costs of the system will be substantially increased over what they would be without the option. This is because of the factor of selection. Take, for example, the case of pilots who are disqualified from flying. The basis of the disqualification for some of them will be such that there is no impairment of their physical power. Most such pilots would take the annuity. Other pilots, however, will be disqualified because of very serious physical impairments. If offered the choice between annuity and cash, they will, of course, take the cash. In the preliminary calculations which I made, I used an annuity value, for $200 per month, of approximately $43,000, at age 40, and of $38,500 at age 45. These are averages. Even if we differentiated between those who were in poor physical condition and those who were not, (this would be a task of some difficulty, and one on which the administrative agency would be challenged by every pilot who was classified as a bad physical risk), the cash value for the bad risks would be about $25,000 at 40 and about $22,000 at 45.

If every man who thought himself a bad risk took the cash and everyone who did not, took the annuity, the cost would be increased by 10 to 15 percent as a minimum, if not more than half made the correct guess. If the pilots were better than average guessers as to their chances of living or dying in a 10 or 12 year period, the cost increase would be very substantially greater.

3. A pilot has coverage for total and permanent disability after 5 years of employment. With the new disability figures that are coming out of the survey, it may be possible to lower the disqualification requirement to perhaps 8 years. I doubt if it would be desirable to go any lower.

I am not clear what the language about having "to pay for about 8 years to equal his amount due him under Social Security" means. A man who pays for only 8 years under Social Security" and