B-131141, MAY 17, 1957

B-131141: May 17, 1957

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LEVERENZ: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 20. WHERE AN EXAMINATION OF YOUR MILITARY PAY ACCOUNT REVEALED THAT NO DEDUCTIONS WERE MADE FROM YOUR PAY DURING THE PERIOD FROM JULY 1. THE CASE WAS REFERRED TO THE GENERAL ACCOUNTING OFFICE FOR COLLECTION. THAT PAPERS WERE DRAWN IN JULY 1951 FOR CONVERSION OF YOUR NSLI TERM INSURANCE POLICY TO A 20 YEAR ENDOWMENT POLICY WHEN YOU WERE STATIONED IN TOKYO. ALLEGING THAT THE PAPERS WERE DESTROYED IN YOUR PRESENCE. TERM INSURANCE WAS NO LONGER AVAILABLE. IS THE BASIS FOR THE LEGAL DETERMINATION BY THE VETERANS ADMINISTRATION THAT YOU HAD CHANGED TO A 20-YEAR ENDOWMENT POLICY IN JULY 1951. FOR WAIVER OF PAYMENT OF PREMIUM ON TERM INSURANCE WAS NOT APPROVED.

B-131141, MAY 17, 1957

TO MR. CARL E. LEVERENZ:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 20, 1956 CONCERNING THE CLAIM OF THE UNITED STATES AGAINST YOU IN THE AMOUNT OF $1,009.20.

THIS CLAIM ORIGINATED IN THE FINANCE CENTER, UNITED STATES ARMY, INDIANAPOLIS, INDIANA, WHERE AN EXAMINATION OF YOUR MILITARY PAY ACCOUNT REVEALED THAT NO DEDUCTIONS WERE MADE FROM YOUR PAY DURING THE PERIOD FROM JULY 1, 1951, THROUGH NOVEMBER 30, 1953, TO PAY PREMIUMS ON A 20 YEAR ENDOWMENT, NATIONAL SERVICE LIFE INSURANCE (NSLI) POLICY. BY LETTER OF SEPTEMBER 3, 1954, THE ARMY FINANCE CENTER INFORMED YOU OF THIS NONDEDUCTION AND REQUESTED THAT YOU REIMBURSE THE GOVERNMENT FOR THE SHORTAGE IN YOUR ACCOUNT. AFTER FURTHER LETTERS BETWEEN YOU AND THE ARMY, THE CASE WAS REFERRED TO THE GENERAL ACCOUNTING OFFICE FOR COLLECTION.

YOU STATE IN YOUR LETTER OF JULY 20, 1956, THAT PAPERS WERE DRAWN IN JULY 1951 FOR CONVERSION OF YOUR NSLI TERM INSURANCE POLICY TO A 20 YEAR ENDOWMENT POLICY WHEN YOU WERE STATIONED IN TOKYO; THAT ON THE FOLLOWING DAY, HOWEVER, YOU DECIDED NOT TO CONVERT THE INSURANCE AND HAD THE 20-YEAR ENDOWMENT POLICY CANCELED, ALLEGING THAT THE PAPERS WERE DESTROYED IN YOUR PRESENCE; AND THAT YOU THEN APPLIED FOR A WAIVER OF PREMIUM ON THE TERM INSURANCE. AFTER YOUR DISCHARGE FROM MILITARY SERVICE IN NOVEMBER 1953 YOU FORWARDED A PAYMENT TO THE VETERANS ADMINISTRATION TO RESUME COVERAGE UNDER THE TERM INSURANCE, BUT THE VETERANS ADMINISTRATION INFORMED YOU THAT, SINCE YOU HAD A 20 YEAR ENDOWMENT POLICY, TERM INSURANCE WAS NO LONGER AVAILABLE. YOU INDICATE THAT YOU THEN HAD LENGTHY CORRESPONDENCE OVER A PERIOD OF FIVE MONTHS WITH THE VETERANS ADMINISTRATION, WHICH IN TURN COMMUNICATED WITH THE ARMY FINANCE CENTER IN INDIANAPOLIS, AND THAT FINALLY YOU CHANGED YOUR POLICY FROM 20-YEAR ENDOWMENT TO ORDINARY LIFE. YOU INQUIRE WHY, IF THERE HAD BEEN A 20-YEAR ENDOWMENT POLICY IN FORCE FOR 2 1/2 YEARS, YOU HAD NOT RECEIVED DIVIDENDS.

AT OUR REQUEST THE VETERANS ADMINISTRATION FURNISHED PHOTO COPIES OF VA FORM 9-358, APPLICATION FOR CONVERSION, NATIONAL SERVICE LIFE INSURANCE, DATED JULY 13, 1951. THIS APPLICATION, PROPERLY COMPLETED AND SIGNED BY YOU, IS THE BASIS FOR THE LEGAL DETERMINATION BY THE VETERANS ADMINISTRATION THAT YOU HAD CHANGED TO A 20-YEAR ENDOWMENT POLICY IN JULY 1951. THE VETERANS ADMINISTRATION ALSO FURNISHED PHOTO COPIES OF VA FORM 9-1549, APPLICATION FOR CHANGE OF PERMANENT PLAN, NATIONAL SERVICE LIFE INSURANCE, DATED JUNE 29, 1954, IN WHICH YOU APPLIED FOR A CHANGE TO AN ORDINARY LIFE POLICY. FURTHERMORE, THE VETERANS ADMINISTRATION INFORMED US THAT AN APPLICATION DATED AUGUST 13, 1951, FOR WAIVER OF PAYMENT OF PREMIUM ON TERM INSURANCE WAS NOT APPROVED, SINCE ON THAT DATE A 20-YEAR ENDOWMENT POLICY WAS IN FORCE. IN VIEW OF THIS INFORMATION THERE IS NO DOUBT THAT A 20-YEAR ENDOWMENT POLICY WAS ESTABLISHED IN ACCORDANCE WITH YOUR SIGNED APPLICATION OF JULY 13, 1951.

IN REGARD TO DIVIDENDS AND OTHER BENEFITS THE DIRECTOR, INSURANCE SERVICE, VETERANS ADMINISTRATION, IN A LETTER DATED JULY 24, 1956, SAID:

"THE INSURANCE LATER CONVERTED TO AN ORDINARY LIFE CONTRACT EARNED ANNUAL DIVIDENDS OF $67.20, $67.20, $66.20 AND $66.20 FOR 1952, 1953, 1954 AND 1955, RESPECTIVELY. ALL HAVE BEEN APPLIED TO PAY INSURANCE PREMIUMS. * *

"THE ORDINARY LIFE POLICY HAD A LOWER CASH RESERVE VALUE THAN THE 20-YEAR ENDOWMENT PLAN. MR. LEVERANS REQUESTED THAT THE DIFFERENCE IN RESERVE BE USED TO PAY THE FIRST QUARTERLY PREMIUM OF $42.20 ON THE ORDINARY LIFE PLAN DUE IN JUNE 1954 AND THAT THE BALANCE CASH RESERVE BE REFUNDED. CHECK NUMBER 29,903.217 FOR $710.32 WAS THEREFORE MAILED TO CARL E. LEVERENZ, 195 BIRCH, PARK FOREST, ILLINOIS, ON JULY 28, 1954.'

THUS YOU RECEIVED DIVIDENDS FOR 2 1/2 YEARS ON THE ENDOWMENT POLICY AS WELL AS A CASH RESERVE REFUND OF $752.52, $42.20 BEING APPLIED AS A QUARTERLY PREMIUM AND $710.32 PAID TO YOU. IN ADDITION, THE REMAINDER OF THE CASH RESERVE FROM THE 20-YEAR ENDOWMENT POLICY HAS BEEN APPLIED RETROACTIVELY TO ESTABLISH THE CASH RESERVE FOR THE ORDINARY LIFE POLICY FROM JULY 1, 1951.

WHILE THESE BENEFITS HAVE BEEN RECEIVED BY YOU, NO DEDUCTIONS WERE MADE FROM YOUR PAY FOR THE INSURANCE ALLOTMENT WHICH THE DEPARTMENT OF THE ARMY PAID TO THE VETERANS ADMINISTRATION ON YOUR BEHALF. SINCE YOU RATIFIED THE ACTIONS TAKEN BY THE GOVERNMENT WITH RESPECT TO YOUR LIFE INSURANCE BY ACCEPTING THE BENEFITS ARISING OUT OF SUCH ACTIONS, INCLUDING CASH BENEFITS, YOU ARE INDEBTED TO THE UNITED STATES IN THE AMOUNT OF $1,009.20, WHICH IS THE AMOUNT PAID BY THE ARMY TO THE VETERANS ADMINISTRATION ON YOUR BEHALF ($34.80 PER MONTH FOR THE PERIOD FROM JULY 1, 1951, TO NOVEMBER 30, 1953).

PROMPT PAYMENT IN THE FULL AMOUNT OF THE DEBT SHOULD BE MADE OR, IF THIS IS NOT POSSIBLE, YOU SHOULD REMIT AN INITIAL PAYMENT WITH A SCHEDULE FOR FUTURE INSTALLMENTS. THE AMOUNT SHOULD BE SENT HERE BY CHECK, DRAFT, OR MONEY ORDER PAYABLE TO THE TREASURER OF THE UNITED STATES.