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Public enterprise funds-Continued

SERVICE-DISABLED VETERANS INSURANCE FUND-Continued This fund finances the payment of claims on nonparticipating insurance policies issued to veterans with serviceconnected lisabilities which makes them ineligible for commercial insurance (38 U.S.C. 722). Administrative expenses are paid from the General operating expenses appropriation.

Budget program-1. Death claims.-Payments to surviving beneficiaries continue to increase as new deaths occur among the increasing number of policyholders.

3. Cash surrenders.-A policyholder may terminate his insurance by cashing in his policy for its cash value.

4. Policy loans and liens.-A policyholder may borrow up to 94% of the cash value of his policy. This activity increases with the increased number of policyholders.

The general increase in the activity of this fund is indicated in the following table (dollars in thousands):

Number of policies.. Insurance in force..

June 30, June 30, June 30, June 30, 1962 1963 1964 1965

49,577 52,790 55,800 58,600 $432,896 $460,174 $487,000 $511,000

Financing. Operations are financed from premiums and other receipts. Additional funds are derived from the Veterans insurance and indemnities appropriation, instead of direct appropriations to this fund. It is estimated that the payment will be $2.7 million in 1964 and $3.2 million in 1965.

Operating results and financial condition.-Because premium and other receipts continue to be insufficient to cover operations, the deficit is expected to continue to increase with capital impairment reaching an estimated $33.8 million by June 30, 1965.

The capital of the fund consists of $4.5 million-$3.5 million appropriated directly in 1952, 1956-58 and $1 million transferred from Readjustment benefits appropriation in 1954.

Revenue, Expense, and Retained Earnings (in thousands of dollars)

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Program by activities:

Revenue:

Operating costs, funded:

Funded.

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servicemen's commercial life insurance policies...

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5,928

6,408

6,818

11,763 11,986

13,203

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-5,835 -5,578 -6,385

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-24,200 -27,735 -30,613 3,200

Financing:

Revenues and other receipts:

Deficit, end of year..

2,300 2,700 -27,735 -30,613 -33,798

Collection of claims receivable....

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Revenue (recoveries of claims receivable written-off)....

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Financial Condition (in thousands of dollars)

Total revenues and other receipts.. Unobligated balance brought forward.. Unobligated balance carried forward..

6

6

6

31

86

64

-15

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The fund finances claims arising from the guarantees of premiums due on commercial life insurance policies held by servicemen while they are in service and for 2 years after discharge (72 Stat. 487). The Government guarantees the repayment of any indebtedness not liquidated by the insured himself. Any payment by the Government on cases approved subsequent to October 6, 1942, creates a debt owed the Government by the insured.

Budget program-Insurance program.-Claims paid on guaranteed premiums are made to commercial insurance companies in cases where the servicemen failed to make premium payments which were guaranteed by the Government.

The activity of the fund is indicated in the following table:

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Capital outlay:

6. Policy loans made...

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7. Policy liens established.

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Financing:

Revenues and other receipts:

Policy loans repaid..

Policy liens repaid.

Other revenues (optional settlements).

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Premiums earned..

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Interest on investments.

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Public enterprise funds—Continued

VETERANS SPECIAL TERM INSURANCE FUND-Continued

nent plan of insurance or to a new form of term insurance which may not be renewed beyond age 50 but which costs. less than the unlimited term insurance. Those who converted to a permanent plan also acquired the right to purchase total disability income coverage with an additional premium.

The fund has an accumulated surplus in excess of its anticipated liabilities. Provision was made (75 Stat. 495) for a onetime distribution of surplus by payment of a special dividend to policyholders whose insurance was in force during November or December 1960 or January 1961 if they had a permanent or limited term plan or converted from unlimited term to permanent or limited term before September 14, 1963. The dividend was also paid on unlimited term policies which matured by death on or after the November 1960 premium due date and before September 1963.

Budget program-1. Death claims.-Payments to surviving beneficiaries continue to increase as new deaths occur among policyholders.

2. Disability claims.-Payments to individuals who have purchased total disability coverage and who subsequently become totally disabled began in 1960.

4. Dividends.-Payments began in 1962 and were completed in 1964.

6. Policy loans made. The policyholders who converted their insurance from term to permanent plan were subsequently entitled to borrow up to 94% of the cash value of the new policy. Disbursement of such loans from this fund increased from $703 thousand in 1962 to $1,129 thousand in 1963.

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The general decrease in the activity of this fund is indicated in the following table (dollars in thousands):

Number of policies... Insurance in force.

Financing.-Payments from this fund are financed primarily from premium receipts and interest on investments. Operating results and financial condition.-Favorable mortality experience on insurance written against this. fund has kept death claims payments well below the amount of premium and interest receipts, thereby producing an annual increase in the retained earnings of the fund. The retained earnings have been reduced by the special dividend and any further excess will be transferred to the general fund of the Treasury.

Revenue, Expense, and Retained Earnings (in thousands of dollars)

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42)..

216

250

210

Financing:

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Revenues and other receipts: Loans repaid...... Unobligated balance brought forward...

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Financing applied to program....

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Summary of Sources and Application of Funds (in thousands of dollars)

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