You are reading a page from The Fraternal American Table,
American Insurance Union (1926)
Part
of the American Term Life Insurance History Project
Term Life Insurance
The Fraternal
American Mortality Table
Read to the
Fraternal Actuarial Association,
Tuesday, February 23rd, 1926
Chicago, Illinois
Hotel Sherman
By Edward B. Fackler
The Fraternal American Mortality Table consists of a sec-
tion of the National Fraternal Congress Table and a section of
the American Experience Table, with a new section of table so
graded as to bridge the gap between the other two sections. The
table which resulted was so named to indicate the combination
and not imply a new grading of actual experience.
This table was prepared in May, 1912, to meet a special
need, and has served its original purpose excellently. In re-
sponse to requests, this description of the table is now given, be-
cause of the degree to which its general suitability is confirmed
by recent actual experience.
This table was adopted with 4% interest in 1914 as the
basis of the insurance plan of the Knights of Columbus, replac-
ing the Canada Life Table with 3 % interest.
The basis adopted by the Knights of Columbus in 1902 on
the recommendation of the late Mr. David Parks Fackler was
entirely adequate for the actual requirements of the insurance
system. We were, however, studying the facts each year as they
developed, and found that the curve of the Order's actual mor-
tality did not correspond as closely as desirable to the standard
which has been adopted. Therefore, when the time seemed op-
portune, the firm, which had then become Fackler & Fackler,
recommended a change to a basis which would be more satis-
factory and which would take advantage of the then widely
adopted New York Conference Law. There was no opposition to
this change. It required no increase in any step-rates, and the
level-rate assessments afterward were made easier to meet. The
change was not obligatory on the then existing membership, so
there was little, if any, friction or unsettlement caused by the
change.
The K. of C. system is a five-year step-rate system, merging
into level-rate plans after middle life. The reserve during the
step-rate period is relatively small per unit of insurance, as there
is only a moderate amount of accumulation to reduce the level-
rate. premium which eventually becomes payable.
It was expedient to use as a basis the National Fraternal
Congress Table and 4 % interest for most of the step-rate period,
32
when no surrender values would be granted, and it was also ex-
pedient to use the American Experience Table and 4% interest
during the level-rate period so there could be no doubt that sur-
render values might, under the New York Conference Law, be
granted on such certificates. My suggestion, to join the two
mortality tables, seemed but the logical course under the cir-
cumstances.
The situation required that the N. F. C. Table be used up
to age 45, and that the American Experience Table be used from
about age 55 upwards. To improve the "bridge curve" it was
extended up to age 57.
An interpolation of mortality rates by formula was tried,
without satisfactory results. Therefore, we plotted the N. F. C.
Table from 45 downwards and the American Experience Table
from 57 upwards, with a "spline" so fixed as to indicate the
proper curve between ages 45 and 57.
The mortality rates read off from the joining curve thus
established were somewhat adjusted, by inspection of differ-
ences, to improve the grading. Then Ix and dx columns were ob-
tained from age 45 upwards with 145 of the N. F. C. Table
used as the radix. As that radix is not large, this produced
some changes in the qx column, and above age 67 there are some
minor differences between the Fraternal American Table and
the American Experience Table.
While the formation of this combination table was there-
fore a matter of expediency, and the "bridge curve" was not
based upon adequate statistical data, there was actual experience
in the K. of C. tending to confirm the general accuracy of the
"bridge curve."
We had noted that between ages 45 and 60 the N. F. C.
Table was rather too low and the American Experience Table
rather too high to properly represent the actual experience of
the Order. We also had before us criticisms of the N. F. C.
Table to the effect that it understated the true fraternal mor-
tality during middle life.
Probably an idea of how the Fraternal American Table
compares with other tables can best be formed from a graph
such as is given herewith.
This graph shows the Fraternal American Table, the Na-
tional Fraternal Congress Table, the American Experience Table J
and the American Men (Ultimate) Table for all the younger
ages, past the "bridge curve" of the Fraternal American Table
and up to age 70. Beyond that point the table of qx shows the di- J
vergence between the various tables, which results from the dif-
fering limits assumed for life; terminating at age 96, the F-A
and American Experience Tables of course soon rise much above
the other two tables.
The closeness of the F-A Table curve to the A M (5) Table
curve is very striking. At ages 61-68 the A M (5) rates of mor-
tality rise slightly above the F-A rates—at most .53 per 1000 at
65. At all other ages the F-A rates exceed those of the A M (5).
The section below age 20, marked "prefix," was graded to con-
form with the curve above age 20.
The similarity of the American Men Table tends to confirm
the general accuracy of conservatism of the Fraternal American
Table for general use by fraternal benefit societies, except with
regard to business which is specially subject to adverse selection.
It also suggests the advisability of replacing both the N. F. C.
Table_ and the American Experience Table by the Fraternal-
American Table, as the minimum statutory basis for fraternal
insurance with the usual surrender values.
In a paper which I read before the Fraternal Actuarial As-
sociation in August, 1923, which appears in No. 6 of the F. A. A.
Proceedings, some figures, involving 4% interest, were given
based on the Fraternal American Table, as compared with other
tables, and for convenience of reference, some of the compari-
sons are repeated here.
Net Annual Premiums and Reserves, Per $1,000
ORDINARY WHOLE LIFE
Net Level Premium Basis, 4% Interest.
NET ANNUAL PREMIUMS
Age A. M. (5) F-A Am. Exp.
20 9.82 10.66 12.67
30 13.68 14.53 16.21
40 20.55 21.24 22.35
50 32.86 33.43 33.70
60 54.90 55.45 55.45
TERMINAL RESERVES
End of Table Age
Years 20 30 40 50 60
AM 34 53 82 117 155
5 F-A 33 52 80 115 159
Am. Exp. 30 46 73 112 159
A M 182 269 368 466 551
20 F-A 177 263 364 475 589
Am. Exp. 159 242 352 473 589
Attention is directed to the comparison of net annual prem-
iums on the American Men (Ultimate) Table, Fraternal Ameri-
can Table and American Experience Table.
The F-A Table requires net premium collection moderately
gre