A-10774, SEPTEMBER 19, 1925, 5 COMP. GEN. 208

A-10774: Sep 19, 1925

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WAR-RISK INSURANCE - PREMIUM PAYMENTS BY PERSONS IN THE ACTIVE MILITARY OR NAVAL SERVICE REGULATIONS OF THE UNITED STATES VETERANS' BUREAU GOVERNING THE EFFECTIVE DATE OF LAPSE AND REINSTATEMENT OF UNITED STATES GOVERNMENT LIFE INSURANCE APPLICABLE WHILE THE INSURED IS IN THE ACTIVE MILITARY OR NAVAL SERVICE. WHICH CONTAIN A PROVISION THAT THE POLICY WILL LAPSE WHEN THE INSURED COLLECTS HIS ACTIVE SERVICE PAY WITH ACTUAL OR PRESUMPTIVE KNOWLEDGE THAT DEDUCTION OF PREMIUMS HAS NOT BEEN MADE. ARE LEGAL AND PROPER AND THEIR PROMULGATION IS AUTHORIZED. SUBMITTING A DRAFT OF PROPOSED REGULATIONS GOVERNING THE EFFECTIVE DATE OF LAPSE AND REINSTATEMENT OF UNITED STATES GOVERNMENT LIFE INSURANCE APPLICABLE WHILE THE INSURED IS IN THE ACTIVE MILITARY OR NAVAL SERVICE.

A-10774, SEPTEMBER 19, 1925, 5 COMP. GEN. 208

WAR-RISK INSURANCE - PREMIUM PAYMENTS BY PERSONS IN THE ACTIVE MILITARY OR NAVAL SERVICE REGULATIONS OF THE UNITED STATES VETERANS' BUREAU GOVERNING THE EFFECTIVE DATE OF LAPSE AND REINSTATEMENT OF UNITED STATES GOVERNMENT LIFE INSURANCE APPLICABLE WHILE THE INSURED IS IN THE ACTIVE MILITARY OR NAVAL SERVICE, WHICH CONTAIN A PROVISION THAT THE POLICY WILL LAPSE WHEN THE INSURED COLLECTS HIS ACTIVE SERVICE PAY WITH ACTUAL OR PRESUMPTIVE KNOWLEDGE THAT DEDUCTION OF PREMIUMS HAS NOT BEEN MADE, ACQUIESCES IN SUCH FAILURE TO DEDUCT PREMIUMS, AND MAKES NO PROVISION FOR OTHERWISE PAYING SAID PREMIUMS DURING THE GRACE PERIOD, ARE LEGAL AND PROPER AND THEIR PROMULGATION IS AUTHORIZED.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, SEPTEMBER 19, 1925:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF AUGUST 5, 1925, SUBMITTING A DRAFT OF PROPOSED REGULATIONS GOVERNING THE EFFECTIVE DATE OF LAPSE AND REINSTATEMENT OF UNITED STATES GOVERNMENT LIFE INSURANCE APPLICABLE WHILE THE INSURED IS IN THE ACTIVE MILITARY OR NAVAL SERVICE, AND REQUESTING DECISION AS TO YOUR AUTHORITY TO INCLUDE THEREIN A CERTAIN PROVISION HEREINAFTER QUOTED AND AS TO WHETHER YOU WOULD BE AUTHORIZED TO PROMULGATE THE REGULATIONS WITH SAID PROVISION OMITTED THEREFROM.

THE PROVISION IN QUESTION IS AS FOLLOWS:

SEC. 5. LAPSE OF INSURANCE.

B. U.S. GOVERNMENT LIFE INSURANCE SHALL LAPSE:

(4) WHEN THE INSURED COLLECTS HIS ACTIVE SERVICE PAY WITH KNOWLEDGE THAT DEDUCTION OF PREMIUMS HAS NOT BEEN MADE, ACQUIESCES IN SUCH FAILURE TO DEDUCT PREMIUMS AND MAKES NO PROVISION FOR OTHERWISE PAYING SAID PREMIUMS DURING THE GRACE PERIOD.

YOU STATE THE QUESTION AS TO THE NECESSITY FOR INCLUDING THE QUOTED PROVISION IN THE REGULATIONS IS SUBMITTED BECAUSE OF OBJECTIONS MADE THERETO BY THE WAR DEPARTMENT WITH RESPECT TO ITS APPLICATION TO ENLISTED MEN OF THE ARMY.

THE MOST RECENT STATUTORY AUTHORITY GRANTED THE DIRECTOR, UNITED STATES VETERANS' BUREAU FOR PROMULGATING SUCH REGULATIONS IS FOUND IN SECTION 301 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, AS AMENDED BY SECTION 13 OF THE ACT OF MARCH 4, 1925, 43 STAT. 1309, VIZ: "REGULATIONS * * * SHALL PRESCRIBE THE TIME AND METHOD OF PAYMENT OF THE PREMIUMS THEREON.'

IT HAS BEEN REPEATEDLY HELD THAT THE MERE ALLOTMENT OR OTHER FORM OF AUTHORIZATION FOR DEDUCTION FROM THE PAY OF OFFICERS AND ENLISTED MEN IN THE ACTIVE MILITARY OR NAVAL FORCES TO COVER WAR-RISK INSURANCE PREMIUMS IS NOT EQUIVALENT TO ACTUAL PAYMENT OF THE PREMIUMS, AND DOES NOT IPSO FACTO PREVENT LAPSING OF THE POLICY. ARMY OFFICERS, 2 COMP. GEN. 249, AND DECISION OF DECEMBER 5, 1923; NAVY OFFICERS, 4 COMP. GEN. 691; NAVY ENLISTED MEN, 3 COMP. GEN. 202. THERE EXISTS NO SOUND REASON FOR ANY DIFFERENT RULE WITH RESPECT TO ENLISTED MEN OF THE ARMY.

ONE OF THE CONTRACTUAL CONDITIONS OF GOVERNMENT INSURANCE IS THE MONTHLY PAYMENT OF PREMIUMS BY THE INSURED. THE ALLOTMENT SYSTEM IS A MEDIUM THROUGH WHICH PERSONS IN THE ACTIVE MILITARY OR NAVAL SERVICES MAY CONVENIENTLY EFFECT PAYMENT OF THEIR PREMIUMS. NO RESPONSIBILITY RESTS UPON THE GOVERNMENT IN THE CAPACITY OF INSURER IF THERE IS SUCH A FAILURE OF THE ALLOTMENT SYSTEM AS TO PREVENT PAYMENT OF THE PREMIUMS TO THE GOVERNMENT WHEN DUE. THE INSURED WHO ACCEPTS HIS PAY WITH KNOWLEDGE, ACTUAL OR PRESUMPTIVE, THAT THE AMOUNT OF INSURANCE PREMIUMS HAS NOT BEEN DEDUCTED, IS IN NO BETTER POSITION THAN A PERSON OUTSIDE THE GOVERNMENT SERVICE WHO FAILS TO FORWARD HIS INSURANCE PREMIUMS TO THE VETERANS' BUREAU WHEN DUE.

AS OMISSION OF THE SUBPARAGRAPH IN QUESTION FROM THE REGULATIONS WOULD BE CONSTRUED AS PREVENTING THE LAPSE OF POLICIES WHILE THE INSURED IS IN THE ACTIVE MILITARY OR NAVAL SERVICE MERELY UPON THE EXECUTION OF THE ALLOTMENT OR OTHER AUTHORIZATION OF PAY FOR PREMIUMS, YOU ARE ADVISED THAT THE SUBPARAGRAPH IN QUESTION IS A LEGAL AND PROPER PROVISION TO INCORPORATE IN THE REGULATIONS AS PROPOSED AND SAID REGULATIONS WITHOUT SUCH A PROVISION WOULD NOT BE AUTHORIZED. FURTHERMORE, THE WORDS ACTUAL OR PRESUMPTIVE SHOULD BE INSERTED IMMEDIATELY BEFORE THE WORD ,KNOWLEDGE" IN SAID PROVISION.

BY PRESUMPTIVE KNOWLEDGE IS MEANT THE KNOWLEDGE TO BE PRESUMED FROM THE ACCEPTANCE OF FULL PAY, OR OF SUCH AMOUNTS AS WOULD NOT LEAVE SUFFICIENT PAY REMAINING DUE TO COVER INSURANCE PREMIUMS AS AND WHEN PAYABLE. COMP. GEN. 693.